The Indian chemicals industry contributes ~3% of the country’s GDP and provides support to various other sectors including agriculture, construction, and leather. Currently, India is the 3rd largest chemical producer in Asia and the 6th largest in the world by output. It is also the 6th largest consumer of chemicals in the world. Factors such as abundant availability of raw materials, continued innovation, growth in demand, cost-effective labour wage (India has one of the lowest per hour labour cost amongst the major chemical producing countries), and lower cost of production have led India to grow in this sector. India’s proximity to the middle east further enables it to gain an advantage based on economies of scale for petrochemicals.
As India is enforcing stricter environmental regulations, companies are increasing investments in production technologies that reduce environmental impact. Governmental incentives, such as capital and interest subsidies and viability gap funding that actively promotes the adoption of renewable energy resources, are also contributing to sustainable growth in the industry. The industry is expected to witness a growth rate of ~9.9% CAGR till 2021, helped significantly by demand projection from both domestic and worldwide markets.
- Unlike many countries, India permits 100% Foreign Direct Investment (FDI) in this sector. Most of the chemicals are delicensed except for a few hazardous chemicals.
- The government has set up clusters known as Petrol, Chemicals, Petrochemicals Investment Regions (PCPIRs), which are delineated investment regions specifically designed to undertake various activities in this sector. These clusters are expected to attract an investment of ~USD 117 billion.
- The government grants a weighted tax deduction of ~200% for undertaking research and development activities in this sector.
- Aarti Industries
- Gujarat Heavy Chemicals
- Indian Glycols Ltd.
- Pidilite Industries
- Tata Chemicals
- Vinati Organics
- The Indian chemicals industry is estimated at USD 145 billion, contributing about 3% to the GDP in FY17.
- India is the 3rd largest consumer of polymers, 3rd producer of agrochemicals, and the 7th largest producer of chemicals in the world.
- India accounts for ~16% of the world’s production of dyestuff and dye intermediates, particularly for reactive acid and direct dyes.
- Indian chemicals accounted for ~12.17% of total national exports and 9.91% of total imports in FY17.
- Department of Chemicals & Petrochemicals
- Indian Chemical Council
- Dye Manufacturers Association of India
- Alkali Manufacturers 'Association of India
- Indian Speciality Chemical Manufacturers Association
- Chemicals & Petrochemicals Manufacturers Association
- The All India Plastic Manufactures Association, (AIPMA)
- Organization of Plastic Processors of India (OPPI)