Chemicals Sector - FICCI

March 2021
India: A global manufacturing

hub for chemicals and
petrochemicals
Knowledge report on Indian chemical
and petrochemical industry
Petrochemical report_updated.indd 1 15/03/21 9:59 PM

2 India Chem 2021

India Chem 2021 3

4 India Chem 2021

Message from FICCI
Dilip Chenoy
Secretary General, FICCI
The chemical industry is a critical and integral part of the growing The Department of Chemicals and Petrochemicals, Government
Indian economy. It occupies a vital position in meeting our basic of India, and FICCI have jointly organised the eleventh edition
needs and improving the quality of our daily lives. It is also a of India Chem 2021, which will be held from 17–19 March
crucial component of agricultural and industrial development 2021. With ‘India: A global manufacturing hub for chemicals and
in India, and provides the building block of various other petrochemicals’ as its theme, this mega event is expected to attract
downstream industries. There are several opportunities to be over 100 exhibitors and more than 7,000 business visitors from
explored within the Indian chemical industry, and its high potential India and abroad.
is well-recognised globally. Indeed, India has emerged as one of
I wish India Chem 2021 a grand success.
the most preferred destinations for investment in this area.
The Indian chemical industry is one of the fastest-growing sectors

in the world and is projected to be worth USD 304 billion by 2025.
Foreign investors are keen to invest as they seek to diversify their
sourcing countries and supply chains. India’s growing per capita
consumption and demand for agriculture-related chemicals offer
huge scope for the sector’s growth. The Government of India
recognises the chemical industry as a key growth driver and is
extending several incentives and policy support to boost sectoral
growth.
India Chem 2021 5

Message from FICCI
Deepak C Mehta
Chairman, FICCI National Chemical Committee, and
Chairman and Managing Director, Deepak Nitrite Ltd
The theme ‘India: A global manufacturing hub for chemicals and and infrastructure for manufacturing various products. Also, it
petrochemicals’ is appropriate for India Chem 2021, as on the one has been observed that demand grows much faster with easy
hand, the initiatives to improve infrastructure through petroleum, local availability. Thus, even for products that are not yet in high
chemicals and petrochemicals investment regions (PCPIRs) and demand, establishing world-class plants and exporting the surplus
chemical clusters are gaining momentum and on the other hand, output for a short period will increase demand growth rates as local
global players are looking at India to reduce their dependency on availability increases. Overall, significant investment opportunities
China. are opening up in the chemical sector.
Over the last five years, India has grown to become the sixth- A large local marketplace and superior manufacturing skills across
largest player in the chemical business. The Indian chemical the value chain make India the most attractive global chemical and
sector continues to grow at a rate of 1.2–1.5 times the gross petrochemical manufacturing hub after China.
domestic product (GDP).1 As demand surpasses supply, imports
continue to grow substantially. At present, 30% of India’s chemical
requirements are met by imports. Going forward, as the chemical
market in India grows to become worth USD 300 billion from the
current valuation of USD 178 billion, the gap between demand
and supply will only increase.2 This gap often creates sizeable
opportunities to support the development of large-scale capacities
1 FICCI
2 PwC analysis
6 India Chem 2021

