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CHEMICALS

FDI in Chemical Industry in India

The chemical industry in India is an indispensable part of the country's economy, for it constitutes around 6% of the country's GDP. The chemicals industry in India is highly diversified, covering more than 80,000 commercial products. It is broadly classified into Basic chemicals, Specialty chemicals, and Agrochemicals.

The Indian chemicals industry, which employs more than 2 million people, is projected to reach $300 bn by 2025. India is a robust global dye supplier, accounting for approximately 16% of the world's dyestuff and dye intermediates. The chemicals industry in India has been de-licensed except for few hazardous chemicals. Upcoming Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) and Plastic parks will provide state-of-the-art infrastructure for the Chemicals and Petrochemicals sector.

During the period 2020-25, demand for chemical goods is predicted to expand at a rate of about 9% per year.

100% FDI Chemical Industry in India is allowed under the automatic route (except in certain hazardous chemicals).

1.4 %

Nation's Gross Value Added
11.3 %

Chemical products exports share
2.5 %

Contribution to global chemical sales
9 % P.A.

Demand of chemical product to grow

1

3rd largest consumers of polymers in the world
2

4th largest producer of agrochemicals in the world
3

6th largest producer of chemicals in the world

India is a global solid dye supplier, accounting for approximately 16% of the world's dyestuff and dye intermediates.
Demand for organic chemicals is expected to grow at 9% CAGR from FY19-23, with phenol demand growing at 11%.
The market size of the Chemicals & Petrochemicals sector in India is around $178 bn; expected to grow to $300 bn by 2025.
Alkali chemicals had the largest share in the Chemical industry in India, with approximately 69% share in the total production. Production of polymers accounts for around 59% of the total production of basic primary petrochemicals.
The petrochemical demand is expected to grow at 7.5% CAGR from FY 2019-23, with polymer demand growing at 8%.
The Indian colorant industry, valued at USD 6.8 bn, exports nearly 75% of its production.
In India, specialized chemicals account for 18% of the total chemicals and petrochemicals market. The whole market size is estimated to be around $32 billion in FY19. From FY19 to FY22, demand for specialty chemicals is predicted to expand at a CAGR of 12%.

Robust demand
Large population base coupled with strong export demand
Policy support
Setting up PCPIRs, plastic parks and CIPETs
Chemicals manufacturing hub
The global shift towards Asia as the world’s chemicals manufacturing hub
New focus segments
Specialty and Knowledge chemicals
Cost competitive manufacturing
Boost air connectivity to smaller cities & northeastern statesSkilled manpower, world-class engineering, and strong R&D

May 2021-The Union Cabinet has approved the PLI scheme National Program on Advanced Chemistry Cell Battery Storage which aims to produce 50 GWh of ACC and 5 GWh of Niche ACC battery storage.
April 2021- Amid COVID-19's second wave, the Odisha government-approved investment proposals worth over INR 2,570 crore in the metal, cement, chemical, plastic, food processing, and manufacturing sectors, creating 2,755 jobs.
April 2021- The government has approved 422 ethanol projects expected to attract INR 41,000 crore in investment.
March 2021- Dhunseri Ventures, located in Kolkata, would spend around INR 400 crore on a polyester packaging plant in West Bengal.

$18.48 bn FDI inflow in chemicals other than fertilizers during April 2000- March 2021.
As per FDI policy for the chemical sector, 100% FDI is allowed under the automatic route in the chemicals sector.