A key constituent of the Indian economy that accounts for about five percent of the GDP, the Indian chemical industry has vital associations with several other industries such as automotives, consumer durables, food processing, iron and steel, textiles, paper, and engineering, among others. It is the eighth largest sector in the world and the third largest in Asia by volumes, after China and Japan. This report encompasses an assessment of the chemicals industry in India, within the context of the global industry, and the opportunities and challenges it presents. The country's chemical industry was estimated at USD 91 billion in 2011 and the authors believe that it has the potential to reach USD 134 billion by 2015 growing at a CAGR of 10 percent. The growth is expected to be driven by rising demand in end-use segments and expanding exports fueled by increasing export competitiveness. The dynamics that propel the industry, namely opportunities, competition, infrastructure investment and regulatory policies are also studied in the report.
The industry is a multi-product and multi-faceted one that comprises basic chemicals, pharmaceuticals, petrochemicals, specialty chemicals, agrochemicals and biotechnology and their sub segments. Within the sub segments, the petrochemicals industry is growing the fastest, with a rate of around 15 percent annually.
In India, the per-capita consumption of most of the finished products under the chemicals sector is far below the world average, which demonstrates the industry's enormous potential for growth. The government of India plans to invest USD 34 billion in three approved Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs); it also plans to establish port-based chemical parks in special economic zones (SEZs) in the next five years.
India has the potential to become a global chemical manufacturing hub if the government and domestic players rise up to the challenge. It is projected that USD 350 billion of the projected USD 1 trillion global specialty chemical industry could move to Asia by 2020. In wake of this, immense growth opportunities coupled with intense competition are acting as major drivers behind the dynamic growth in certain segments.