Message from FICCI
Prabh Das
Chairman, FICCI National Petrochemical Committee, and
Managing Director and CEO, HPCL-Mittal Energy Limited
India’s sustained and strong economic growth, supported by robust polypropylene (PP) spunbond non-woven fabric. There are strong
macro fundamentals, are major enablers for the growth of the indications of high demand for polymers from other sectors, fuelled
chemical and petrochemical sector. by the fast-expanding middle class with higher disposable income,
urbanisation, focus on food and water security, development of
India is poised to emerge as a global chemical and petrochemical
smart cities and increased preference for personal hygiene and
manufacturing hub. The Government of India has launched
healthcare.
flagship programmes such as Make in India and the Aatmanirbhar
Bharat Abhiyan to provide much-needed support to this sector and Furthermore, the petrochemical industry has enormous
create a facilitative environment to attract further investments. opportunities to aid the circular economy by implementing effective
designs, reuse, recovery, recycling and upcycling. India is taking
The Indian chemical and petrochemical industry is expected
responsible and strong steps towards achieving sustainable
to continue its high-growth trajectory with the current low-
environmental and climate goals. The Indian chemical sector has a
consumption levels and a huge potential consumption base.
large network of 200 national laboratories and 1,300 research and
The Indian petroleum industry’s downward integration into
development (R&D) centres, and has a strong potential to drive
petrochemicals, driven by the developments around alternative
further innovation. The sector has an opportunity to leverage its
fuels such as biofuels and hydrogen, is a potential game changer.
human talent pool and attain a dominant global position.
This shall expand the availability of feedstock and intermediate
products for downstream industries. I am happy that FICCI and the Department of Chemicals and
Petrochemicals, Government of India, are jointly organising
COVID-19 has led to previously unseen large-scale disruptions.
the India Chem 2021 and publishing a relevant and pertinent
Polymers proved their resiliency, worth and value during the
knowledge paper on the theme of ‘India: A global manufacturing
pandemic. Polymer products helped address several challenges. It
hub for chemicals and petrochemicals.’
is unimaginable how the global pandemic could have been tackled
this effectively without the use of polymers. I wish the organisers the very best for the event and hope that
the knowledge paper will address some of the key interventions
Pandemic-induced shifts in consumer behaviour could also
necessary for the Indian chemical and petrochemical sector.
have a huge and permanent impact on the way we live and
do business. The pandemic has led to high growth in the
consumption of healthcare products and flexible packaging for
food and e-commerce goods, leading to rising demand for certain
petrochemical products. In the hygiene and healthcare sectors,
the global need for items such as personal protective equipment
(PPE), syringes, vials, wipes, medical cartridges, surgical masks
and gowns has led to a surge in the demand for products like
India Chem 2021 7

Message from FICCI
RG Agarwal
Chairman, FICCI Crop Protection Committee, and
Group Chairman, Dhanuka Agritech Ltd.
The Government of India has identified the crop-protection The allocation of INR 50,000 crore by the GoI towards the National
chemical sector as a champion sector and is providing a lot of Research Foundation will spur innovation and strengthen the
support for its growth. The GoI aims to transform India into a overall research ecosystem of the country.5 Providing nutritious
manufacturing hub for crop-protection chemicals to cater to both food is prioritised by all countries and hi-tech agricultural inputs
domestic and international demand. such as the latest fertilisers, bio stimulants, hybrid seeds,
genetically modified (GM) seeds, drip-irrigation technology, new-
Today, the Indian market for crop-protection chemicals is estimated
technology pesticides, new plant protection machinery and drones
to be worth INR 43,000 crore. The value of the domestic market
with spray technology will play pivotal roles.
is estimated to be approximately worth INR 20,000 crore and the
export market is worth around INR 23,000 crore.3 Unfortunately, a Our Hon’ble Prime Minister has shared his vision of ease of
parallel grey market in the form of an unorganised sector exists, doing business (EODB), Sabka Saath Sabka Vikas Sabka
and the extent of its market share is unknown. Vishwas and less government and more governance. However,
the implementation of these ideas will take some time. Agriculture
Crop-protection chemicals save foodgrains from various diseases,
and crop-protection chemicals will play crucial roles in India’s
insects, weeds, mites, etc. Climate change has caused insects and
journey towards becoming a USD 5 trillion economy by 2025. The
pests to evolve and develop the ability to resist existing pesticides.
contributions of the Government and the scientific and industrial
Newer pesticides are rapidly required to address this crisis, but
sectors will also be crucial.
the slow process of registration and adherence to the Insecticides
Act, 1968, are posing problems for adoption. Laws related to
crop-protection chemicals should be similar to international laws
to attract international investments. There has been no significant
research on the development of new pesticides as we spend
0.5% of our GDP on R&D, compared to 4‒5% spent by developed
countries.4
3 https://www.mordorintelligence.com/industry-reports/india-crop-protection-pesticides-market
4 https://www.psa.gov.in/psa-prod/publication/RD-book-for-WEB.pdf
5 https://www.thehindu.com/business/budget/union-budget-2021-50000-crore-for-national-research-foundation/article33720164.ece
8 India Chem 2021

