Chemical industries alone contribute at an alarming rate in the production of different industrial products. The categories of chemical products are generally grouped into basic chemicals, specialty, fine chemicals, plastics and fibers, pharmaceuticals, paints and coatings etc. Chemical companies has employed nearly one million workers in USA including more than 90,000 scientists, chemists and engineers who work in research areas and functions, and they account for more than 2% of the total US gross domestic product and 12% of the manufacturing gross domestic products. The similar conditions are also visualized in the developing countries too, though not so high as developed countries but are taking part in the race.
The major products of chemical industries are basic chemicals, commodity chemicals to polymers and speciality chemicals. Basic chemicals or commodity chemicals are broad chemical category industry which includes polymers, bulk petrochemicals, intermediates, derivatives and basic industrial, inorganic chemicals and fertilizers or pesticides. (India Chem 2010). The chemical industry develops new products and manufacture variety of products for human lives. Many of the products from the chemical industry, such as detergents, soaps and perfumes, are purchased directly by the consumers, 70% of chemicals manufactured are used to make products by other industries including other branches of the chemical industry. The chemical industry sector has witnessed growth nearly about 13-14% in the last five years. In India chemical industries are also growing fast and competitive in the global market. The major causes in growth of chemical industry in India are identified as under : (http://www.ficci.com/sector/7/Project_docs/Chemical-Petrochemical-sector.pdf)
â¢ Increasing urbanization and demand for the products like paints, textiles, cosmetics, constructions etc which supports to the growth and also predicted 10-13% rise in future.
â¢ Internal consumptions of products are 33% average of output and likely to increasing in future
â¢ Diversified manufacturing base which support to produce world class products
â¢ Export of chemical products 5.4% in dyes pigments, pharmaceutical products, agro-chemicals etc
â¢ Global competition is increasing and import / export policies are simpler. Government has recognized chemical industry sector as key growth element of Indian economy. In chemical sector 100% FDI is permissible by Indian Govt.
â¢ Number of incentives and initiatives has been added in the 12th five year plan (1912-1917) , which boosts in growth of chemical industries.
â¢ Govt. want to increase GDP up to 25% till 2025 from current 16%
â¢ Govt. want to support chemical industries to develop bio based products to reduce dependencies on other countries and enhance export promotion.
Due these facilities more chemical industries are collaborating with multinational companies and develop new competitive products for use.
3.2 Importance of Chemical Industries
Almost everything used in human life for the human survival is made up of chemical products. The Chemical Industry is one of the most important industries in the modern world. Chemical products are involved in almost every industrial process and are essential to other industries also. The Chemical industry is the one responsible industry for converting raw materials like water, oil, natural gas, air, metals, and minerals, in to more valuable products. The different chemicals used like basic chemicals which include polymers, petrochemicals, reaction intermediates, inorganic chemicals and fertilizers. The polymers and plastics are used for construction pipes, tools, materials like acrylics, appliances, electronic devices, transportation, toys, games, packing, clothing and textiles like nylon and polyester, among many other products. Polymers come from petrochemical raw materials like Liquefied Petroleum Gas (LPG), natural gas and crude oil or petroleum. Petrochemicals are also used for producing other organic chemicals and well as specialty chemicals. (http://www.inquimica.com/chemical-industry-modern-life.html) More than 70,000 different products are manufactured through these industries. (www.en.wikipedia.org/wiki/chemical_industry_chemical industries, and https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
Other basic industrial chemicals include synthetic rubber, pigments, resins, explosives and rubber products. Inorganic chemicals belong to the oldest chemical categories, and include daily products like salt, chlorine, soda ash, acids like nitric, phosphoric and sulfuric acids, caustic soda and hydrogen peroxide, which are vital for several industries. Fertilizer belong to the smaller category of basic chemicals and include phosphates, ammonia and potash, which are used to supply the soil with nutrients for growing plants and agriculture.
