Apart from being one of the oldest industries in India, Indian chemical industry is indeed an integral part of the country’s economy. The industry is fundamental to modern world economy where raw materials such as natural gas, minerals, air, water, oil, metals, etc. are being converted into 70,000 different products. A rise in disposable income of Indians has potentially driven the growth of chemical consumption by them. This has led to the growth in India’s GDP from 9% to 13%. To make the industry more flourished and wide, there have been a set of policies and special economic zones planned to promote petrochemical sector. Also, several manufacturing companies in India have unveiled their plans for expansion in the coming few years.
Each aspect of our living is greatly influenced by chemicals and chemical products. We have inextricable linkages to it whether it is about wearing synthetic clothes, or consuming drugs, or using thermoplastic furniture at our home and offices. Apart from this, the industry also plays vital role in agricultural and development sectors as well and has key connection to other sectors like engineering, consumer durables, automotive, food processing etc.
According to a recent report, the size of this fast growing chemical industry is of USD 28 billion and through a sequence of concerted efforts, the industry is expected to grow at USD 100 billion in coming time. Its total contribution in the Indian manufacturing sector is about 17.6 per cent. India continues to be a net trader of chemicals from ages with imports of USD 7.92 billion and exports of USD 5.95 billion. In this era of brand building and post worldwide trade organization (WTO) where there is an extensive global reach, the Indian chemical industry is experiencing a new massive expansion. It constitutes a wide spectrum of products including inorganic and organic (commodity) chemicals, fine and specialty chemicals, drugs and pharmaceuticals, dyes and pigments, pesticides, agrochemicals and fertilizers, and plastics and petrochemicals to name a few.
However, Indian chemical industry is still a marginal player of the international market that only accounts for 1.9 percent share of USD 1.3 trillion (as per 2002 data) global chemical industry. Indian chemical industry is characterized by;
o Small scale operations in highly fragmented scenario
o Developing Indian market and increasing per capita consumption level
o Limited emphasis on export due to increased demand at domestic level
o Low competitiveness due to higher cost of capital, import duties and power
o Low focus on Resource & Development despite initiatives to enhance lucrative synthesis of products
Indian chemical industry has been throughout a better performer in the manufacturing sector with the constant effort of Indian manufacturers and exporters but in international markets, it has not acquired a significant position. However, factors like Asian Crisis and political uncertainty in Middle East have left an adverse impact on overall manufacturing and exporting sector of this industry.