Message from FICCI
Janardhanan Ramanujalu
Co-Chairman, FICCI Petrochemicals Committee, and
Vice President, South Asia and ANZ
Government reforms in direct tax reductions, production-linked incentives, dividend distribution tax with receivers/treaty based, EODB
reforms coupled with India’s digital capabilities, complex manufacturing skills and abundant talent are set to make India a global
chemical manufacturing hub across industry sectors and value chains.
India Chem 2021 9

Foreword
Manoj Mehta
Deepak Mahurkar
Director and Head – Chemicals,
Partner and Leader, Oil and Gas
Agrochemicals, Petrochemicals and
Industry Practice
Civil Aviation, FICCI
PwC India
The chemical industry has played a pivotal role in shaping

The global chemical industry has witnessed a change over the
up the Indian economy and providing livelihood opportunities
last decade owing to dependency on fossil fuels. Climate change
to more than two million individuals. Chemicals and
goals are expected to alter the way the industry develops and
petrochemicals are playing an increasingly important role in
also present chemical companies with the opportunity to explore
improving the quality of life of people as well as supporting
new growth areas.
the manufacturing sector as their application extends across
This report highlights the importance of chemicals in various segments.
the manufacturing sector and the Indian economy. The
The Indian chemical industry has been driven by increasing
Government’s progressive efforts to promote investments in
domestic demand and strong growth in exports. It is set to
the chemical industry and improve the EODB have also been
witness positive changes and become a key investment
highlighted in this report. These Government initiatives will
destination soon as the flagship initiatives of the Government
catalyse the growth of the industry in the next five years, helping
aim to improve EODB and transform India into a global
to transform India into a global manufacturing hub for chemicals
manufacturing hub for chemicals and petrochemicals.
and petrochemicals.
The Government and the private sector can collectively
FICCI, the Government of India and industry participants have
address the challenges faced by the industry and pave the
come together to organise India Chem 2021. PwC’s purpose
way towards the sector’s long-term growth.
is to build trust in society and solve important problems. In this
context, associating with FICCI as a knowledge partner and
contributing to this industry initiative is a privilege for us and an
opportunity to live our purpose. In an increasingly complex world,
PwC helps intricate systems function, adapt and evolve so that
they can benefit communities, society and the complex world of
the chemical industry.
I take this opportunity to wish India Chem 2021 a grand success.
10 India Chem 2021