Life science industries uses different chemicals and biological substances for manufacturing pharmaceuticals, animal health products, vitamins and pesticides. This industry produce a small volume compared to other chemical sectors, but their products are most commonly expensive. Life science products are produced with detailed specifications and have to have better quality. There is a lot of money invested in investigation even before making the first marketable product. This industry is strictly scrutinized by government agencies and authorities.(http://www.inquimica.com/chemical-industry-modern-life.html)
Specialty chemicals are of a specific categories and covers very high valued chemical products and are rapidly growing today. This includes the most innovative products valued more for what they do, than what chemicals they contain. This includes electronic chemicals, industrial gases, adhesives and others. Finally, the consumer products are chemicals directly sold to the customers like soap, detergents and cosmetics. (http://www.inquimica.com/chemical-industry-modern-life.html)
Chemical processes in chemical industries uses to transform raw materials into more specialized products. The place where chemical products are produced is usually called chemical plants. The chemical industries relies on the knowledge and investigations of the chemical properties of different materials. (http://en.wikipedia.org/wiki/Chemical_industry, http://www.inquimica.com/chemical-industry.html and http://www.rsc.org/get-involved/importance-of-chemical-sciences/)
3.3 Status of Chemical Industries
Among all the industries chemical industries have ranked status in the world, as it helps directly to the welfare of the human society. Tata Management Group (2014) pointed out that at global development and contribution to GNP, chemical industry accounts for $1.7 trillion sales per annum. Among the world development US chemical industry is the world’s largest producer of different chemicals. There are hundreds of chemical companies with more than 2,800 facilities abroad and 1,700 foreign subsidiaries or affiliates operating in US. (Tata Management Group 2014)
The Indian chemical industry (large, medium and small scale) has about 70,000 chemical manufacturing units located in different parts of India. But a major share is of small scale sector. The top ten chemical companies listed as per the 2012 based on revenue earned indicators are: (http://www.ficci.com/sector/7/Project_docs/Chemical-Petrochemical-sector.pdf)
â¢ Tata Chemicals
â¢ United Phosphorus limited
â¢ India Glycols
â¢ Pidilite Industries
â¢ Vikas WSP
â¢ Phillips Carbon Black Limited
â¢ Gujrat Heavy Chemicals
â¢ Arati Industries
â¢ Gujrat Alkalies and Chemicals Limited.
Petrochemicals and polymers constitute 70% of end products in India. The main industries involved in this sector are:
â¢ Reliance Industries Limited (RIL)
â¢ Indian Oil Corporation Limited (IOCL)
â¢ Haldia Petrochem Ltd. (HPL)
â¢ Gas Authority of India Ltd. (GAIL)
â¢ Hindustan Petroleum Corporation Limited (HPCL)
3.3.1 Products of Chemical Industries:
The products of the chemical industry are generally divided into three categories:
â¢ Basic chemicals
â¢ Speciality chemicals
â¢ Consumer chemicals
A) Basic chemicals
Basic chemicals are divided into
â¢ Chemicals derived from oil, known as petrochemicals
â¢ Basic Inorganic chemicals
Basic chemicals, produced in large quantities and are mainly sold within the chemical industry and to other industries before becoming products for the general consumer. For example, Ethanoic Acid is sold to make esters, which in turn is sold to make paints and sold to the consumer. Huge quantities of Ethene are transported as a gas by pipeline around Europe and sold to companies making poly(ethene) and other polymers. These are then sold to manufacturers of plastic components before being bought by the actual consumer.
Petrochemicals and polymers are the products of chemicals from petroleum (and increasingly from coal and biomass) has seen many technological changes and the development of very large production sites throughout the world. The hydrocarbons in crude oil and gas, which are mainly straight chain Alkanes, are first separated using their differences in boiling points by Distillation (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html). They are then converted to hydrocarbons that are more useful to the chemical industry, such as branched chain Alkanes, Alkenes and Aromatic Hydrocarbons. In turn, these hydrocarbons are converted into a very wide range of basic chemicals which are immediately useful (petrol, ethanol, ethane-1,2-diol) or are subjected to further reactions to produce a useful end product (for example, phenol to make resins and ammonia to make fertilizers). Many examples are found in the group Basic chemicals. The main use for petrochemicals is in the manufacture of a wide range of polymers. Due to their importance of these they are given their own section of units, Polymers. (The term âpetrochemicalâ can be misleading as the same chemicals are increasingly being derived from sources other than oil, such as coal and biomass viz. methanol is commonly produced from oil and natural gas in the US and Europe but from coal in China, poly(ethene) is derived from oil and gas in the US and Europe but increasingly from biomass in Brazil. ) (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
Basic Inorganic Chemicals are relatively low cost chemicals used throughout manufacturing and agriculture. They are produced in very large amounts, some in millions of tons a year, and include Chlorine, Sodium Hydroxide, Sulfuric and Nitric Acids and chemicals for fertilizers. Like petrochemicals, many emerging countries are now able to produce them more cheaply than companies based in the US and Europe. This has led to tough competition and producers of these chemicals worldwide work continuously to reduce costs while meeting ever more stringent environmental and safety standards. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
B) Speciality chemicals
This category covers a wide variety of chemicals for crop protection, paints and inks, colorants (dyes and pigments). It also includes chemicals used by industries as diverse as textiles, paper and engineering. There has been a tendency in the US and Europe to focus on this sector rather than the basic chemicals because it is noticed that, with active research and development (R & D), speciality chemicals deliver better and more stable profitability. New products are being created to meet both customer needs and new environmental regulations.
