CHEMICALS 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. SECTOR HIGHLIGHTS Indian chemical industry is: 3rd largest in Asia with respect to output 6th largest in the world with respect to output Valued at USD 163Bn in 2017. Covers more than 80,000 products. Demand of chemical products is expected to grow at 9% p.a. over the next 5 years During June 2014 to September 2018, 2.40 lakh people have been trained by CIPET under various skill-imparting activities Contributes 3.4% to the global chemical industry Employs more than 2 MN people Ranks 14th in exports and 8th in imports of chemicals (excluding pharmaceutical products) globally The petrochemical market in India is expected to grow at a CAGR of 10 % over the next 5 years to reach USD 100 Bn by 2022 GROWTH DRIVERS 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). GOVERNMENT INITIATIVES 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 India is the 3rd largest producer of Agro-chemicals India exports about 50 % of its current production and these exports are likely to remain a key component of the industry Pesticide consumption in the country is 0.6 kg/hectare, compared with a global average of 3-10 kg/hectare. This low consumption is the result of low purchasing power in agricultural areas, unawareness of the existing products, and difficulty of access. With the increase in awareness and purchasing power capacity, an increase in demand is foreseen. SPECIALITY CHEMICALS India is currently the world’s 3rd largest consumer of polymers and growth in plastic demand is to further drive up consumption. The speciality chemicals market has witnessed a growth of 14% in the last five years; the market size is expected to reachUSD 70 Bn by 2020 Low per capita paper consumption in India, compared to the global average, suggests there is good opportunity for the paper chemicals industry in India. Growth drivers include a growing construction industry and adoption of advanced coating, ceiling and polymer-based reinforcing material in construction as well as in plastics, and paints and coatings for the automotive sect UPCOMINGPROJECTS Sector Investor Company Investment Value (USD Mn) Project Announcement Year Petrochemical Saudi Aramco, Indian PSUs Refinery 44,000 Mega Refinery 2018 Petrochemicals Reliance 9,500 Refinery 2017 Petrochemical HPCL + GAIL 5,700 Petrochemical Complex 2017 Petrochemical Sabic 4,300 Petrochemicals (50% stake in OPAL) 2018 Petrochemicals BPCL 4,000 Refinery 2018 Petrochemicals HMEL 3,000 Petrochemical Complex 2017 Petrochemical IOCL 1,030 Ethylene Glycol & Polypropylene 2018 Specialty Chemicals Sudarshan Chemicals 155 Expansion 2017 Specialty Chemicals Himadri Specialty Chemicals 153 Expansion Carbon Black 2018 Specialty Chemicals Solvay 62 Expansion of Polymer Plant 2018 Petrochemicals Sanmar 61 H2O2, PVC 2017 Source: Invest India Grid
SECTOR HIGHLIGHTS
GROWTH DRIVERS 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).
GOVERNMENT INITIATIVES 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
SPECIALITY CHEMICALS
UPCOMINGPROJECTS
Sector
Investor Company
Investment Value (USD Mn)
Project
Announcement Year
Petrochemical
Saudi Aramco, Indian PSUs Refinery
44,000
Mega Refinery
2018
Petrochemicals
Reliance
9,500
Refinery
2017
HPCL + GAIL
5,700
Petrochemical Complex
Sabic
4,300
Petrochemicals (50% stake in OPAL)
BPCL
4,000
HMEL
3,000
IOCL
1,030
Ethylene Glycol & Polypropylene
Specialty Chemicals
Sudarshan Chemicals
155
Expansion
Himadri Specialty Chemicals
153
Expansion Carbon Black
Solvay
62
Expansion of Polymer Plant
Sanmar
61
H2O2, PVC
Source: Invest India Grid