1. An industry analysis of
Indian Chemical Industry
• Submitted by:- Veeraj Vashishtha
(NU-MBA)
2. Facts.
• Size is estimated at around US$ 35 billion approx., which is
equivalent to about 3% of India's GDP
SIZE
• The total investment in Indian Chemical Sector is approx.
INVESTME
US$ 60 billion and total employment generated is about 1
NT million.
• The Indian Chemical sector accounts for 13-14% of total
Global
exports and 8-9% of total imports of the country. In terms of
Position volume, it is 12th largest in the world and 3rd largest inAsia.
3. Facts continued..
• Per capita consumption of products of chemical industry in
India is about 1/10th of the world average.
Consumption
• Over the last decade, the Indian Chemical industry has
evolved from being a basic chemical producer to becoming an
Growth innovative industry and grows at a rate of 10% per annum.
• Fine and speciality chemicals, drugs and pharmaceuticals, dyes and
pigments, agrochemicals and fertilizers, pesticides, plastics and
petrochemicals etc.
What it
Manufactures
5. Major Segments
• Petrochemicals
* Inorganic Chemicals
* Organic Chemicals
* Fine and specialties
* Bulk Drugs
* Agrochemicals
* Paints and Dyes
6. Chlor-Alkali & Inorganic Chemicals Sector
• At present it is worth US$ 2.5 Billion industry. The segment
concentrates on the production of caustic, chlorine, sulphuric
Acid etc. The inorganic chemicals are commonly used in
detergents, glass, soap, fertiliser, alkalies etc. However, the
industry is encountering stiff competition from international
players, when it comes to catering to the requirements of the
local markets.
7. Petrochemicals
• Petrochemicals
Petrochemicals form the biggest category in the chemicals, and
it is also one of the fastest growing sectors. The segment is
into producing basic chemicals like Ethylene, Propylene,
Benzene and Xylene etc, intermediates like MEG, PAN and
LAB etc., synthetic fibres like Nylon, PSF and PFY etc,
polymers like LDPE/HDPE, PVC, Polyester and PET etc,
synthetic rubber like SBR, PBR etc. The key players include:
Reliance, IPCL, NOCIL, Haldia and GAIL etc.
8. Other Segments
• . It is one of the fastest growing sectors with market around US$80 million
p.a. And many big and small Indian companies form part of it.
Fine • The major end user segments include: Textile, Leather, paper, detergent,
Specialties rubber, paints, polyester, oil and gas etc.
• Out of the 475 drugs used, 425 are locally procured.
• Major players in India in bulk drug category include: Ranbaxy, Dr.
Reddy's, Cheminor, Shasun, Cipla, Lupin, IPCA, Sun, Aurobindo,
Bulk Drugs Kopran, Cadilla, Wockhardt.
• The average Indian consumption is reportedly low i.e., 1/20th of world average.
• The segment has been witnessing a growth of 10% pa and has registered revenue
worth US$800 million.
• Cash crops like sugarcane, tobacco etc. consume large amount of pesticides, almost
Agrochemicals over 60%. Major agrochemicals exports include: Insecticides, Fungicides, Herbicides,
Weedicides, Rodenticides, and Fumigants.
9. Paints and dyes
•Indian dyes are in demand world over.
•Dyes are principally used in Paints, Inks, Textiles and Polymers.
•The total market of paint and dyes is almost US$ 1 Billion, and the growth rate
is almost 12%.
•There are about 25 large and medium players, which cover 50% market
share, while 2000 other organized players contribute next fifty percent.
Moreover, the per capita consumption is very low in India(400 gms) as
opposed to the developed countries(15 kgs).
10. GLOBAL SCENARIO
• The global chemical industry, estimated at US$ 2.4 trillion, is
one of the fastest growing sectors of the manufacturing
industry.
• Despite fuel price increase chemical industry managed to grow
at a higher pace.
• According to industry reports the pharmaceutical segment
contributes approximately 26% of the total industry output and
approx. 35-40% is dominated by the petrochemical segment.
• Commodity chemicals is the largest segment in the chemicals
market with an approx. size of $ 750 billion while the specialty
and fine chemicals segment accounts for $ 500 billion.
11. Continued.
• Some of the major markets for chemicals are
North America, Western Europe, Japan and
emerging economies in Asia and Latin
America.
• The US consumes approximately one-fifth of
the global chemical consumption whereas
Europe is the largest consumer with approx.
half the consumption.
• The US is the largest consumer of commodity
chemicals whereas Asia Pacific is the largest
consumer of agrochemicals and fertilizers.
12. Strength
• A diversified manufacturing base having a capacity to
produce quality chemicals from world-class plants.
• Vibrant downstream industries in different segments.
• Competitive core industries, essential for the development
of chemical industries.
• Capability to produce world-class end products.
• Strong presence in the export market in sub-segments
such as Dyes, Pharma and Agrochemicals.
• Large domestic market.
• Major raw material component sources within the country
• Good R&D base and
13. Weaknesses
• -Cost of Power : Very high cost of power, unreliability of
supply and frequent interruption. Transmission and
distribution losses are very high.
• - Cost of Finance : Chemical industry is highly capital-
intensive, cost of finance in India is very high, interest rates
are 14%-15% p.a. as compared to 2% to 6% prevailing in
developed countries.
• Lack of Infrastructure India ranked 55th in the world
14. Weaknesses
• Scale of production :-
(a) plants were build to cater to domestic needs only.
(b)Per capita consumption is low as compared to the world.
• Technology:
(a) In the days of sheltered economy, up-gradation of
technology was not critical.
(b) Process Modification used rather than research.
15. Road Ahead
• Highly developed technology
• In-depth research capabilities.
• Development of domestic capacity to
decrease the dependence on imports.
• Safety, health and environment protection
issues have become the major-talking point
in almost all industries and even in the
Indian chemical industry too.
