CHEMICAL INDUSTRY IN INDIA : AN OVERVIEW

The  Indian Chemical Industry is an integral part of the economy. In all different ways it’s a part of our lives. We are inextricably linked to the industry-be it be the furniture we use, cars we drive, garments we put on  or the drugs we consume. Indian Chemical industry is both capital as well as knowledge intensive. This industry is playing important role in meeting up with basic needs of the people and improving their lives. S Epichlorohydrin (67843-74-7) manufacturer India is a leading Indian manufacturer of speciality chemicals, pharmaceutical intermediates and aroma chemicals with a global footprint. We manufacture chemicals used in the downstream manufacturing of pharmaceuticals, agrochemicals, polymers, additives, surfactants and chirally pure intermediates. Our wide portfolio has made us a global partner of choice for various major global and domestic customers.

Based on composition and end use, chemicals can be divided into following broad categories:

● Bulk Chemicals:

This segment includes basic organic (methanol, acetic acid, phenol, etc.) and inorganic (also known as alkali chemicals, caustic soda, chlorine and soda ash).

●Specialty chemicals:

Also known as performance chemicals are high value compounds with low volume. Paints and adhesives, electronic and oilfield chemicals are few of the specialty chemicals examples.

●Agrochemicals:

Chemicals important for agriculture crops to protect against insecticide and pesticides.

●Petrochemicals:

Chemicals derived from petrochemicals. Two common classes of petrochemicals are olefins and aromatics.

●Fertilizers:

Fertilizers are organic or inorganic compounds required for the growth of the plants. Manufacturing raw materials for agriculture in fertilizer sector, is the foremost occupation of India.

INDUSTRY SCENARIO AND MARKET SIZE

● Indian chemical industry is vastly diversified with more than 80,000 commercial products in the market. Chemical industry in India is delicensed apart from for few of the hazardous chemicals.

● The market size of chemical industry of India came up at $ 163 billion for FY 2021-2022 and is expected to reach $ 304 billion by 2030, with growth in demand for chemical products by approx. 9 % per annum in coming next five years.

●  India is the third largest producer of chemicals by volume in Asia and sixth largest producer of chemicals in the world.

●India has 3.40% of contribution towards the global chemical industry along with 10.30% of chemical products exports share, making it to rank on 14^th in exports globally (excluding pharma products). HIL (India) Ltd, a PSU under the Department of Chemicals and Petrochemicals has recorded growth in exports in the first two-quarters of FY 2021-2022.

● Union Minister for Chemicals and Fertilizers, Shri D.V. Sadananda Gowda launched the Phase-II of the Direct Benefit Transfer of Fertilizer Subsidy (DBT 2.0) in July 2019. The new initiatives of DBT 2.0 are DBT Dashboards, PoS 3.0 Software and Desktop PoS Version. The Department of Fertilizers (DoF) has implemented the Phase-I of the DBT system in fertilizer subsidy pan-India in Fertilizers w.e.f. March 2018. 

●India is the third largest consumer of polymer , and fourth largest producer of agrochemicals in the world. With more than 45 technical grade pesticides being manufactured in the homeland, the country qualifies as one of the most dynamic generic pesticide manufacturers in the world. Being a net export earning industry, it has a significant contribution to the foreign exchange basket of the country. 

●India accounts for approx. 16% of the world dyestuff and dye intermediates production, making it a strong dye supplier globally.

●The specialty chemicals market in India  has witnessed 14% growth in past 5 years and is expected to reach $ 70 billion in market size by 2020. India produces many fine and specialty chemicals, which are essential for increasing industrial production. These special chemicals find wide usage as polymer additives, food additives and pigments and anti-oxidants in the rubber industry. 

● Under its diversification programme, FCI Aravali Gypsum and Minerals India Limited (FAGMIL) has taken up a project to establish a white cement plant near village Nohra Dhar in the Sirmour district of Himachal Pradesh, at a project cost of approximately INR 605 cr. 

● Total chemicals and petrochemicals production in India were $ 7,44,607.71 during the year 2021-2022. The petrochemical market is expected to reach $ 100 bn over the next 5 years at a CAGR of 10%.

● Alkali chemicals have the largest share with approx. 69% share in the total production globally.