C) Consumer chemicals
Consumer chemicals are sold directly to the public. They include, for example, detergents, soaps and other toiletries. The search for more effective and environmentally safe detergents has increased over the last 20 years, particularly in finding surfactants that are capable of cleaning anything from sensitive skin to large industrial plants. Parallel to this, much work has been done in producing a wider range of synthetic chemicals for toiletries, cosmetics and fragrances.(http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
D) Research and development (R and D)
Although research and development is crucial, expensive and time-consuming to the industryâs evolution but to keep competitiveness in the industry must find new products which enhance the quality of life adapt rapidly to changes in consumer demand around the world produce and sell chemicals in quantities that achieve economies of scale select locations for bulk chemical companies so that they can access the cheapest raw materials and energy to improve existing processes for making chemicals in order to use less capital expenditure and save raw materials as well find methods of manufacturing that use and dispose of chemicals which do not harm the environment locate speciality chemical companies near good centers of R&D within both the commercial and university sectors.
The R & D cycle – deciding to carry out research on a particular topic, to spend money on development and then to manufacture – involves not only chemists and chemical engineers but other experts; financial (for borrowing the large sums of money needed), marketing (for ensuring that their new or improved product can be sold), legal (to ensure that the patents are secure) and many others like libraries and information centers or knowledge resource centers to assist researchers in knowing the past. (http://www.indiamart.com/ramyagroup/about-us.html; and http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
E) New Innovative through R and D
Although expensive and time-consuming, research and development but is crucial to the industryâs evolution. To keep competitiveness, the industry need to find new products which enhance the quality of life product rapidly to changes in consumer demand around the world. produce and sell chemicals in quantities that achieve economies of scale select locations for bulk chemical companies so that they can access the cheapest raw materials and energy improve existing processes for making chemicals in order to use less capital expenditure and save raw materials find methods of manufacturing that use and dispose of chemicals which do not harm the environment, speciality chemical companies rear good centers of R&D within both the commercial and university sectors. The R & D cycle – deciding to carry out research on a particular topic, to spend money on development and then to manufacture – involves not only chemists and chemical engineers but other experts; financial (for borrowing the large sums of money needed), marketing (for ensuring that their new or improved product can be sold), legal (to ensure that the patents are secure) and many others. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
Sometimes discoveries have took place in industries e.g. the discoveries of both low density and high density Poly(Ethene). Discoveries are the direct results of the clever ideas of chemists with specific aims in mind, e.g. the discoveries of Polyamides, Polyesters and, much later, linear low density Poly(Ethene). Research on use of new catalysts is still very fruitful and new catalyst for the manufacture of Methanol at lower temperatures and lower pressures than previous and saves much energy. A new class of catalysts, the Metallocenes have been developed for manufacture of Poly(Ethene) and Poly(Propene) which give superior properties to these plastics for specialised uses. Other research areas are now commercialized which include nanotechnology, biotechnology and the development of biofuels to supplement oil supplies. Significant benefits to the environment have come from research to develop processes which lead to improved octane rating of petrol, water-based paints, replacements for Chlorofluorocarbons (CFCs) and the development of Green Chemistry.
Research carried out in the laboratories of industry and universities is only the first step. These discoveries have to be converted into realistic industrial processes. This is the job of the chemist and chemical engineer who is responsible for translating the laboratory chemistry to a larger scale. Scaling up production from grams under laboratory conditions to thousands of tons in a full scale industrial plant is very painstaking work for chemists and chemical engineers. The intermediate stages between laboratory and full scale production involve equipment that is able to mimic the large scale process and enable the most favorable conditions to be found for a high yield of product obtained at a suitable rate. For doing this the library services are required to chemist for carefully controlled conditions carried out to obtain the maximum yield.( http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
For conducting research and development activities which includes development of innovative practices need support of information or library. The new literature on the topic of research is essential for R and D chemist. It is also observed that large scale medium scale, multinational industries have established well developed library system to support industrial activity. Professional librarians with subject knowledge are selected for the post of librarians having capacity to serve users based on their needs. The user centric services is the need of industrial libraries. The collection though not sufficient but the librarians are collecting information from different sources. In industries new product and process development is continuous as well as intellectual monopoly rights are also tried to secure by the industries for the profits. Thus libraries plays an important role in supporting industries for information support.
