India’s Chemicals and Fertilisers Minister D V Sadananda Gowda on Tuesday said the demand for chemicals and petrochemicals is expected to rise 9% annually, and the size of the industry is likely to grow to $300 billion by 2025.
Addressing a conference organised by industry body Assocham, the minister said the Indian chemical industry, over the last one-and-a-half decade, has transformed from manufacturing principal chemicals in a highly regulated market to being a mature industry in a liberalised economy.
Majority of the chemicals produced in India comprise either upstream products or intermediates, which go into a variety of manufacturing applications including fertilisers, pharmaceuticals, textiles and plastics, agrochemicals, paints and dyes, he said, adding that end-use industries like automotives, electronics, packaged food and textiles are driving Indian specialty chemicals industry.
‘Strong domestic demand, coupled with huge investments by domestic and foreign players, is making the industry scale new heights,’ Gowda said.
The minister said rising disposable income, median age of population, urbanization and growing penetration, and demand from rural markets are the factors contributing to growth of chemical and petrochemical sector.
‘As production and consumption shift towards Asian and Southeast Asian countries, the demand for chemicals and petrochemicals is expected to grow at 9 per cent per annum, much faster than the expected GDP growth rate, to reach $300 billion by 2025,’ Gowda said.
Gowda said the size of the industry was $163 billion in 2018, contributing 13.4% of manufacturing GVA (gross value added) and 2.4% of national GVA. The sector employs 2 million people.
He said Indian chemical and petrochemical industry plays an important role in all sectors of the economy.
Stating that successive governments have taken various initiatives to promote this sector, the minister highlighted that licensing requirements, except for hazardous chemicals and a few special drugs, have been removed.
Entrepreneurs are allowed to set up chemical industries following the Industrial Entrepreneurs’ Memorandum (IEM) route and under the automatic route, 100% FDI is allowed for all chemicals, except hazardous ones, he said.
Gowda said the peak rate of customs duty on most chemicals has been brought down to 7.5%, while the Petroleum Chemical Petrochemical Investment Regions (PCPIR) policy has been introduced to boost the development of chemicals and petrochemicals investment regions.
‘I certainly believe that the Indian chemical and petrochemical sector holds a potential to emerge as global manufacturing hub. We are aware of the need to support the cluster based development of the sector through provision of world class infrastructure and logistics. The department is working on it,’ he said.
Speaking at the event, Niranjan Hiranandani, President ASSOCHAM, said, “The Indian chemical industry presents excellent potential and is expected to register a growth of 8-9% in the next decade and is expected to double its share in the global chemical industry to about 6% by 2021. The Indian chemical industry has a significant potential for growth, provided some of the key drivers are focused upon like Securing Feedstock, Right Product Mix and M&A opportunities.”
“The Government could continue to work toward the ease of doing business in India by streamlining regulations and processes and by issuing clear directives on future regulatory requirements. I am sure the insightful views from the experts would further contribute to the initiatives of the Government on making India a global manufacturing hub,” he added.
Jai Shroff, Global CEO, UPL Group, said, “India has ample manufacturing potential for chemicals sector which needs to be leveraged to substitute imports and promote exports. For India, to emerge as a dominant leader in the sector, research and development and creation of centres of excellence need to be promoted and encouraged.
Speaking at the session, Janardhanan Ramanujalu, Vice President & Regional Head- South Asia & Australia, SABIC, said, “All of Industrial Revolution 4.0 ingredients like precision manufacturing, digital capability, talent availability and supportive policies makes India best suited to be the global manufacturing hub”.
Adnan Ahmad, Region Head – India, Clariant Chemicals (India) Limited, said, “India’s position as a global manufacturing hub contender was always a given. The only question was when we would take across the tipping point. Now we are seeing opportunities for the Specialty Chemicals Industry like never before, with the local demand expected to grow exponentially and global industries looking to de-risk their Supply Chain dependency on China. It is now time for us to act and move into a role that was destined to be ours, as a Global Manufacturing Hub for chemicals.”