Executive summary
India has emerged as a leading economy in the world and investment policies, strong regulatory framework, promising labour
its GDP has grown at an average rate of about 7% in the last reforms and trade agreements, and lucrative tax incentives have
one decade.6 Similar to the global economy, the impact of the further propelled it into the league of preferred manufacturing
COVID-19 pandemic on the Indian economy has been severe. destinations. The Department of Chemicals and Petrochemicals
The Government of India has taken proactive measures such (DCPC), Ministry of Chemicals and Fertilizers, Government of
as announcing economic stimulus packages, implementing a India (GoI), has implemented a number of flagship initiatives to
nationwide lockdown and launching the vaccination drive, resulting improve the overall competitiveness, quality and output of the
in the country progressing towards a V-shaped recovery. Moreover, chemical industry. Mandatory standards set by the Bureau of
India’s growth is estimated to surpass the major economies of Indian Standards (BIS), public procurement policies for chemicals
the world in the near term. The presence of a strong domestic and petrochemicals, better trade intelligence, schemes for setting
market coupled with a large working population, a stable political up plastic parks and adequate support for research and innovation
environment, positive outlook towards reducing emissions and are some of the notable initiatives that are catalysing the industry’s
focus on innovation make India a promising manufacturing growth. The Government is also addressing challenges related
destination. to the availability of feedstock, access to industrial infrastructure
and common user facilities, complex approval procedures, skill
The manufacturing sector plays a significant role in the output
development and product-quality standards.
of the Indian economy, and chemical manufacturing is a crucial
segment with roots spread across a wide range of end-use Moreover, the Government has implemented enterprising
industries. With the index of industrial production (IIP) for initiatives and schemes such as Make in India, Aatmanirbhar
chemical manufacturing returning to pre-COVID levels, the Bharat Abhiyan and the Production-Linked Incentive (PLI) Scheme
industry is expected to grow at a CAGR of about 9.2% by FY25.7 with the objective of improving the competitiveness of domestic
Demographic dividends, low per capita consumption, an increasing manufacturing, attracting investments and enabling exports. These
export demand and enabling Government initiatives are the initiatives are expected to boost domestic production and also
key growth drivers for the Indian chemical industry. Attractive increase the demand for chemicals and petrochemicals. Such
business opportunities are present in different segments, including significant measures are expected to transform India into a global
petrochemical intermediates, downstream petrochemicals and manufacturing hub for chemicals and petrochemicals, and help
specialty chemicals. The coming decade is expected to bring in realise the vision of the country becoming a USD 5 trillion dollar
investments worth more than USD 87 billion (solely on the basis of economy.
the major petrochemical products under consideration).
India’s strategic location advantage, skilled and competent

manpower, good governance, high-quality infrastructure, robust
6 RBI, IMF and industry sources

7 PwC analysis
India Chem 2021 11

Table of contents
14 18 20
India at a glance An overview of the An overview of the
Indian manufacturing Indian chemical
sector industry
24 30 31
Opportunities in India’s competitiveness Advantage India
the Indian chemical in the global
industry petrochemical industry
37 42
Recent Government Ease of doing
initiatives business in India
12 India Chem 2021

India Chem 2021 13

India at a glance
India is the largest democracy in the world with a 910 million India’s foreign direct investment (FDI) stood at USD 50 billion in
strong electorate and home to the largest English-speaking FY20, having witnessed a compound annual growth rate (CAGR)
population. It is the sixth-largest economy in the world and the of 5.74% since FY16. Cumulative FDI inflows since FY10 amount
third largest in Asia.8 India is expected to surpass the UK in FY25 to USD 473 billion and 60% of this has been realised in the past
to become the fifth-largest economy and rise to the third spot, five years. Radical reforms such as Make in India, approval of
overtaking Japan in FY30.9 A total of 25 cities in India are among 100% FDI through the automatic route and industrial delicensing
the world’s top 100 fastest-growing cities. The consumer spending have propelled the growth in FDI inflows, which recorded an
in India is expected to grow to nearly USD 6,000 billion by 2030.10 increase of over 12.62% in FY20 over FY19.12
The Indian economy Social conditions

India has exhibited an average 7% gross domestic product
(GDP) growth rate in the last 20 years despite major recessions Population
and economic slowdowns. The GDP is expected to contract India, with its 1.36 billion population, is the second most populous
by 9% in FY21 owing to the COVID-19 pandemic, followed by country in the world after China.13 The country is home to the
a bounceback with over 10% in FY22, surpassing the major largest working population with a median age of 28 years,
economies in the world.11 compared to 38 years in China and the US, 42 years in Europe and
49 years in Japan. The working population has grown at a CAGR
YoY GDP growth rate of India (FY 16–20)
of 20% since 2015 and is expected to reach 1.03 billion by 2030
and 1.14 billion by 2040 when India will have the largest work force
compared to other countries.14
YoY GDP growth in %
10.1%
8.2% • The current median age of 28 years is expected to rise to 31
7.1% 7.0%
6.1% years by 2025 and 37 years by 2040. Therefore, India will
4.2%
continue to have an advantage over developed nations during
this period.
• The income levels of Indians are projected to rise three times

