Chemicals

Summary
  • The Chemical industry in India provides several building blocks and raw materials for many industries, including textiles, paper, paints, soap and detergents, pharmaceuticals and agrochemicals.*
  • India is the 6th Largest producer of Chemicals in the world and 3rd in Asia. India ranks 14th position in the export of chemicals.*
  • India is 4th largest producer of agrochemicals in the world and manufactures more than 50% technical grade pesticides.*
  • Indian chemical sector continues to grow at a rate of 1.2-1.5 times the GDP.*
  • India is the largest producer and exporter of castor oil in the world and is responsible for almost 85-90 % of total global exports in this segment.*
  • Market size of Chemicals & Petrochemicals sector in India is worth ~$178 bn.*
  • Indian chemicals and petrochemicals industry is growing to new heights, looking forward to an investment of INR 8 lakh cr by 2025.*
  • India exports Chemicals to more than 175 countries. It accounts for 13% of India’s total exports. *
  • India is the second highest producer and consumer of chemical fertilisers in the world. Per hectare fertiliser consumption in the country has increased by 75% during the last two decades. *
Reasons to Invest
  • Chemicals & Petrochemicals demand in India expected to nearly triple and reach USD 1 Tn by 2040.*
  • The value additions in the petrochemicals chain offer immense possibilities and cater to the needs of textiles and clothing, agriculture, packaging, infrastructure, healthcare, furniture, automobiles, information technology, power, electronics and telecommunication, irrigation, drinking water, construction and a variety of other articles of daily and specialized usage amidst other emerging areas.*

  • India leads in Dyes production and contributes to 16%-18% to world’s dyestuff exports. Indian Dye is exported to over 90+ countries.* 

  • India also offers the availability of a large pool of skilled science professionals.*

  • India has several world-class engineering facilities and strong R&D capabilities.*

  • The per capita consumption of chemicals is lower in India, compared to western countries, therefore presenting immense scope for setting up export-oriented manufacturing units through new investments.*
  • The government has been promoting the use of ethanol as a blendstock with main automotive fuel like petrol in line, envisages an indicative target of blending 20% ethanol in petrol by 2030.*

Explore more about infrastructure availability in the Chemicals sector >

Key Achievements
  • Cabinet has approved Subsidy amounting to INR 38,000 cr for NBS – Kharif season 2023.*
  • A new type of chemical bonding in solids, the Metavalent bonding, can be used to tailor the thermoelectric performance in quantum materials and efficiently convert waste heat to electricity.*
  • India ranks 11th in the World Exports of Chemicals (excluding pharmaceutical products) and ranks 6th in the World Imports of Chemicals (excluding pharmaceutical products).
  • Indian chemical industry employs more than 2 Mn people.
Recent Announcements

27th Jul 2023: Union Minister of Finance and Corporate Affairs Smt.  Nirmala Sitharaman inaugurates ‘3Rd Summit on Global Chemicals & Petrochemicals Manufacturing hubs in India’.

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24th May 2023: International conference on ‘Chemicals and Petrochemicals: Sustainable transitions through Green Technologies and digitalization’ held at New Delhi today.

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19th May 2023: Chemicals & Petrochemicals demand in India expected to nearly triple and reach USD 1 trillion by 2040: Hardeep Singh Puri.

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04th May 2023: Union Minister for Chemicals & Fertilizers and Health and Family Welfare Dr. Mansukh Mandaviya Launches PLASTINDIA 2023.

