FACILITATING FOREIGN DIRECT INVESTMENTS IN INDIAN BUSINESS AND INDUSTRY

FDI Manager : Foreign Direct Investments Into India
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Indian Chemical Industry - FDI Manager

CHEMICAL SECTOR IN INDIA

An Overview

Chemicals industry in India is highly diversified, covering more than 80,000 commercial products. It is broadly classified into Bulk chemicals, Specialty chemicals, Agrochemicals, Petrochemicals, Polymers and Fertilizers. India’s proximity to the Middle East, the world’s source of petrochemicals feedstock, makes for economies of scale.

India is a strong global dye supplier, accounting for approximately 16% of the world production of dyestuff and dye intermediates. Chemicals industry in India has been de-licensed except for few hazardous chemicals. Upcoming Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) and Plastic parks will provide state-of-the-art infrastructure for Chemicals and Petrochemicals sector.

  • The Indian chemicals industry is projected to reach $ 304 bn by 2025
  • Indian ranks 14th in export and 8th in import of chemicals (Excluding Pharmaceuticals products) globally
  • Demand of chemical products is expected to grow at approximately 9% p.a. over the next 5 years
  • Indian chemical industry employs more than 2 million people

100% FDI is allowed under the automatic route in the chemicals sector (except in the case of certain hazardous chemicals)


 

Industry Scenario

Market size of the Chemicals industry in India stood at $ 163 bn in 2017-18.

Total production of major chemicals and petrochemicals stood at 27,847 MT during 2018-19, a growth of 4.15% over 2017-18. Alkali chemicals had the largest share in the Chemical industry in India with approximately 69% share in the total production. Production of polymers account for around 61% of total production of basic major petrochemicals.

  • The petrochemical demand is expected to grow at 7.5% CAGR from FY 2019-23, with polymer demand growing at 8%
  • The agrochemicals market in India is expected to grow at 8% CAGR reaching $3.7 bn by FY22 and $4.7 bn by FY25.
  • The specialty chemicals constitute 22% of total chemicals and petrochemicals market in India. As of FY18, the total market size is around $35 bn. The demand for speciality chemicals is expected to grow at 12% CAGR from FY19-22.


 

Pro-growth environment pays off for Indian chemical companies

India is steadily moving up the ranks as a global economic power and a business magnet for investment. Key drivers for success in the chemical sector include proximity to strong growth markets, greater ease in doing business, and the continued development of petroleum, chemicals and petrochemical investment regions (PCPIRs). Backed by one of the strongest GDP growth rates in the world, the future looks bright for the Indian chemical industry.

 

Steady market strength for chemicals

Indian chemical companies support a sizable and highly diversified industry that includes commodities, specialities, polymers, agrochemicals and a range of other groups. Total chemical sales are expected to grow from US$139 billion in 2014 to US$214 billion by 2019. By 2025, the Indian chemical industry is projected to reach US$403 billion.

 

Doing business in India is getting much easier

Since 2014, the government administration headed by Prime Minister Narendra Modi has supported a number of reforms designed to encourage business growth by eliminating unnecessary laws and regulations, simplifying bureaucratic processes,and making the government more transparent, responsive and accountable.

These reforms and other initiatives have supported a dramatic, even historic, rise in India’s ranking on the World Bank’s Ease of Doing Business (EoDB) Index — a jump of 30 places into the top 100 countries. In fact, India is the first large country ever to record such an increase in ratings over a single year.

Snapshot

 

  • The Indian chemicals industry is projected to reach $ 304 bn by 2025
  • Indian ranks 14th in export and 8th in import of chemicals (Excluding Pharmaceuticals products) globally
  • Demand of chemical products is expected to grow at approximately 9% p.a. over the next 5 years
  • Indian chemical industry employs more than 2 million people

Find out more

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