FY16 FY17 FY18 FY19 FY20 FY21P FY22P
by 2025, resulting in improved GDP per capita and increased
spending.
India’s economy is witnessing a V-shaped -9.0%
• India’s urban market is expected to account for two-third of its
recovery, supported by the Government’s
stimulus packages, strong market demand growth in consumption in the next ten years.
and the vaccination drive.
Therefore, it is envisaged that increasing income levels and its
young population will drive India’s economic growth, and the
FDI equity inflows between FY16–20 (in USD billion)
country will continue to have a consumption-driven economy with
a strong consumer market in combination with a large working
CAGR – 5.74% population.
60
FDI inflows in USD billion
50
50 45
40
43 44
Technological progress
40
30 The Government of India (GoI) is focused on innovation and
technology development in various sectors of the economy. India
20
was ranked 48 among 131 countries in the Global Innovation Index
10
(GII) and made it into the list of top 50 innovative countries in the
0 world for the first time in 2020. On the sub-index level of the GII,
FY16 FY17 FY18 FY19 FY20
India was ranked 45th on its innovation output and 57th on its
innovation input.
Source: Department for Promotion of Industry and Internal Trade
8 https://eci.gov.in/ 11 Reserve Bank of India, World Bank, International Monetary Fund and Goldman
9 https://cebr.com/ Sachs
10 http://www3.weforum.org/docs/WEF_Future_of_Consumption_Fast-Growth_ 12 http://mospi.nic.in/
Consumers_markets_India_report_2019.pdf; The Economic Times 13 https://cebr.com/
14 http://hdr.undp.org/en/content/asia-pacific-human-development-report-2016;
Economic Survey of India
14 India Chem 2021

Although the Gross Expenditure on Research & Development
(GERD) in India has nearly tripled between FY08 and FY18 in
terms of value, the country’s gross expenditure amounts to a
mere 0.6-0.7% of its GDP. This is relatively low compared to
the US (2.8), China (2.1), Israel (4.3) and Korea (4.2). From its
current spend of 0.6–0.7% of its GDP on R&D, India aims to
increase its expenditure on the segment to over 2% of its GDP.15
Several schemes have been implemented to develop the

country’s R&D and digital infrastructure. Additionally, the
Government is providing financial incentives and funds to various
businesses and research institutes.16
• A USD 700 million fund has been announced for the National
Research Foundation to strengthen research ecosystems of
India over the next five years.
• USD 200 million has been earmarked to boost digital

transactions in the country.
• Tax incentives are to be provided to businesses on capital

expenditure on research and development (R&D) related
activities for their own enterprises or contributions made to
India is the world’s most open and
other institutions for research.
investment-friendly economy due to
• The Government had introduced a ‘patent box’, similar to
political stability, predictable policy
those of countries in Europe, under which royalty income from
patents developed and registered in India will be taxed at a and business-friendly reforms.
concessional rate of 10%.
Political environment Narendra Modi, Prime Minister

• The political stability of India’s macroeconomic environment
of India, at the BRICS Business
has played a crucial role in its development. The current Forum (November 2019)
Indian Government, in its tenure of seven years, has enacted
various structural reforms to streamline regulations and
increase ease of doing business in the country, as well as
improve the manufacturing competitiveness and infrastructure
of Indian companies to realise its dream of India becoming
a USD 5 trillion economy by FY24. Simplification of tax
provisions, digitally enabled online permits and license-related
processes have significantly improved the processing time
earlier taken to complete administrative tasks and have also
reduced red-tapism, corruption and tax evasion.
• Past and the present measures taken by the Government

clearly indicate its positive outlook on India’s development
in the future. The Hon’ble Prime Minister elaborated on this
initiative during the BRICS meet and the US-India Strategic
Partnership Forum.
15 https://www.psa.gov.in/psa-prod/publication/RD-book-for-WEB.pdf
16 Ministry of Science and Technology, GoI, Economic Survey
India Chem 2021 15