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Statistics
  • Overall growth in production of Alkali Chemicals in 2022-23 (up to March 2023) over 2021-22 (up to March 2022) has been 5%.*
  • The combined exports of Major Chemicals and Major Petrochemicals in the year in 2022-23 (April 2022- March 2023) is INR.128.34/- thousand crores.
  • The quantum of production of Major Chemicals increased to 130.22 lakh tonnes during 2022-23 as compared to 127.43 lakh tonnes during the corresponding period of the previous year, recording an increase of 2.19%.*
Growth Drivers
  • Indian Potash limited (IPL) signs MoU with Israel Chemicals Limited (ICL) for the supply of Muriate of Potash (MOP) for the period 2022 to 2027 with the aim to propel agriculture production and improve lives of farming community.*
  • GOI aims to make Atmanirbhar Bharat in Urea and DAP Production by using 'Green Hydogen'.*
  • India’s refining capacity has been increased from 215 MMTPA to 251.2 MMTPA and is now the fourth largest in the world.*
  • Department of Chemicals & Fertilizers sets up a Joint Task Force to explore possibilities of utilize by-products of Petroleum and Petrochemical Industries for Producing Crucial Intermediates for Pharmaceutical and Agrochemical Industries.*
  • PM inaugurates 600 PM Kisan Samruddhi Kendras (PM-KSK) of Ministry of Chemicals & Fertilizers. The fertilizer retail shops will be converted into one stop shop in phased manner tol cater to the needs of the farmers in the country and provide agri-inputs (fertilizers, seeds, implements); testing facilities for soil, seeds, fertilizers; awareness among farmers ; provide information regarding various Government schemes and ensure regular capacity building of retailers at block/ district level outlets.*
FDI Policy
  • 100% FDI is allowed under the automatic route in the Chemical industry, except in the case of hazardous chemicals. *
  • The cumulative FDI equality inflow in the Chemicals industry (excluding fertilizers) is USD 21,302 mn during the period April 2000 to March 2023. This constitutes 3% of the total FDI inflow received across sectors.*
  • The cumulative FDI equality inflow in the Fermentation industry is USD 4251 mn during the period April 2000 to March 2023.*
  • The cumulative FDI equality inflow in the Fertilizers Industry is USD  721.5 mn during the period April 2000 to March 2023. *
  • The cumulative FDI equality inflow in the Dye Stuff is USD 103.6 mn during the period April 2000 to March 2023. *
  • The cumulative FDI equality inflow in the Glue & Gelatin is USD 163 mn during the period April 2000 to March 2023. *

 

Read more about Foreign Direct Investment Policy in India >

Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in Advance Chemistry Cell Battery for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.

Financial Outlay- INR 18,100 cr

For more details on PLI Schemes, Click Here

Sector Policy

Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs)*

  • The Government of India has conceptualized PCPIRs as clusters that provide investors with a transparent and investment-friendly policy and facility regime. PCPIRs have a high-class infrastructure and provide a competitive environment conducive to setting up businesses. 
  • Each PCPIR is a specifically delineated region spread over an area of about 250 sq. km. These areas will have manufacturing facilities, along with associated logistics and other services. The required infrastructure along with a non-processing area will be developed, to include residential, commercial and other social and institutional infrastructure. 
  • The minimum processing area for the PCPIR will be about 40% of the total designated area, i.e., around 100 sq. km.
  • The Ministry of Chemicals & Petrochemicals has set up four PCPIRs in Dahej (Gujarat), Vishakhapatnam-Kakinada (Andhra Pradesh), Paradeep (Odisha), and Cuddalore and Nagapattinam (Tamil Nadu). 
  • The projected investment on the full realisation of PCPIRs is INR 7.63 lakh cr. 

PCPIR projects for National Infrastructure Pipeline (NIP): 

  • 14 projects worth INR 18,843 cr by Odisha PCPIR
  • 5 projects worth INR 3,758 cr by Gujarat PCPIR

For more details on the PCPIRs, refer to PCPIR Policy.

 

Plastic Parks*

  • The Department of Chemicals and Petrochemicals has formulated the scheme for setting up Plastic Parks with the objective of synergizing and consolidating the various units of the Indian Plastics Industry. The larger objective of the scheme is to contribute to the economy by increasing investment, production, export in the sector and also the generation of employment.
  • The units will be consolidated through the cluster development approach. The Government of India will provide grant funding of up to 50% of the project cost subject to a ceiling of INR 40 cr. The remaining project cost is to be funded by the State Government or State Industrial Development Corporation.
  • Plastic Parks in the States of Madhya Pradesh, Odisha, Jharkhand, Assam and Tamil Nadu are being set up under the scheme of Plastic Parks.

For more details, refer to Scheme for Setting Up Plastic Parks.

 

National Policy on Petrochemicals*

  • The National Policy on Petrochemicals aims to achieve sustainable development for the petrochemical industry by promoting research and development and human resource planning and development to cater to the needs of the industry by adopting a mission mode approach.
  • A programme on Petrochemical Development is required to improve existing petrochemical technology and research in the country and to promote the development of new applications of polymers and plastics. Centre(s) of Excellence (COE) are being set up for this reason and will be one of the components of the programme.
  • COEs will be set up in existing educational and research institutions working in the field of polymers, and include the following:
    • Updating and modifying products for new uses
    • Innovative product technology and product designs
    • Improving production processes to make them more efficient
    • Development of biopolymers and biodegradable polymers
  • The COEs are expected to emerge as internationally recognised centres for the analysis and dissemination of existing global knowledge, provide authoritative, strategic and timely information to organizations and companies to use in the development and implementation of their projects/programmes, which engaging in path-break R&D efforts.
  • 8 COEs have been set up in Pune, Chennai, Delhi, Bhubaneshwar, Roorkee and Guwahati.

