Chemicals industry set for growth

The $28 billion chemicals industry is expected to benefit from the government's plan to attract international companies to set up research and development bases in India, said industry sources.

The Central government is giving fast-track support for all infrastructural needs of the industry be encouraging the setting up special economic zones (SEZs) and export oriented units (EOUs).

The chemicals industry accounts for 6.7 per cent of India's GDP, 10 per cent of its total exports, 12.5 per cent of the industrial production and 15 per cent of the manufacturing capacity. The industry employs over 17 per cent of the organised labour force and contributes 20 per cent of the excise and import duty collections.

The per capita consumption of chemicals in India is low as compared to other countries in the world.

S C Mehta, managing director, Deepak Fertilisers and Petrochemicals Corporation, said in a recent presentation to the Union fertilisers and chemical ministry: "In spite of having the second largest population in the world, the creation of demand lags far behind China. To create a larger marketplace, India needs to follow China's model, where the chemicals industry is directly associated with the country's exports of toys (plastics), shoes (adhesives) and leather goods (polymers)."

The significant advantages in knowledge manpower costs and the negative attitude in developed countries towards working in the chemicals industry have fuelled the growth of the Indian chemicals industry.

"Exports of chemicals, particularly from the pharma, agrochemicals and dyes sectors have consistently grown by over 10 per cent. India has established a strong base for producing dyes, active pharmaceutical ingredients (APIs) and agrochemicals. India has also the highest number of US FDA approved plants to make APIs outside USA," Chandan Chatterjee, general manager, technology and projects, Industrial Extention Bureau (Indextb), a Gujarat government enterprise, said.

According to the presentation to the ministry, opportunities for domestic growth in demand for chemicals could be made available by the introduction of VAT, creation of downstream markets through joint ministerial efforts and encouragement of application development centres.

Units in the chemicals industry should also enter into joint ventures companies in the Middle-East to source cheap raw materials, the presentation noted.