● Indian Scientists have designed a new non-toxic organic photocatalyst that can efficiently capture CO2 and convert it into methane.

● Indian Chemical Industry has created employment opportunities for more than 2 million people.

● FDI of 100% is allowed in the chemicals sector of India under the automatic route, except for few of the hazardous chemicals.

MAJOR INVESTORS IN CHEMICALS INDUSTRY OF INDIA

● Mitsubishi chemicals

● BASF

● ADEKA

●Akzo nobel

●Dupont

●Syngenta

●DyStar

●Henkel

●Rhodia

● WACKER

●CRODA

 

GROWTH  DRIVERS

● Indian Potash limited (IPL) signs MoU with Israel Chemicals Limited (ICL) for the supply of Muriate of Potash (MOP) for the period 2022 to 2027 with the aim to propel agriculture production and improve lives  of farming community.

● IFFCO has started production of Nano Urea and the work on Nano DAP, as less amount of Nano Urea will be used contrary to the quantity used for fertilizers at present and contribute to higher nutrient use efficiency.

● GOI aims to make Atmanirbhar Bharat in Urea and DAP Production by using 'Green Hydogen'.

 

STATISTICS

●  The Chemical industry in India is expected to grow at 9.3% per annum to reach USD 304 Bn by FY 2025. 

● Fertilizers production (weight: 2.63 percent) declined by 1.4 percent in February 2022 over February 2021. Its cumulative index decreased by 0.4 percent during April to February 2021-22 over the corresponding period of previous year.

● Among Major Chemicals, the production of Pesticides & Insecticides has increased by 25.04% and in the case of Alkali Chemicals, Inorganic Chemicals, Organic Chemicals and Dyes & Pigments production has decreased during the period as compared to the last year.

● The production of Pesticides & Insecticides has increased by 32.54% and Organic Chemicals has increased by 2.13% and in case of Alkali Chemicals, Inorganic Chemicals, and Dyes & Pigments production has decreased during the period as compared to the last year.

● Exports of Organic and Inorganic chemicals values at  USD 2649.59 mn in March 2022 and records positive growth vis-à-vis March 2021 of 15.76%. 

● Organic and Inorganic chemicals shares 6.56% of the total exports of the country in the month of March.

● Exports of Organic and Inorganic chemicals values at  USD 29152.67 mn from Apr21- Mar22 and records positive growth vis-à-vis Apr20-Mar21 of 31.98%. 

● Organic and Inorganic chemicals shares 6.98% of the total exports of the country in the period Apr21- Mar22.

● Exports of Plastic and Linoleum values at  USD 811.53 mn in March 2022 and records positive growth vis-à-vis March 2021 of 12.78%. 

● Plastic and Linoleum shares 2.01% of the total exports of the country in the month of March.

● Exports of Indian Chemicals has registered growth of 106% in 2021-22 over 2013-14. India’s exports of Chemicals for 2021-22 hit a record at USD 29296 Mn.

FUTURE  PROSPECTS  & INVESTMENT  OPPORTUNITIES

 Indian chemical industry is expected to register a growth of 8-9% in the next decade and is expected to double its share in global chemical industry to 5-6% by 2030. Indian Chemical industry has the potential to grow significantly provided some of the key growth imperatives are taken care of. Securing Feedstock, Right Product Mix, M&A opportunities are currently the key imperatives for chemical industry in India. Few investment opportunities can be highlighted as:

1.                            Chemical companies in India can either explore alternate feedstock or invest in setting up plants in resource rich nations to secure feedstock.

2.                              Companies need to invest in exploring the right product mix to be competitive and profitable using the available feedstock in India i.e. Naphtha and its derivatives.

3.                              Indian companies can explore possible Merger, JV opportunities for technology, capital or access to international market by taking advantage of increasing expansion of western companies in India.  

4.                            Chemical companies can invest in exploring strategic energy management and strategic water management to cut down their energy costs and contain water availability concerns.

5.                             Companies can invest in upcoming PCPIRs in India and overcome challenges related to  infrastructure, power and water availability.  

6.                            There are good opportunities in segments such as Speciality Chemicals, Speciality Polymers, for catering to huge emerging domestic demand as also as a manufacturing hub.