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Impact of FDI Investments on the Chemical Sector of India

Impact of FDI Investments on the Chemical Sector of India

The chemical industry in India offers a lot of building blocks and raw materials for several industries. It includes textiles, paper, paints, soap and detergents, pharmaceuticals, and agrochemicals. FDI in Chemical Sector of India is permitted 100% under the automatic route except in the case of hazardous chemicals.

India is the 6th largest producer of chemicals globally. It stands 3rd in Asia. In the export of chemicals, it ranks 14th. The country is ranked 4th as the largest producer of agrochemicals globally. The manufacturing of more than 50% of technical-grade pesticides is done by the nation.

Enlisting the Reasons to Invest

  • The value additions in the petrochemicals chain provide a lot of possibilities and cater to the needs of textiles and clothing, agriculture, packaging, infrastructure, healthcare, furniture, automobiles, etc. 
  • In recent times, there has been a worldwide shift towards Asia as the global chemical manufacturing hub. 
  • The availability of a huge pool of skilled science professionals is also provided by India. 
  • The country has numerous world-class facilities regarding engineering and strong capabilities related to R&D. 
  • The per capita consumption of chemicals is lower in India as compared to the countries of the west, thus presenting a huge scope to set up export-oriented units of manufacturing via new investments. 
  • In order to promote investments in the sector, the government is going to implement four Investment Regions regarding petroleum, chemical, and petrochemical in the nation. They will be clustered, offering investors a transparent and investment-friendly policy along with a facility regime. 
  • The use of ethanol as a blendstock with major automotive fuels like petrol in line is being promoted by the government, which predicts an indicative target of blending 20% of ethanol in petrol by 2030. 
  • The government has signed MoU with ILO to build a cadre of trainers to ensure further safety measures within the industry. 

Major Achievements

  • The production of pesticides and insecticides has risen by 23.5%. 
  • A new non-toxic organic photocatalyst has been designed by scientists that can capture CO2 efficiently and transform it into methane. It is because FDI in Chemical Sector is not allowed for hazardous chemicals. 

Growth Drivers of the Chemical Sector

  • “In principle” approval by the center had been granted regarding the three bulk drug parks to Himachal Pradesh, Gujarat, and Andhra Pradesh.
  • IFFCO has begun production of Nano Urea and the work on nano DAP due to the lower amount of nano Urea being used contrary to the quantity used for fertilizers in today’s world and contributes to the higher efficiency of nutrient usage. 
  • The aim of the government of India is to create Atmanirbhar Bharat in Urea and DAP production by utilizing “Green Hydrogen.” 

Investment Opportunities

There are investment opportunities in a variety of industries, such as the dyestuff industry, the pesticides industry, along with the industry of fine and specialty chemicals. 

The dyestuff industry is a crucial sub-sector of the chemicals industry and accounts for 16% of the global market. It consists of forward and backward linkages with multiple sectors like paper, textiles, plastics, printing inks, leather, and foodstuffs. The potential in this sub-sector is huge, and it serves as a beneficial opportunity for investors. 

FDI in Chemical Sector is 100% permissible for the further progression of the industry.

Consult with FDI

At FDI India, our aim is to simplify the complex structure regarding foreign investments and transactions done under FDI through years of experience.

Our objective is to transform the face of the facilitation services of FDI in India by keeping our focus on sustainable investments or loans to help the businesses of India.

FDI India is transforming the investment climate of the country by keeping the environment of business for investors. Its experts specialize across different states and sectors of India, handholding investors through their investment lifecycle ranging from pre-investment to aftercare.

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