Published on July 29, 2014
Chemical industry of India is expected to achieve the ambitious target of being one of the top five chemical producers in the world within the next five years. Currently, the Indian industry is at the 12th position and accounts for about 3 per cent of the global industry, far behind China, US, Germany and Japan.
Chemical demand in the country may increase but this will not help boost the growth of this industry. A large share of the demand is met via imports, the low tariffs as well as the numerous free trade agreements have had an adverse impact on the industry.
The Indian industry needs to come up with new strategies, reinvent itself and stop taking its growth for granted. The Chinese chemical industry may not grow at a rate it’s used to but it will remain a formidable force. In the petrochemicals sector, China is making use of locally available coal through indigenous technologies. While, in India, technologies for sectors like oil refining and fertilisers continue to be imported.
In the US, the shale gas revolution has revitalised the petrochemical industry. Over $100 billion will be invested in setting up cracker projects and for expansions, the output of which will be exported.
European chemical industry is facing a tough time, growth is slow and the only way out is innovation. While, the Middle East continues its forward stride despite reduced investments.
The government and the industry must take steps to revitalise the chemical industry. The PCPIR policy must be brought to the forefront. Delaying this project will deliver a huge blow to the industry as the need of the hour is to setup projects for integrated manufacture of chemicals.
The government must help boost the downstream specialty chemicals industry and each PCPIR should reserve a portion of its area for these units. Specialty chemicals are not capital intensive and are not heavily dependent on the availability of cheap hydrocarbons.
India must have an investor-friendly environment and the new government is trying to make our country an easier place for business. The government plans to extend the time validity of industrial licenses, to simplify rules and the make them more transparent, lessen visits by regulators etc. Quick implementation of GST will bolster demand and benefit majority of the industries.
Instead of trying to make it to the fifth position in global rankings, Indian chemical industry should focus on achieving 20 per cent annual growth over the next five years, which will help the industry reach $300 billion by 2020.
