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Importance of Chemical Industry in India and its Global Potential

Chemical Industry is a diversified sector, which covers around 80,000 commercial products.  The industry is classified into three segments such as basic chemicals, specialty chemicals, and Agrochemicals.  The chemical industry in India projected to reach $304 billion in 2025.  Total production of chemicals and petrochemicals was at 47,882,000 MT in 2017-18, 2.62% increase over 2016-17.  This industry employs more than 2million people.  The chemical industry in India is the largest consumer of its own product, consuming around 33% of its output.  The chemical industry in India ranks third largest industry in India and Sixth largest in the world.

 

 

According to Market research firm chemical industry constitutes around 5.4% of total India’s total export.  India already has a strong presence in the export market in the sub-segments of dyes, pharmaceuticals, and agrochemicals.  India exports dyes to US, Switzerland, Spain, Germany, UK, Turkey, Singapore and Japan.  100% FDI is permissible in the chemical industry.  This industry also provides valuable inputs to other industry like paper, paints, textile varnishes, etc.  The domestic chemical sector attracts an FDI of $1.3 billion in the year 2018 which is around 3% of the total FDI flow in the country.  The per capita consumption of chemical is 1/10th of the world average with India is a low consumption country even among developing nations, due to this India is a very attractive destination to invest and grow.

The global specialty chemical market is expected to increase $226 billion by 2022, whereas the global agrochemical market will reach $226 billion in the year 2021.  North America was having a 16.1% market share in 2015 whereas Europe contributes to 17.4% of the total global chemical sales.  Asia is having the largest market share of 61% and will acquire a 64.6% market share by the end of 2023 according to market assessments.  The capacity expansion coupled with rising consumer purchasing power will drive the demand for chemicals in the coming years.

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