3.4 Challenges in Chemical Industries:
Many challenges are visible in chemical industry sectors and few major challenges are listed below which are summarized from http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html
â¢ The chemical industry is undergoing huge changes worldwide. Companies in Middle Eastern countries, China, India and Brazil emerging as manufacturers of chemicals on a mammoth scale, for their own consumption and also for export worldwide. These countries are also investing in plant in the US and Europe whilst US and European companies are investing in plant in these large emerging countries, making the industry as a whole totally international in the way it conducts business. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ A new revolution in oil and natural gas become ever scarcer and more expensive, chemists are searching for new feed stocks to supplement or even replace oil and natural gas. And they are rediscovering the virtues of coal and biomass. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ In the late 19th and the first part of the 20th centuries, the organic chemical industry was based largely on coal and biomass. Coal was heated strongly in the absence of air to form coal gas (a mixture of hydrogen, methane and carbon monoxide). A liquid (coal tar) was formed as a by-product which contained many useful organic chemicals, including benzene, and the solid residue was coke, an impure form of carbon. Coke was the source of synthesis gas. Steam was passed over it at high temperatures to yield carbon monoxide and hydrogen. Another source of organic chemicals was biomass. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ Since then, from the 1940âs onwards, the industry has found better and better ways of using the products from the refining of oil to produce not only all the chemicals mentioned above but many more. An example is the growth of the petrochemical industry, with the array of new polymers, detergents, and myriad of sophisticated chemicals produced at low cost.( http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ The greatest challenge lies in finding ways to reduce our dependence on non-renewable resources. Thus, as oil and natural gas supplies dwindle, must find ways to use the older technologies based on biomass to produce chemicals in as an environmentally acceptable way as possible, in terms of energy expended and effluents produced.
â¢ Another challenge is to reduce our dependence on non-renewable resources to produce energy. The easiest way to do this is to find ways to run our chemical plants at lower temperatures with the aid of catalysts or using alternative routes. (http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ The new technologies based on nano-materials forefront in future advances in the chemical industry and it will be important to ensure that the production of these revolutionary materials is safe and of economic benefit.( http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
â¢ The chemical industry has many challenges in the 21st century which must be overcome in order to remain at the heart of every major country. It is only way that the industry can help society to maintain and improve its standard and sustainable way of living.
â¢ The industries need information support from the libraries, this is also a challenge for the chemistâs. In China for industries âChina National Chemical Information Center (CNCIC) is established. This supports to the information needs of industrial researchers and chemist. Such Information centers are needed in every country for providing support.
The challenges are tried to solve by the industrial associations, Govt. policies etc. But need more efforts towards solving the issues. The chemical industry is undergoing huge changes worldwide. The very notion of sustainable Development requires new approaches in a number of areas. Innovation at all levels and in all fields of activity is the most effective instrument for ensuring that the economic, and environmental goals, as well as those of society, are being advanced. (http://www.icca-chem.org/ICCADocs/1996-01-Policy_Paper_on_Sustainable_Development.doc)
The chemical industry’s contribution is to continue innovation of new products that meet customer needs and manufacturing processes that reduce risks to health and the environment. This contribution is based upon the knowledge and experience the industry has acquired from applying innovation not only to making, handling and use of chemical compounds, but also to reprocessing, recycling and solving environmental problems. The challenge facing the chemical industry is to maximize innovation, which can contribute to society meeting its goals for Sustainable Development. The chemical industry is firmly convinced that leadership in innovation represents the best way of attaining sustainable development. For the individual company, this means: (http://www.icca-chem.org/ICCADocs/1996-01-Policy_Paper_on_Sustainable_Development.doc)
