India is primed to become a global economic power and investment destination for business. While there are many factors that have contributed to this meteoric growth of the Indian economy, the significant role played by the chemical industry is worth special mention. Statistics say that India is the sixth-largest producer of chemicals by total output.

The chemical industry, characterized by the large network of chemical distributors in India, is valued at over USD 150 billion and expected to increase to USD 350 billion by 2021.

The chemical industry has diversified in recent years, with over 80,000 commercial products now produced in the country. India exports half of its chemical products to major overseas markets like the U.S, Canada, China, Japan, and western Europe.

The chemical industry covers products under the following categories:

  • Inorganic and organic chemicals
  • Plastics and petrochemicals
  • Dyes (including fast dying resin), and pigments
  • Drugs and pharmaceuticals
  • Fine and speciality chemicals
  • Pesticides and fertilizers

India is a particularly strong supplier of industrial dye, including fast dying resin products. We account for approximately 15% of the world’s production of dyestuff and dye intermediates.

India’s Chemical Industry in the Global Market

If we take a closer look at the market distribution of the different categories of chemical products, dyes and agrochemicals (pesticides and fertilizers) have displayed a consistent increase in demand in the world market. In addition to this, Alkyd Resin and inorganic chemicals have also displayed strong growth both in terms of value and volume.

The highest rate of growth in the past 5 years, however, has been registered by petrochemicals. This can be attributed to the fact that petrochemicals play a key role in every economic sector, including agriculture, textiles, consumer durables, healthcare, etc. India’s proximity to the Middle East, the world’s primary source of petrochemical feedstock, contributes towards the growth of the petrochemical industry in India.

Consumption of Chemical Output in India

The growth of India’s chemical industry is supported by an increase in disposable income, a high rate of urbanization, and the ever-increasing demand for textiles, adhesives, construction material, and petrochemical products. India self-consumes about 35% of its total chemical production. Therefore, we are also one of the world’s largest consumers of chemical products.

Demographic trends show that the population is rapidly becoming larger, younger, and more urban. This trend will support the increased demand for appliances, housing, healthcare and other consumer goods which have a direct impact on the chemical industry. In addition to that, the Indian economy is projected to grow owing to its proximity to expanding markets in Asia and increased integration to the global economy.

Several government initiatives have supported reforms designed to encourage business growth by eliminating unnecessary regulations. This has seen India make a dramatic jump in the World Bank’s Ease of Doing Business Index and bodes well for the chemical industry.

There are also huge growth opportunities in segments such as speciality chemicals, polymers, cosmetics raw material, that generate huge domestic demand. These segments have great potential to make India competitive in the production of chemical products.

Feedstock for India’s Chemical Industry

India has little access to the petrochemical gas that fuels the Middle East and North American industries. India however, has refining capabilities beyond the domestic requirements.

India is strongly equipped to make use of biomass. Our strong agricultural base has ensured the availability of significant quantities of biomass at single sites.

Projections for the Future

The demand for chemical products is expected to grow as much as 10% in the next five years.

The continued growth of agriculture, construction, clothing, and automotive sectors is expected to fuel the chemical industry's growth. With governmental support for direct investment and support for research and development also contributes to this sector.

The center of gravity of the global chemical industry is slowly shifting towards the East, and if current trends are anything to go by, Indian chemical companies are well-positioned to take advantage of this favorable situation.

Author's Bio: 

Torsi is a professional blogger.