CHEMICAL SECTOR OVERVIEW-2020

Statistics, news & updates: everything you need to know about the Chemical Industry in India

Snapshot

  • Summary
  • COVID-19 Impact
  • Industry Clusters
  • Growth Drivers
  • Key Players
  • Market Stats
Chemical Industry Expertise in India

Sub-Industries

  • Summary
  • COVID-19 Impact
  • Industry Clusters
  • Growth Drivers
  • Key Players
  • Market Stats

Summary

The Chemical Industry is one of India’s oldest industries. It contributes to a lot of other sectors by supplying products and raw materials. The industry is expected to have a market value of 300 billion USD by 2025. The size of the Indian Chemical Industry is USD 108.4 billion. It contributes 2.11% to the economy’s GDP. The chemical industry is the third-largest in Asia. The exports are very strong and almost 34% of the country’s earnings actually come from the chemical industry.

The environment becomes crucial in the chemical industry. The market is shifting to a more environmentally aware R&D process. Therefore, it takes into account all the factors while investing in R&D. This is a big opportunity to explore. Because a lot of different aspects and products are yet to be invented and introduced into the market.

Besides, the sector allows 100% FDI and this makes the markets open for investments. The Indian Government supports the Industry in Research & Development, reduced the basic customs duty on several products and offers support through the ‘Make in India’ campaign. India also holds a large pool of skilled and cheap workforce in the sector. Therefore, foreign companies coming to India benefit from this. Moreover, the polymer and agrochemical industries present huge growth opportunities. Overall, the Chemical Industry in India is a good investment opportunity as it has large growth potential. This is majorly due to comparatively lower per-capita consumption and ease of doing business being promoted by the Indian Government.

COVID-19 Impact

Chemical Industry in India worth $ 163 billion is struggling due to the impact of coronavirus. India ranks 6th in the world in chemical sales and holds the 14th position for global exports. India exports around 34% of its petrochemical production to China. Since, exports to China would be a hit, finding new markets would be a challenge. Further, the prices and margins of petrochemical would fall due to the pandemic. It is anticipated that the demand for chemicals is likely to fall because of the uncertain global economy and capital markets.

Apart from exports, India is also reliant on China for its critical chemical raw material imports. Every year, this sector sees bilateral trade worth $30 billion from China. Rising raw material prices and delayed shipments are affecting this sector. Going by statistics, around 20% of production has already been impacted due to this.

Map – Industry Clusters

Map- Industry Clusters - Chemical

Growth Drivers

  • Asia is becoming a global chemical manufacturing hub.
  • There is a shift in Chemical production and consumption towards Asian and Southeast Asian countries. This leads to an increase in demand for chemicals and petrochemicals.
  • India has an opportunity to produce chemical products worth $ 111 billion by 2023 only for domestic consumption.
  • The Indian chemical industry employs more than 2 million people.
  • Export demand and domestic market dependence are key growth drivers for the chemical industry.
  • The chemical industry sees an annual growth rate of 15% to 20%. It is expected to hit $ 304 billion by 2025.
  • Government targets to increase Chemical manufacturing share of the GDP to at least 25% until 2025.
  • Indian ranks 14th in export and 8th in the import of chemicals globally (excluding pharmaceuticals products).
  • India is targeting exports of USD 18 billion by 2020.

Key Players in India

National

  • Pidilite Industries Ltd
  • Tata Chemicals Ltd
  • UPL Ltd
  • Gujarat Fluoro Chemicals Ltd
  • Aarti Industries Ltd
  • Gujarat Alkalies & Chemicals Ltd
  • Reliance Industries Ltd.
  • Gas Authority of India Ltd

International

  • BASF
  • DowDuPont
  • SINOPEC
  • SABIC
  • INEOS
  • Formosa Plastics
  • ExxonMobil
  • Mitsubishi Chemical Corporation

Market Stats

  • The chemical industry accounts for about 2.11% of the country’s GDP and 3.4% of the global chemical industry.
  • It is a highly diversified industry covering more than 80,000 commercial products.
  • 100% FDI is allowed under the automatic route in the chemicals sector (except in the case of certain hazardous chemicals)
  • The market size of the basic Chemicals industry in India is estimated to be approximately $ 174 billion in FY
  • The value of exports from India stood at US$ 19.09 billion during the year 2018-19.
  • The value of exports from India during April to October 2019 stood at US$ 11.06 billion.
  • India’s total imports recorded US$ 37.5 billion in Feb 2020. Total imports grew 2.5% year on year in Feb 2020.
  • The total production of chemicals and petrochemicals in India stood at 27,847 MT during 2018-19. It shows a growth of 4.15% over 2017-18.
  • The demand for petrochemicals in India is forecasted to grow at 5% CAGR from FY 2019-23.
  • The Indian agrochemicals market is forecasted to grow at 8% CAGR. It is expected to reach $ 3.7 billion by FY22 and $ 4.7 billion by FY25.
  • The total market size of speciality chemical in India is around $ 35 billion. The demand for speciality chemical is forecasted to grow at 12% CAGR from FY 2019-22.
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