â¢ a consistent orientation towards products, technologies and solutions which offer the greatest promise for the future
â¢ development of new integrated environmental technologies
3.5 Chemical Industries: Brief Overview
Globally the chemical industry is estimated to be USD 3.4. trillion. Chemical Industry is growing very well @ 9% PA up to 2008 and also rising since 2010. Basic chemicals constitutes 45%, Biotechnology 5%, Agrochemicals 1%, Speciality chemicals 22% and Pharmaceuticals 27%. Thus Basic chemicals is the largest among the chemical industries followed by pharmaceuticals and speciality chemicals. (India Chem 2010)
In the USA the initial development of Chemical industries at first sight initiation of todays fourth and seventh largest chemical companies in the world, Dow and DuPont , in Midland, Michigan and Wilmington, Delaware. The reason in developing industry by Henry Dow at Midland in 1897 was because the salt deposits in the area contain particularly high concentrations of bromide ions, and thus Dow had patented two methods for obtaining elemental bromine from these deposits. DuPontâs EleuthÃ¨re IrÃ©nÃ©e (E I) du Pont fled to the United States from the French Revolution. Henry Dow arrived with considerable experience in manufacturing gunpowder and paid Jacob Broom, a local businessman, $6,740 for a site on the Brandywine River near Wilmington on which to build his first powder mill in 1802. The falling water drove the machinery of the mill and the willow trees on the riverbanks were turned into charcoal, one of the three ingredients of gunpowder. The site was far enough away from Wilmington in case of explosion but near enough to wharves on the river to ship out the powder. A perfect and entirely logical location. (http://essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
At this time, two great German companies were established – Bayer in 1863 and BASF in 1865. Bayerâs incentive was principally the river Rhine, a tributary of which ran through the city of Barmen (now part of the city of Wuppertal). There Friedrich Bayer and Johann Friedrich Weskott, one a salesman and the other a master dyer, set up a factory to manufacture synthetic dyestuffs from coal-tar for the textile industry. The city was near extensive coal fields, and the Rhineâs tributary offered both a source of power and a means of transport.(http://essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
BASF, like Bayer, was founded to make dyes but its location was influenced by civic utilities and an early instance of industrial recycling. In 1861 Friedrich Engelhorn built a gasworks in Mannheim and installed the street lighting for the town council. At the same time he seized the opportunity to use the by-product, coal-tar, to make dyes. The company also began to make the other chemicals necessary for dye production, notably alkalis and acids. Engelhorn called his company Badische Anilin- & Soda-Fabrik in recognition of the wide range of chemicals it manufactured and of its location in the Grand Duchy of Baden. With environmental foresight, the city fathers of Mannheim did not want any pollution of their city and so the plant was actually built across the Rhine at Ludwigshafen.( http://essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
In the UK the locations of much of todayâs industry also relate to the nineteenth centuryâs industrialization. For example, the concentration of the chemical industry in the Northeast of England was influenced by the location of coal mines, the availability of iron ore (for the steel industry) and the closeness to ports. Similarly, the strong chlor-alkali industry (chlorine, sodium hydroxide, sodium carbonate) in the Northwest of England developed because of local coal and salt mines and the proximity of a major canal leading to a main port of England. The great cotton mills in Lancashire gave the obvious location for the dyestuff industry around Manchester, the largest city in Lancashire.
All of the sites mentioned above are flourishing today, although the companies expanded during the subsequent 150 years to make many other chemicals ranging from plastics to pharmaceuticals. They have also added many new plants all over the world to be near their customers. Nevertheless, exactly the same range of factors that influenced locations in the nineteenth century are active today, for example: access to raw materials plentiful water supplies good communications (road, rail and port facilities)closeness to the customer for the products reliable energy supplies, and the availability of skilled labour.
