India's chemical industry expected to grow by 9 pct: Report

The country's chemical industry is expected to grow at around 9 per cent per annum to reach USD 304 billion by FY25, from USD 163 billion in FY18, a report said.

The growth is likely to be driven by rising demand in end-use segments for speciality chemicals and petrochemicals intermediates said the India Chem Strategy report by Tata Strategic group, brought in association with leading industry body Ficci.

The country's chemical industry is one of the fastest growing in the world, currently ranked the third largest in Asia and sixth globally with respect to output after the US, China, Germany, Japan and Korea.

The study said the domestic chemical sector (other than fertiliser) attracted FDI investment of USD 1.3 billion in FY18, which is about 3 per cent of the total FDI inflow.

Noting that the domestic chemical industry's growth is largely driven by country's consumption growth story, the report said the per capita consumption of chemicals in the country is 1/10th of world average with India a low consumption country even among developing nations.

"Indian consumption is low. This makes India a very attractive destination to invest and grow," the report said. The study also noted that Indian chemical companies have started focusing on global markets for investments.

Recently, India's largest agrochemical company, UnitedPhosphorous, announced the acquisition of Arysta Lifescience for about USD 4.2 billion. Among the other mega projects, Saudi Aramco showed interest in investing USD 44,000 million in the mega petrochemical project, ONGC plans investment of USD 11,000 million in greenfield oil and gas project and Sabic is investing USD 4,300 million in brownfield petrochemical complex.

Deepak C Mehta, chairman-FICCI national chemical committee and chairman and managing director, Deepak Nitrite, feels the significantly growing domestic market and the upheaval in international markets, particularly with respect to China, augur well with opportunities for the Indian chemical industry to rapidly grow in size and capability.

"As India gains increased traction from major countries, looking at investment in the Indian chemical sector, both driven entrepreneurs and a positive government need to put their combined vigour to grow the chemical industry multi-fold in the coming decade," Mehta said.

The country must target to become the third largest player in the next few years, he added. According to BASF India chairman and managing director Raman Ramachandran, the chemical industry will be a key enabler and catalyst in achieving the target of USD 1 trillion manufacturing economy by 2028, from the current USD380 billion.

"The projected high local demand will provide us with a strong platform to also establish ourselves as a major supplier of speciality chemicals to the world with right investments. "Thus, the chemical sector is very strategic to achieving our country's vision encompassed in Make in India, SwachhBharat, Housing for All and Power for All," he said. 

(With inputs from agencies.)