The Chemical industry is among one of the most significant manufacturing sub-sectors in India. The industry has its history traced back to pre-independence days, when only few goods were manufactured indigenously. The sector has significant contribution towards the economy, and accounted for over 6.5% of GDP in 2009. The sector also has significant presence in terms of exports and imports.
The sector is highly diversified and is classified in three different categories namely Basic Chemicals, Specialty Chemicals and Knowledge Chemicals.
i) The Basic chemicals are high volume, low value added products with limited product differentiation across manufacturers. Stringent regulations exist in the said category and include Petrochemicals, Fertilizers, and Inorganic chemicals industry.
ii) The Specialty segment consists of products with high value addition having great product differentiation. Low capital investment is required in the segment and includes Adhesive sealants, Catalysts, Industrial gases, Paints, dye stuffs and varnishes to name a few.
iii) The Knowledge segment includes differentiated Chemical and biological substances with high cost of R&D and Marketing. This includes Plastic additives, Agrochemicals, Pharmaceuticals, Biotechnology.
Some of the characteristics of the Indian Chemical industry in India are elucidated as under:
India enjoys the position of being ranked 12th in the production of chemicals worldwide by volume. Also the country is the 3rd largest in Asia. Since 1991 when the trip principle of LPG was implemented and soon after TRIPS was mandated by WTO in 1995, the sector saw significant transition from producer of low value basic chemicals to higher value knowledge chemicals. Knowledge chemicals involve considerable investment pertaining to intellectual property and patents.
Some of the lucrative sub-sectors of the chemical industry are:
1) Basic Chemicals – The basic chemical sub-sector has reached a mature stage. It is expected to grow at the pace of GDP. One of the biggest challenges of the sub-sector is the existence of old plants whose history can be traced back to pre-liberalization era, as a result of which they have constrained capacity to compete in the global market. Also the cost of raw materials is high which experience fluctuations. Some of the well performing segments of the basic industry are:
Read about Oil & Gas Companies in India.
2) Specialty Chemicals – The sector is highly fragmented and majority of the industries capture the domestic demand. The sector accounts for about 5% of the universe of chemicals. Some of the leading companies operating in the sector are Akzo Nobel, Dow, Du Pont, and Mitsubishi.
It is expected that the chemical industry as a whole will grow subsequently as the demand is rising and the per capita consumption is rising too. Thanks to the industrial development and improving living standard of the people.