One thing that changed during the twentieth century was the importance of oil and natural gas feed stocks in supporting the growing petrochemical/polymer industry which developed principally after 1945. This explains why some installations are sited adjacent to oil fields. For example, there is a cluster of companies adjacent to the oil fields in Texas, and the discoveries and development of gas shale (still a controversial process in many countries) in places like Texas, Colorado and Pennsylvania are leading to new investment in chemical plants nearby. Access to the sea for transport remains a huge influence. Refineries and chemical companies have been built on the coast of many countries, whether they have their own indigenous oil and gas or whether they import it.( http://essentialchemicalindustry.org/the-chemical-industry/the-chemical-industry.html)
3.5.2 National (India) Overview:
Growth of Chemical Industry
The chemical sector has witnessed growth of 13-14% in the last 5 years while petrochemicals have registered a growth of 8-9% over the same period. The major growth drivers, behind Indiaâs chemical industry could be listed as follows: (http://www.magships.com/india-growth-of-chemical-industry/)
Ã Structural advantage: With a growing market and purchasing power, the domestic industry is likely to growth at over 10-13% in the coming years. Growing disposable incomes and increasing urbanization are fueling the end consumption demand for paints, textiles, adhesives and construction, which, in turn, leads to substantial growth opportunity for chemicals companies. (http://www.magships.com/india-growth-of-chemical-industry/)
Ã High domestic consumption: The chemicals industry in India is the largest consumer of its own products, consuming 33% of its output. With promising growth trends in the chemicals industry, this internal consumption is also set to rise. (http://www.magships.com/india-growth-of-chemical-industry/)
Ã Diversified industry: The Indian chemicals industry has a diversified manufacturing base that produces world-class products. There is a substantial presence of downstream industries in all segments. Further, this large and expanding domestic chemicals market also boasts of a large pool of highly-trained scientific manpower. (http://www.magships.com/india-growth-of-chemical-industry/)
Ã Promising export potential: Chemicals constitute ~5.4% of Indiaâs total exports. India already has a strong presence in the export market in the sub-segments of dyes, pharmaceuticals and agro chemicals. India exports dyes to Germany, the UK, the US, Switzerland, Spain, Turkey, Singapore and Japan. (http://www.magships.com/india-growth-of-chemical-industry/)
Future Prospects and Investment Opportunities
Indian chemical industry is expected to register a growth of 8-9% in the next decade and is expected to double its share in global chemical industry to 5-6% by 2021. Indian Chemical industry has the potential to grow significantly provided some of the key growth imperatives are taken care of. Securing Feedstock, Right Product Mix, M&A opportunities are currently the key imperatives for chemical industry in India. Few investment opportunities can be highlighted as: (http://www.magships.com/india-growth-of-chemical-industry/)
Chemical companies in India can either explore alternate feedstock or invest in setting up plants in resource rich nations to secure feedstock.Companies need to invest in exploring the right product mix to be competitive and profitable using the available feedstock in India i.e. Naphtha and its derivatives Indian companies can explore possible Merger, Joint Venture opportunities for technology, capital or access to international market by taking advantage of increasing expansion of western companies in India. 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. There are good opportunities in segments such as Speciality Chemicals, Speciality Polymers, for catering to huge emerging domestic demand as also as a manufacturing hub. (http://www.magships.com/india-growth-of-chemical-industry/)
Factors Influencing the Growth of Chemical Industry
â¢ Setting up the Training center for the new talented pool of chemical engineers.
â¢ To learn the art of developing the high quality, low cost manufacturing from lab scale to ton scale.
â¢ Increase the R&D investment to enter the world of innovators
â¢ Install the latest facilities and technologies to fast and large production to meet the demand of export.
â¢ Tax Reduction and other incentives to be provided for flourishing the production rate of industry
â¢ Development of SEZ and world class infrastructure along with improved facilities of transportation by railways, roadways and ports.
Indiaâs chemical industry has played an important role in the development of the economy. The industry includes basic chemicals and chemical products, petrochemicals, agrochemicals, dyes, paints and varnishes, synthetic fibers and industrial gases. Chemicals and chemical products industry is among the 22 industry groups in the manufacturing sector tracked by the index of industrial production (IIP). Domestic industrial production saw a recovery in the fiscal year ended March 2015. The sector is expected to continue on its growth track, backed by a growing construction sector, a large textile sector, and a growing need for agrochemicals. The launch of âMake in Indiaâ campaign and other such government initiatives further added to the growth of this sector. Chemicals and chemical products are one of the major industry groups tracked by the index of industrial production (IIP). It constitutes about 10.1% of the industrial output represented by IIP and grew at a CAGR of 2.1% during fiscal years 2007-12. In the period 2009-14, chemical exports saw a double-digit annual growth rate of 18%. As of FY14, organic chemicals accounted for 41% of the Indian chemical exports, followed by plastic products with a contribution of 19%. (http://www.researchandmarkets.com/reports/3246147/india-chemicals-industry-report-2015)
