Indian Chemical Industry – Brief Overview
The Indian chemical industry is among the fastest growing Indian industries. Majority of the chemicals produced in India comprise either upstream products or intermediates, which go into a variety of manufacturing applications including fertilisers, pharmaceuticals, textiles and plastics, agrochemicals, paints and dyes. Over the last one and a half decade, the Indian chemical industry has transformed from manufacturing principle chemicals in a highly regulated market to being a mature industry in a liberalised economy.
Indian Chemical Industry – Segments
The Indian chemical industry comprises a wide and varied spectrum of products that can be sub-categorised into inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and speciality chemicals, pesticides and agro chemicals, and fertilisers.
Indian Chemical Industry – Market Size
Post independence era has witnessed a significant contribution of Indian chemical industry to both industrial and economic growth. Accounting for 18 per cent of the output of manufacturing sector, the chemical industry forms 14-15 per cent of total exports and 8-9 per cent of the total imports in India. Chemicals including petrochemicals sector contributes 3 per cent to India’s GDP.
The Indian chemical industry, an important constituent of the Indian economy, is valued at around US$ 35 billion. The industry, the 12th largest in production globally, and third largest in Asia, is growing at an average rate of 12.5 per cent. Modernisation of existing technology through foreign collaborations could further enhance growth.
India is a promising economy that holds potential to produce quality chemicals for world consumers because of its diversified manufacturing base.
A network of 200 national laboratories and 1,300 Research and Development (R&D) centers provide a strong base to the Indian chemical industry to become innovation-oriented. Shifting focus towards R&D would also facilitate growing opportunities for R&D hubs and industry-specific institutes.
In India a number of recent developments, such as establishment of intellectual property rights (IPR), a rapidly growing middle-class population, emerging rural markets and improvements in medical infrastructure have benefitted foreign manufacturers.
Indian Chemical Industry - Market Dynamics
Base Chemicals form the largest segment of the Indian Chemicals Industry (53 per cent), followed by pharmaceuticals (24 per cent). While base chemicals are raw material oriented and involve bulk manufacturing through standardised reactions, pharmaceuticals and specialty chemicals are more R&D intensive, high value and low-volume. Petrochemicals (Olefins and aromatics) are the major sub-segment of the base chemical industry. Olefins demand in India is anticipated to grow at 10 per cent per annum while aromatics demand is expected to grow at 12 per cent per annum over 2010-2015.
Pharmaceuticals industry, forming the second largest segment with 24 per cent share, has evolved over past 30 years from a marginal global player to becoming a world leader in the production of high quality generic drugs. India exports pharmaceutical products to over 200 countries. Spurred by a strong domestic market and enhancing exports, the Indian formulations market is expected to reach US$25.6 billion in 2013-14 from about US$ 12.6 billion in 2008-09.
End-use industries like automotives, electronics, packaged food, textiles et all are driving Indian specialty chemicals industry. Strong domestic demand coupled with huge investments by domestic and foreign players, is making the industry scale new heights. Many international companies have pledged substantial investments in potential Indian markets because of availability of vast pool of skilled and cheap labour and resources.
Biotechnology, accounting for 3 per cent of the total chemicals industry, is currently pegged at US$ 4 billion. It is estimated to be worth around US$ 10 billion by 2015. New opportunities across various sectors including bio-pharma, agri-biotechnology and industrial biotechnology are expected to help the industry grow rapidly in the near future.
India is the fourth largest producer of agrochemicals in the world. The Indian Agrochemicals Industry is expected to grow at 7.5 per cent, to reach over US$ 1.7 billion by 2012, driven by various factors including need for food grain self-sufficiency and the momentum in floriculture and horticulture sectors. India’s 60 per cent of agrochemicals’ production is exported to countries like USA, UK, Russia, Europe, South Africa, Bangladesh, Malaysia etc.
Industry experts expect per capita consumption of plastics in India at 27 kilograms (kg) by 2020 from 8 kg in 2010; thereby aligning the consumption with global standards.
