CHEMICAL INDUSTRY

SUBMITTED BY
ANOOP P. R.
ASWIN BHASKAR
BABURAJ M V
GINTO SAJU
LIYAS A
SACHIN SATHEESH
SAYED AFTAB
SIDHARTH SALIL
VINEETH ASHOK

Introduction

This term refers to the manufacturing of chemical products from raw materials
(oil, wood, minerals, petroleum, metals, water).

These chemicals are primarily used for starting materials for consumer goods
(plastics, pharmaceuticals, synthetics, etc.), pulp and paper industry,
metallurgy, textiles, construction materials, agriculture etc.

Polymers and plastics, especially polyethylene, polypropylene, polyvinyl chloride,

polyethylene terephthalate, polystyrene and polycarbonate comprise about 80% of
the industrys output worldwide.

INDIA: The Indian chemical industry stands as the third largest producer in Asia
and 12th in world, in terms of volume. This industry could grow at 14 per cent
per annum to reach a size of US$ 350 billion by 2021.

A brief history

Middle eastern artisans used to refine alkali and limestone for the production of
glass in as early as 7,000 B.C. And Phoenicians produced soap in the 6th century
B.C. The Chinese developed black powder around the 10th century A.D, and it was
used as a primitive explosive.

The first sulphuric acid plants were built in Great Britain in 1740, France in
1766, Russia in 1805, and Germany in 1810.

Man-made fibres changed the textile industry when rayon (made from wood fibres)
was introduced in 1914; the introduction of synthetic fertilizers by the American
Cyanamid Company in 1909 led to a green revolution in agriculture that
dramatically improved crop yields.

By this century, companies in the chemical industry include large, medium, and
small companies located all over world.

Global Trends of Production in Chemical Industry

The global chemicals industry has grown steadily over the past several decades.
Chemical industry data cited by OECD indicate that global chemical industry output was
valued at US$ 171 billion in 1970. In 2013, industry sources valued global output above
US$ 4.12 trillion.

A variety of global economic forces influence changes in chemical production, use and
disposal over time. Chemical use is influenced both by countries domestic needs, and
by global trade.

As high-quality natural resources are exhausted in industrialized countries, energy and

pollution-intensive activities are more likely to shift to less developed countries.

Global Trends of Production in Chemical Industry

(contd)

Illustrate the nominal growth of chemical

industry output over time, broken out by
country or region.
In the decade 2000 to 2010, the Global
Chemical Production increased 54 per
cent.
In 2010, China was the largest chemical
producing country, with sales of US$ 754
billion.

Global Trends of Production in Chemical Industry

(contd)

The prolonged adverse macroeconomic

climate in Europe and slowdown in Chinese
and other emerging economies during
20112013 have affected global chemical
output.
Due to the competitive advantages
accruing from shale gas development,
North America will also witness slow but
steady growth.

Indian Trends of Production in Chemical Industries

Chemical Industry is one of the oldest industries in India, which contributes

significantly towards industrial and economic growth of the nation.

The Indian Chemical Industry comprises both small and large-scale units. The fiscal
concessions granted to the small-scale sector in mid-eighties led to establishment of a
large number of units in the Small Scale Industries (SSI) sector.

India also produces a large number of fine and specialty chemicals, which have very
specific uses and find wide usage as food additives, pigments, polymer additives, antioxidants in the rubber industry, etc.

In the Chemical Sector, 100 percent FDI is permissible.

According to estimates of the Central Statistical Office (CSO), chemicals and chemical
products accounted for 2.51% of the GDP (at 2004-05 prices) in 2012-13, compared to
2.53% in 2011-12.

Indian Trends of Production in Chemical Industries

(contd)

The
production
of
selected
major
chemicals and petrochemicals during the
years 2008-09 to 2013-14 is shown.

The production of major chemicals in

2013-14 was 8601 thousand MT, compared to
8453 thousand MT in 2012-13 implying a
growth of 1.7%.

The production of Alkali Chemicals

accounts for more than 70% of the total
production of major chemicals.

Investment in Indian Chemical Industry

The government has made 100% FDI permissible and has de-licensed most chemical products
except those that are hazardous in nature to drive investments in the sector.

The total FDI inflow into India in the chemicals sector was USD 2,927 million from
April 2000 to April 2011, according to the Department of Industrial Policy and
Promotion (DIPP).

The inflow of FDI in 2011 2012 was USD 7534.1 million and in 2012 2013 it was USD
1618.2 million.

The investment in the sector has been consistent and points towards the rising interest
of investors; however, it is imperative for the companies in the sector to devise new
processes and technologies.

Government Initiatives

The government has taken various steps to improve the productivity and efficiency in
the chemical sector. The government policies such as 100% FDI and SEZ and industrial
parks model of development have also led to increase in the overall investment in the
sector.

The licensing requirements have been removed except in the case of hazardous chemicals.
Entrepreneurs are now allowed to set up chemical industries through the Industrial
Entrepreneurs Memorandum (IEM) route.

In order to develop the country as a major chemical hub, the government set up
petroleum, chemicals and petrochemical investment regions (PCPIR). These regions
directed investments for establishing manufacturing facilities for domestic and export
led production of petroleum, chemicals and petrochemicals.

To mitigate the impact of the anti-dumping activities, the government imposed a 20%
safeguard on soda ash and imposed such safeguard duties for other affected chemical
products as well.

Current scenario

The global chemical market is estimated at approximately USD 3 trillion excluding

pharmaceuticals. Western Europe is the largest chemical-producing region followed by
North America and Asia.

The Indian Chemical Industry ranks 12 by volume in the world production of chemicals.
The industrys current turnover is about USD 30.8 billion which is 14 per cent of the
total manufacturing output of the country.

India also produces a large number of fine and speciality chemicals, which have very
specific uses and are essential for increasing industrial production. These find wide
usage as food additives, pigments, polymer additives, anti-oxidants in the rubber
industry, etc.

India has emerged as a global supplier of dyestuff and dyes intermediates, particularly
for reactive, acid, vat and direct dyes. India accounts for 6 per cent of the world
production of dyes.

Major Challenges

High prices of basic feed stock

SSI reservation / Fragmented nature of industry

Low R&D levels

Low Level of Brand Development

Low Level of Common Infrastructure

Environmental Regulations

Future Prospects & Investment Opportunities

Indian chemical industry is

next decade and is expected
to 5-6% by 2021.

expected to register
to double its share

a growth of 8-9% in the

in global chemical industry

Availability and abundance of raw materials for titanium dioxide and agro-based
products like castor oil offer an opportunity to generate significant value addition.

Chemical companies in India can either explore alternate feedstock or invest in setting
up plants in resource rich nations to secure feedstock.

Chemical companies can invest in exploring strategic energy management and strategic
water management to cut down their energy costs and contain water
availability concerns.

Companies can invest in upcoming PCPIRs in India and overcome challenges related to
infrastructure, power and water availability.

Reference

Department of Chemicals and Petrochemicals Annual Report 2012 2013

Department of Chemicals and Petrochemicals Annual Report 2013 2014

Planning commission document on five year plan, 2012-17, for Indian Chemical industry

Report on Chemical & Petrochemical industry by CCI October,2013

Chemical Industries after 1850 by Johann Peter Murmann

Year-End 2013 Chemical Industry Situation and Outlook, American Chemistry Council
December 2013

Global Chemicals Outlook - Towards Sound Management of Chemicals, UNEP 2013

THANK YOU..