The Indian chemical industry (large, medium and small scale) has about 70,000chemical manufacturing units located in different parts of India. But a major share is of small scale sector. The top chemical companies listed as per the 2012 revenues are: (http://www.ficci.com/sector/7/Project_docs/Chemical-Petrochemical-sector.pdf)Tata Chemicals
1) Tata Chemicals
2) United phosphorus Limited
4) Pidilite Industries
5) Aarti Industries
6) Gujrat Alkali
7) Deepak Nitrite
8) Aditya Birla Chemicals
9) Vinati organics
10) Navin Fluorine
11) Alkyl Amines
12) Kanoria Chemicals
13) Vinyl Chemicals
14) Mangalam Organics
15) Sunshield Chemicals
16) Dia â”Ichi Karkaria
17) Span Chemicals
19) Sudarshan Chemicals
Petrochemicals and polymers constitute 70% of end products in India. The main industires involved in this sector are:
â¢ Reliance Industries Limited (RIL)
â¢ Indian Oil Corporation Limited (IOCL)
â¢ Haldia Petrochem Ltd. (HPL)
â¢ Gas Authority of India Ltd. (GAIL)
â¢ Hindustan Petroleum Corporation Limited (HPCL)
In the year 2010 Indian Chemical Industry produces US $ 83 billion PA. In India also basic chemical industries are on top (53%), followed by pharmaceuticals (24%). biotechnology 3%, Agrochemicals 2%, speciality chemicals 18%. Petrochemicals form largest segment in basic chemicals. Indian chemical companies are both domestic and multinational.Organic chemicals are playing significant role in indian chemical sector. (OECD 2001)
(Ref: Organization for Economic Cooperation and Development OECD (2001) Environmental outlook for Chemical Industries. Accessed at http://www.oecd.org)
The characteristics of Indian Chemical Industry are: (http://glipho.com/reenadhiman/make-in-india-campaign-will-indian-chemical-industry-gets-the-boost-they-deserve)
â¢ Third Largest producer in Asian region.
â¢ Third Largest global producer in agro-chemicals
â¢ Sixth largest producer of chemicals in world
â¢ During 2013-14 19,300 metric ton production
â¢ 16% global industry share of chemical industries and rise in following years
â¢ The chemical sector has witnessed growth of 13-14% in the last 5 years while petrochemicals have registered a growth of 8-9% over the same period.
Based on the net sales of the chemical companies the top ranked chemical companies are: (http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/chemicals.html)
3.5.3 Maharashtra Overview:
The Indian chemical industry is among the established traditional sectors of the country that play an integral role in the countryâs economic development. This sector forms a part of the basic goods industry and is a critical input for industrial and agricultural development. The Indian chemical industry is one of the oldest industries in India and has made immense contribution to the industrial and agricultural development of India. The chemical industry serves the needs of sectors such as textiles, leather, plastics, paper, printing inks and food stuffs, among others. The chemical industry is among the most diversified industrial sectors and includes basic chemicals and its products, petrochemicals, fertilizers, paints, gases, pharmaceuticals, dyes, etc. The sector covers over 70,000 commercial products, and provides the feedstock to many downstream industries such as finished drugs, dyestuffs, paper, synthetic rubber, plastics, polyester, paints, pesticides, fertilizers and detergents. Over the years, the industry has been evolving with a shift towards product innovation, brand building and environmental friendliness. Besides, customer focus is gaining significance in the industry. (https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
The industry comprises small-scale, middle scale and large scale units (including MNCs) and produces thousands of products and by-products ranging from plastics and petrochemicals to cosmetics and toiletries. The industry consumes a significant share (around one-third) of its own production. The industry has a 14% weightage in the overall Index of Industrial Production (IIP) which gives an indication of its importance in the countryâs industrial growth. A robust chemical industry ushers in many economic and strategic benefits for the nation. As on March 31, 2008, the size of the Indian chemical industry was estimated at around USD 35 bn and 3% of Indiaâs GDP. (https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
The Indian chemical sector accounts for 13-14% of total exports and 8-9% of total imports of India. In terms of volume of production, it is the twelfth-largest in the world and the third-largest in Asia. Currently, the per capita consumption of products of the Indian chemical industry is one-tenth of the world average, which reflects the huge potential for further growth. The Indian advantage lies in the manufacturing of basic chemicals that are also known as commodity chemicals that account for about 57% of the total domestic chemical sector. The chemical industry can be broadly classified into two segments â” organic and inorganic chemicals. Organic chemicals cover over half of all known chemical compounds, and include petrochemicals, drugs, cosmetics, agrochemicals, etc. Inorganic chemicals comprise alkalis, dyes and dyestuffs. Based on a more functional classification, chemicals can be divided into basic, specialty and fine chemicals. ((https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
Alkali chemicals form the highest chunk in the total chemical production in India. During FY10, alkali chemicals production (till February 2009) was 5.5 MMT and accounted for around 71% of the total chemical production. The dyestuff sector is one of the important segments of the Indian chemical industry and has forward and backward linkages with a variety of sectors such as textiles, leather, paper, plastics, printing inks and foodstuffs. The textile industry accounts for 70% of the consumption of dyestuffs. In the Indian chemical industry, alkali chemicals enjoy the highest contribution in the total production around 70%, followed by organic chemicals at around 20%. The share of dyes and dyestuffs and pesticides, on the other hand, remain extremely low; however, the production of dyes and dyestuffs has been increasing steadily due to its growing significance in sectors such as textiles, leather, plastics and foodstuffs.
