India is the seventh largest producer of chemicals globally and third largest producer in Asia in terms of output. The country ranks third globally in the production of agro chemicals and contributes around 16 per cent to the global dyestuff and dye intermediates production. Among the most diversified industrial sectors, chemicals cover an array of more than 70,000 commercial products. The chemical sector is expected to double to US$ 300 billion by 2025, clocking an annual growth rate of 15-20 per cent. To achieve this, the government of India is working on a draft chemical policy that will focus on meeting the rising demand for chemicals and reduce imports. There is a global shift towards Asia as the world’s chemicals manufacturing hub- making this sector a unique investment opportunity.
Consumption driven demand: Per capita consumption of chemicals in India is 1/10th of the world's average. This makes India an attractive destination for investment and growth.
Rising middle class population: By 2030, 23% of the global middle class will most likely be Indian, supporting strong demand for specialty chemicals in the automotive, personal products, water treatment, and constructions segments.
Improving Infrastructure: One of the key economic growth drivers is the government’s investment boost in infrastructure sector (government provision of USD 92 Bn in FY 2018 Budget as compared to USD 61 Bn in FY 2017).
1. 100% FDI allowed under the automatic route in chemicals sector except a few hazardous chemicals
2. Petroleum, Chemical and Petrochemical Investment Regions (PCPIRs): PCPIRs are specifically delineated investment regions with an area for the establishment of manufacturing facilities for domestic and export-led production in petroleum, chemicals & petrochemicals, along with the associated services and infrastructure. Government has approved 4 PCPIRs in the States of Andhra Pradesh (Vishakhapatnam), Gujarat (Dahej), Odisha (Paradeep), and Tamil Nadu (Cuddalore and Naghapattinam). Once fully established, PCPIRs are expected to attract investments worth INR 7.63 lakh Cr (USD 107 BN) and employment generation (direct and indirect) is expected to be around 33.96 lakh persons (3 Mn).
3. Setting up of Plastic Parks
State-of-the-art infrastructure and enabling common facilities are to assist the sector in moving up the value chain and contributing to the economy more effectively. Four plastic parks have been approved in Madhya Pradesh, Odisha, Assam, and Tamil Nadu.
4. Skill Development
Central Institute of Plastics Engineering and Technology (CIPET): 29 CIPETs have been set up across India under the Department of Chemicals. The main objective of setting up the institute is to develop manpower in different disciplines of Plastics Engineering & Technology as no similar institute has been priorly existent in the country.
Chemicals Promotion and Development Scheme (CPDS): Under the CPDS, the Government provides Grant-in-aid for the creation of knowledge products through studies, survey, databank, promotion materials, etc. to facilitate development of the sector.
CoE (Centres of Excellence) in the field of Petrochemicals: Provision of Grant-in-aid to educational/research institutes for setting up CoEs with a view to improve existing petrochemicals technology and to promote development of new applications of polymers and plastics.
KEY SUB SECTORS AGRO CHEMICALS
Investment Value (USD Mn)
Saudi Aramco, Indian PSUs Refinery
HPCL + GAIL
Petrochemicals (50% stake in OPAL)
Ethylene Glycol & Polypropylene
Himadri Specialty Chemicals
Expansion Carbon Black
Expansion of Polymer Plant
Source: Invest India Grid