A Broader Outlook on Indian Chemical Industry - Today, India has achieved considerable progress in production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and specialty chemicals and toiletry product segments. And with slash in tariffs, Indian chemical companies with well-built systems and structured operations are likely to be benefited further. |
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You are here: DIME Home > Entrepreneurs > A Broader Outlook on Indian Chemical Industry
Today, India has achieved considerable progress in production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and specialty chemicals and toiletry product segments. And with slash in tariffs, Indian chemical companies with well-built systems and structured operations are likely to be benefited further.
Author: Jayeshmodi
Date: Dec 16, 2009 - 3:47:26 PM
It is not only country’s oldest industry, but the Indian Chemical Industry has been contributing to
Today, India has achieved considerable progress in production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and specialty chemicals and toiletry product segments. And with slash in tariffs, Indian chemical companies with well-built systems and structured operations are likely to be benefited further. The companies manufacturing highly valued chemicals, and who are compliant of industrial quality standards, can make their mark not just in
In Indian context, the rise in disposable income has led to improved chemical consumption. This has aided country’s GDP climb further, from 9% to 13%. In an attempt to make the industry more progressive and flourishing, the government of
Chemicals and chemical products influence our lives in a significant way. Be it donning synthetic clothes, or consuming drugs, or when it comes to using thermoplastic furniture at homes and offices, chemicals have become a way of life in this fast-changing world. In addition, the industry plays a pivotal role in agricultural and development sectors. Some of the other sectors, like engineering, automotive, consumer durables and food processing also depend on this sector in a big way.
The industry is on a high growth trajectory. The industry, through a series of efforts is expected to achieve USD 100 billion in the upcoming years. The industry’s contribution to the Indian manufacturing sector is almost 17.6 percent. Since the ages, Indian chemicals have been traded and today imports stand at USD 7.92 billion and exports at 5.95 billion. And now with the onset of liberalization and globalization, the Industry is on a major expansion spree. The industry today is into manufacturing wide range of goods including fine and specialty chemicals, drugs and pharmaceuticals, dyes and pigments, agrochemicals and fertilizers, pesticides, plastics and petrochemicals etc.
However, Indian chemical industry is yet to makes its presence felt in a big way in the international markets.
Fast-facts on Indian chemical industry
• Highly fragmented
• Operates at the micro level.
• Increased per capita consumption level has put the industry on fast-track
• Higher cost of capital, import duties and power, making it less competitive in the international markets.
• Very little spotlight on Resource & Development
• Presence of many multinational companies
• Big players in bulk chemicals. Presence of small and big players in fine and specialty chemicals.
Major Segments
The Indian Chemical Industry has following major segments:
* Petrochemicals
* Inorganic Chemicals
* Organic Chemicals
* Fine and specialties
* Bulk Drugs
* Agrochemicals
* Paints and Dyes
Petrochemicals
Petrochemicals form the biggest category in the chemicals, and it is also one of the fastest growing sectors. The segement is into producing basic chemicals like Ethylene, Propylene, Benzene and Xylene etc, intermediates like MEG, PAN and LAB etc., synthetic fibres like Nylon, PSF and PFY etc, polymers like LDPE/HDPE, PVC, Polyester and PET etc, synthetic rubber like SBR, PBR etc. The key players include: Reliance, IPCL, NOCIL, Haldia and GAIL etc.
Inorganic Chemicals
At present it is worth US$ 2.5 Billion industry. The segment concentrates on the production of caustic, chlorine, sulphuric Acid etc. The inorganic chemicals are commonly used in detergents, glass, soap, fertiliser, alkalies etc. However, the industry is encountering stiff competition from international players, when it comes to catering to the requirements of the local markets.
Organic Chemicals
It is reportedly 1billion dollar industry and includes an array of chemicals. Most of the companies manufacturing organic chemicals can be found in western
Fine Specialties
The fine specialties segment is highly fragmented, with sizeable number of big players. However, all these players operate on low volume and high price margin. It is one of the fastest growing sectors with market around US$80 million p.a. And many big and small Indian companies form part of it. The major end user segments include: Textile, Leather, paper, detergent, rubber, paints, polyester, oil and gas etc.
Bulk Drugs
Bulk Drugs have a large market in
Agrochemicals
Paint and Dyes
Indian dyes are in demand world over, thanks to ban on production of dyes in developed nations due to the reservations related to pollution. Dyes are principally used in Paints, Inks, Textiles and Polymers. The total market of paint and dyes is almost US$ 1 Billion, and the growth rate is almost 12%. In addition, the marketplace is highly fragmented. There are about 25 large and medium players, which cover 50% market share, while 2000 other organized players contribute next fifty percent. Moreover, the per capita consumption is very low in
Overseas Trade
In the early 1990s,
The overall performance of Indian Chemical Industry has been good in the domestic markets; however, in the international markets the industry it is yet to make its presence felt in a significant way. And factors like recession and crises in the
The International Council of Chemical Associations (ICCA), an association that consists 80% of the world manufacturers of chemicals has announced its support for a new round of multilateral trade negotiations in the World Trade Organization.
ICCA’s main concerns include: removal of chemical tariffs, management of anti-dumping practices, making simpler the custom processes and full execution of TRIPs agreement. While management of anti- dumping practices would profit
Road ahead
Highly developed technology, in-depth research capabilities, backward and forward linkages, development of domestic capacity to decrease the dependence on imports are some of the crucial factors that need to be taken into consideration. Nowadays, safety, health and environment protection issues have become the major-talking point in almost all industries and even in the Indian chemical industry too. The Indian chemical manufacturers are addressing the issue on a war-footing.
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