For more details, refer to National Policy on Petrochemicals.

 

Chemicals Promotion Development Scheme*

The aim of the Chemicals Promotion Development Scheme (CPDS) is promotion and development of chemical and petro-chemical industry by extending financial support to conduct of seminars, conferences, exhibitions, conducting studies/consultancies, for facilitating growth as well as analysing critical issues affecting the chemical and petrochemical industry.

For more details, refer to Chemical Promotion Development Scheme.

 

Central Institute of Plastic Engineering and Technology*

The Central Institute of Plastic Engineering and Technology (CIPET) has been set up to develop manpower in different disciplines of Plastics Engineering and Technology. The CIPET has a variety of activities and programs focusing on skill training, technology support, academics and research.

For more details, refer to the Central Institute of Plastic Engineering and Technology.

 

Explore Government policies/schemes in the Chemicals sector >

Financial Support

UNION BUDGET 2023-24

  • The total budgetary allocation for FY 2023-24 towards the Department of Chemicals and Petrochemicals is INR 173.45 cr.*

  • The total budgetary allocation for FY 2023-24 towards the  Department of Fertilisers is INR 1,75,148.48 cr.*

R&D INCENTIVES FOR INDUSTRY AND PRIVATE SPONSORED RESEARCH

  • A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act.
  • Weighted deduction of 200% is granted to assess for any sums paid to a national laboratory, university or institute of technology, or specified people with a specific direction and that the said sum is used for scientific research within a program approved by the prescribed authority.

MANUFACTURERS WITH AN IN-HOUSE R&D CENTRE

  • Section 35 (2AB) of the Income Tax Act, 1961 provides a weighted tax deduction of 150% of the expenditure incurred by a specified company, on scientific research in the in-house R&D centres as approved by the prescribed authority. This does not include expenditure on the cost of any land or building.
  • The weighted tax deductions of 150% are effective till 31st March 2020. Consequent to that, the weighted tax deductions will be 100%.

STATE INCENTIVES

  • Apart from the above, each state in India offers additional incentives for industrial projects.
  • Incentives are in areas like subsidized land cost and relaxation in stamp duty exemption on sale/ lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects.

EXPORT INCENTIVES 

  • Export promotion capital goods scheme
  • Duty drawback scheme
  • Merchandise Export from India Scheme

AREA-BASED INCENTIVES

  • Incentives for units in Special Economic Zones (SEZ)/ National Investment and Manufacturing Zones (NIMZ) as specified in respective Acts or setting up projects in special areas like the North-east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.
Investment Opportunities

Dyestuff Industry* 

The Indian Dyestuff Industry is an important sub-sector of the Chemicals industry and it ranks second in Asia. It also accounts for 16% of the world market. It has forward and backward linkages with various sectors such as paper, textiles, plastics, printing inks, leather and foodstuffs. The sub-sector has immense potential and serves as a profitable opportunity for investors.

Pesticides Industry* 

India is the 4th largest producer of agrochemicals in the world. With more than 45 technical grade pesticides being manufactured in the homeland, the country qualifies as one of the most dynamic generic pesticide manufacturers in the world. Being a net export earning industry, it has a significant contribution to the foreign exchange basket of the country.

Fine & Specialty Chemicals*

India produces many fine and speciality chemicals, which are essential for increasing industrial production. These special chemicals find wide usage as polymer additives, food additives and pigments and anti-oxidants in the rubber industry.

 

Explore projects to invest in Chemicals sector >

Sector Reports
  1. Year End Review 2022: Department of Fertilizers
Agencies
Sources
  1. Department of Chemicals, Government of India https://chemicals.nic.in/
  2. Press Information Bureau https://pib.gov.in/PressReleseDetail.aspx?PRID=1886054
  3. India Budget 2023-24 https://www.indiabudget.gov.in/doc/eb/sbe5.pdf
  4. Press Information Bureau https://pib.gov.in/PressReleasePage.aspx?PRID=1925546
  5. Press Information Bureau https://www.pib.gov.in/PressReleasePage.aspx?PRID=1820478
  6. Press Information Bureau https://www.pib.gov.in/PressReleasePage.aspx?PRID=1705524
  7. Monthly Summary Report, https://chemicals.gov.in/sites/default/files/Reports/MONTHLY_SUMMARY_ENG_May_2023.pdf 

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