The Indian chemical industry is well-established in Maharashtra. During FY07, the production of major chemicals in the state was 565,481 MT. In the same year, chemical production capacity of 17,928 MT was added that took and the total installed capacity increased to 1.02 MMTPA.
Under the National Industrial Classification, the chemical industry includes basic chemicals and its products â”petrochemicals, fertilizers, paints, varnishes, gases, soaps, perfumes, toiletries and pharmaceuticals. For the purpose of the cluster and industry study, the chemical industry is classified into five major segments and these are as follows: alkali, inorganic chemicals, organic chemicals, pesticides, and dyes and dyestuff. Accordingly, any reference made to the Indian chemical industry hereon will include the information on these five major segments exclusively. (https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
The Indian chemical industry is endowed with availability of low cost labour. The allied industries such as leather, plastics, food processing, rubber, textiles offer huge growth opportunities in the long term for the chemical industry. Besides, the government is also undertaking several initiatives to sustain the growth of the industry. The promotion of Special Export and Investment Zones, SEZs, cluster development and monetary incentives through fiscal and policy initiatives foster the growth of the industry. Infrastructure sector has gained significant importance and is a priority focus of the government. Thus, the increased spending on infrastructure will help in reducing the infrastructural bottlenecks in the long run. However, issues like inadequate technologies, skilled labour, environmental norms and need to innovate remain a threat to the industry. ((https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
The players must focus on specialising in their areas of expertise in line with the global trend. Innovation is gaining importance as it enables focus on core competence and enables players to lead in specialty products. The idea is to focus on oneâs core competency and select business segments where competitive advantage exists. Likewise, the industry must focus on improving its product and production processes by investing in technology development and building R&D capabilities. Such a step will enable the industry to not only build its expertise in a chosen field but also will lead to cut down in production costs. Adherence to environmental and public safety norms and promotion of safe management of substances are also pivotal areas that need focus right from the design, end use, to its final disposal (hazardous waste) of products. (https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
Logistical bottlenecks, high raw material and fuel prices and anti-dumping activities are posing a threat to the industry in the short run. Thus technology up gradation, access to skilled manpower and funds at a reasonable cost, adequate infrastructure support and economical input costs are essential for the sustained growth and development of the Indian chemical industry. Even though this industry is currently affected by economic recession, in the long term it will benefit immensely from the high growth foreseen in its consuming industries and the improvement in export markets. (https://www.dnb.co.in/IndianTelecomIndustry/Chemical%20overview.asp)
3.5.4 Mumbai and Pune
Maharashtra is one of the largest states in India, the state continues in predominant position as an industrial and service center with Mumbai as the commercial and financial capital of the country. The state has been a preferred investment destination for both domestic and foreign companies because of the availability of skilled manpower, enabling infrastructure ad socio-economic development. In 2009-10, the manufacturing sector accounted for around 21.4 per cent of GSDP (at current prices). Maharashtra has been a pioneer in many of the policy initiatives that support manufacturing sector and the state government recognizes that manufacturing is a key driver of states economic growth.
Chemical sector has been traditionally strong in Maharashtra with specific strength in raw materials, Building Block production and Value Addition & Processing with clusters located in the Mumbai, Thane and Pune belt. According to National Accounts Statistics 2013, brought out by the Central Statistics Office (CSO), chemical and chemical products sector (industry division 24 of NIC 2004) accounted for2.06% of the GDP (at 2004-05 prices) in 2011-12, compared to 2.18% in 2010-11. The share of this sector in the GDP for manufacturing sector at 2004-05 prices was 13.1 % during 2011-12.The size of the Indian Chemical industry in terms of value of output in the year 2011-12 was5, 99,148 crore. The average Indices of Industrial Production (IIP) for the Chemical andChemical products (division 24: NIC 2004) for the year 2012-13 stand at 127.3, which is 3.8% higher as compared to the previous year. (http://chemicals.nic.in/Chemicals%20&%20Petrochemicals%20Statistics%20At%20A%20Glance%20%202013.pdf)
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