Indian Chemical Industry is one of the oldest industry in India. It plays crucial role & contributes significantly towards industrial and economical growth of the nation.
- Petrochemicals :- The biggest and fastest growing sector
- Inorganic Chemicals :- Has a stiff competition with international market
- Organic Chemicals :- Mostly located in western part of India
- Fine and specialties :- Highly fragmented, operate on low volume high margin basis
- Bulk Drugs :- Mainly Indian companies, Formulations are primarily MNC’s
- Agrochemicals :- Growth rate is 10% per annum
- Paints and Dyes :- Growth rate 12% and market is highly fragmented
Until 1991, India had a closed economy and chemical manufacturing was largely controlled by licensing regulations. Indian chemical industry has evolved over the years into producing high quality and reasonably priced products. Indian chemicals and chemical-based products are exported all over the world. Intensive efforts in the areas of research and development have resulted in development of technologically sound, environmentally confirming and economically viable products by the chemical industry in India.
Across the world, the chemicals industry is undergoing the process of globalization, consolidation, product innovation and cost rationalization. This has resulted in a steady shift of manufacturing from western countries to Asia-mainly India, China and West Asia. Due to this there is an increase in the domestic chemical production and exports, with increasing foreign investment.
Indian chemical industry possesses a well-built and diversified base with its operations in many areas such as pharmaceuticals, insecticides and pesticides, and paints. The growth rate of this industry is comparatively higher than all other manufacturing sectors in India. This industry is labor-intensive and therefore human resource is a vital aspect of this industry.
GLOBAL SCENARIO
Global chemical market is approximately USD 1700 bn. The area wise breakup is given below. Global chemical industry growth rate is 2-3%
Country - USD Bn (year 2007)
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Western Europe - 731
N. America - 374
S. America - 68
Asia - 442
Rest - 85*************************
Total - 1698
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Western Europe - 731
N. America - 374
S. America - 68
Asia - 442
Rest - 85*************************
Total - 1698
Huge investments are taking place in China and the Middle East. Our major competitors are China, Taiwan, Korea and the Gulf while major export markets are EU and USA.
Year - US BillionINDIAN SCENARIO
Market size of indian chemical industry is given below*************************
2006 - 30
2010 - 70
2015 - 100+ (expected)
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Indian chemical industry has a share of 14% in indian industry and is the largest single industry segment. 80% of India’s chemical industry is located at Gujrat and indian chemical industry is growing at the rate of 12 -13% per annum.
The industry serves the basic need of many different industry verticals like natural gas, water, oil, metals, minerals, air, oil, etc and all these verticals eventually bring into marketplace an array of products, almost 70000. Although domestic performance is well, Indian chemical industry has to face stiff competition in international market
The strengths of Indian Chemical Industry
The industry serves the basic need of many different industry verticals like natural gas, water, oil, metals, minerals, air, oil, etc and all these verticals eventually bring into marketplace an array of products, almost 70000. Although domestic performance is well, Indian chemical industry has to face stiff competition in international market
The strengths of Indian Chemical Industry
- Long private sector history in textile chemicals, colourants, leather chemicals, et
- It is aggressively competitive overseas
- Scope to grow for indian market (per capita consumption is very low)
- Large pool of skilled manpower is available
- English is commonly spoken language
- Intellectual Property Right enhance the confidence of investors
- Aggressive cost management and use of knowledge engineering
- Joint venture possible
- Contract manufacturing / research possible
- Consolidation and integration
- Outsourcing of services possible
- Product and application development possible
- Chemical Science in China and India is strong in Polymer, Organic Chemistry and Process Engineering
The spread of chemical industry is as follows: Private Limited Company 69%, Public Limited Company 12%, Partnership 11%, Propriyory 08%.
Problems faced by Indian Chemicals Industry
- Lack of scale
- Huge investment and long gestation
- Major threats are from Korea, Taiwan, China and Gulf
- Mindset is largely for trading and not partnering
- Absence of Infrastructure
- Fluctuating prices of crude oil
- Scarcity of capital
- Low investment in R&D.(32nd rank )
- High taxation
- High capital , raw materials and utility cost , hence less competitive
- Highly fragmented
- Presence of many MNC
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Guess post by P.J. Lakhapate
P.J. Lakhapate is a Chemical Engineer from UDCT, Mumbai (1975) & has completed a Post Graduation in systems management from J. Bajaj Institute, Mumbai. He is a lead assessor for ISO-9000. He received Quality Award from Chemtex Engg of India Ltd,Powai. He has travelled U.S.A., Brazil, Russia, Kuwait, Saudi Arabia. He has written more than 40 articles & published in national & international magazines. He is distinguished member of expert committee group (for PUMPS & VALVES ) of NATIONAL ADVISORY COUNCIL. He has to his credit a work experience of more than 35 years. He is working as a consultant.
Email : plakhapate@rediffmail.com
Thanks to P.J. Lakhapate.
by JoeWong
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