Chemical industry in India
The chemical industry is both a knowledge- and capital-intensive sector. It is an integral component of the Indian economy and growing at sustained pace. Petrochemicals, fertilisers, paints, varnishes, gases, soaps, perfumes, toiletries and pharmaceuticals are included in the category of basic chemicals and their by-products. The chemical sector has numerous categories, encompassing more than 80,000 commercial items. The industry plays a crucial role in providing for basic requirements and raising the quality of life in India. The sector is the backbone of the country’s industrial and agricultural development. It serves as the foundation for several downstream industries, including textile, paper, paint varnish, soap, detergent and pharmaceuticals.
The Central Statistics Office's National Accounts Statistics 2021 states that the gross value added (GVA) for all economic activities in the chemical and chemical product sectors was 1.21% through 2019-20 as against 1.14% through 2018-19 at constant prices. This sector's contribution to the manufacturing sector's GVA increased from 6.25% through 2018-19 to 7.08% through 2019-20.
Total production of major chemicals have increased to 11,243 MT in 2020–2021 from 10,234 in 2016-17. Alkali chemicals made up around 69% of all production of major chemicals in 2020-21. The Indian chemical industry was estimated to be worth around US$ 178 billion in FY20 and is anticipated to reach US$ 300 billion in FY25.
Source: Department of Chemicals and Petrochemicals Annual Report
Government’s initiative to promote chemical industry
To boost the growth of the chemical industry in India, the Government of India (GoI) has implemented the following schemes/policies.
Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs)
The Indian government has envisioned the PCPIRs as clusters that offer investors a transparent and investment-friendly policy and facility framework. PCPIRs have a first-rate infrastructure and provide a competitive environment favourable to business establishments. Each PCPIR covers a carefully defined area of around 250 sq. km. Along with supporting logistics and other services, these regions will have manufacturing facilities. In total, four PCPIRs have been established by the Ministry of Chemicals and Petrochemicals in Vishakhapatnam-Kakinada, Andhra Pradesh; Dahej, Gujarat; Cuddalore and Nagapattinam, Tamil Nadu; and Paradeep, Odisha. The estimated investment required to realise PCPIRs fully is Rs. 7.63 lakh crore (US$ 93.3 billion).
Chemicals Promotion and Development Scheme
To support the growth and development of the chemical and petrochemical industries, the Chemicals Promotion and Development Scheme (CPDS) was launched to create knowledge products through studies, surveys, data banks, promotional materials, etc., and disseminate the knowledge through holding seminars, conferences, exhibitions and other events. In addition, the programme rewards exceptional work in the fields of chemicals and petrochemicals to encourage research and innovation.
Production Linked Incentive (PLI) Scheme
The National Programme on Advanced Chemistry Cell (ACC) Battery Storage Production Linked Incentive (PLI) Scheme with a budgetary outlay of Rs. 18,100 crores (US$ 2.2 billion) were approved by the GoI to improve India's manufacturing capabilities by achieving a manufacturing capacity of 50 Giga Watt Hours (GWh) of ACC. The central government is focusing on improving domestic value addition under this plan while ensuring that India's levelized battery production cost is competitive globally. The scheme envisions an investment that will increase domestic manufacturing, facilitate the creation of demand for stationary storage and battery storage for both electric vehicles and stationary storage, develop a fully domestic supply chain and attract foreign direct investments to the country.
Recent developments to boost the future of the chemical industry in India
Exports of the chemical industry
Indian chemical exports increased by 106% from 2013–14 to 2021–22. Chemical exports from India reached a new high of US$ 29.3 billion in 2021–22, compared with US$ 14.2 billion in 2013–14. The increase in shipments of organic, inorganic, agrochemical, dyes and dye intermediates and speciality chemicals have contributed to the expansion of chemical exports. With a "Make in India" philosophy, the Indian chemical sector is now a key competitor on the international stage and generates foreign exchange for the country. As a chemical producer, India ranks third in Asia and sixth globally. Moreover, India is ranked 14th in the world for chemical exports. The country currently leads the world in dye production, with export of dyestuffs ranging from 16% to 18% in 2021-22. India exports dyes to more than 90 countries. Furthermore, India produces more than 50% of pesticides of the technical grade and is the fourth-largest producer of agrochemicals worldwide. Agrochemical exports from India to the rest of the world are close to 50%. India produces and exports the most castor oil in the world, accounting for 85-90% of all exports in this industry worldwide. India sells castor oil to more than 175 nations, with the US, China and new markets, including Turkey, Russia and Northeast Asian countries, ranking as its top export destinations.
With the support of the Indian government, the chemical industry in India witnessed significant growth. The industry has been modernising over time through the development of novel molecules, technological advancements, improvement in product quality and launch of new product profiles to become a contemporary world-class chemical industry prepared to face international competition. Even at a time of increased global unpredictability, the sector remains a desirable centre for prospects. Global dynamics that are affecting the chemical industry would present lucrative opportunities for the Indian chemical sector in the near future. The strategic choice to prioritise and realise this value-creation potential would determine the direction of India's chemical sector and its trade performance in the future.
Selected major Chemicals: Alkali Chemicals, Inorganic Chemicals, Organic Chemicals, Pesticides & Insecticides, Dyes & Pigments
Conversion Rate: 1.0 INR = 0.012 US$