Environmental initiatives
The GoI is dedicated to mitigating concerns arising due to
depletion of natural resources and increasing environmental
pollution. It has undertaken several noteworthy environment-
related initiatives to curb pollution, preserve valuable resources
and provide a safe environment to enable improvement in the
health and well-being of Indian citizens.
Recent Government initiatives on pollution control and waste management17
Formation of a High-Level Task Force (HLTF) and Draft guidelines on ‘Extended Producers Responsibility’
development of a Comprehensive Air Plan (CAP) to for the management of plastic waste in the country
manage air pollution in Delhi and NCR
Enforcement of Bharat Stage VI from 1 April 2020 Promotion of Agricultural Mechanization for In-Situ
throughout the country for both fuels and vehicles to Management of Crop Residue Scheme to prevent
control vehicular emissions stubble burning by providing subsidy for machines for
in-situ crop residue management
Launch of Faster Adoption and Manufacturing of Announcement of the National Hydrogen Mission
Electric Vehicles (FAME) 2 scheme worth USD 1.4 in Budget 2021–22 to promote the consumption of
billion for the next three years to promote the adoption hydrogen-enabling reduced carbon emissions and
of electrical vehicles (EV) sustainability
17 Ministry of Environment, Forest and Climate Change; https://www.indiabudget.gov.in/doc/bh1.pdf

Quote Source: BRICS Meeting
16 India Chem 2021

Globally recognised ‘Brand India’
must be known both for zero defect
(free from defect) & zero effect (no
adverse environmental impact).
Narendra Modi, Prime Minister of

India, on Twitter (December 2014)
India Chem 2021 17

An overview of the Indian
manufacturing sector
The manufacturing sector employed over 160 million people, India’s manufacturing competence
contributing to nearly 16% of the India’s gross value added (GVA)
in FY19. The sector has witnessed a CAGR of approximately 5% in
2nd
its GVA in the last five years18 and is among the priority sectors for
the Government. It has seen major reforms and policy interventions
over the last decade. The sector has tremendous potential and is
expected to increase its contribution to around 25% of India’s GDP Largest steel
by FY25.19 producer
India is emerging as the next global manufacturing hub. This is
recognised by leading government and private agencies worldwide:
• The Global Investment Trend Monitor Report ranked India as
3rd
the most preferred greenfield FDI destination in the world.
• India was ranked sixth among the top manufacturing countries

by the United Nations Industrial Development Organization Largest producer
(UNIDO). of pharmaceuticals
• India was ranked among the top 10 FDI destinations in the world
by the United Nations Conference on Trade and Development
(UNCTAD).
• According to the World Economic Forum’s (WEF) Global

Competitiveness Index, India is the most competitive economy 6th
in South Asia. Largest for
chemicals sales
Value added from manufacturing by National Industrial by value
Classification for FY19 (percentage of share)
23%
Coke, petroleum, rubber,
chemical and related products 4th
Largest automotive
32%
market by volume
13% Chemical and chemical products
(except pharmaceuticals, medicinal
and botanical products) 8.8% of
overall manufacturing GVA
13%
8%
11%
Machinery and equipment Metal and metal products

5th
Largest exporter
Textiles, apparel and Food products, beverages
leather products and tobacco of textiles
Others – 8%
Source: Ministry of Statistics and Programme Implementation Source: National Statistical Office and the Ministry of Statistics
and Programme Implementation
18 http://mospi.nic.in/
19 https://www.businesstoday.in/union-budget-2021/columns/budget-2021-why-manufacturing-industry-expects-more-incentives-this-time/story/429678.html
18 India Chem 2021

India is perceived as a competitive and high-quality manufacturing However, the sudden emergence of COVID-19 resulted in a steep
country in the international market. The rising competitiveness of decrease in the value in April 2020 due to the nationwide lockdown
its Manufacturing industry is reflected in the Global Manufacturing resulting in manufacturing companies shutting down or not
Competitiveness Index (GMCI) rankings, with India being projected functioning at their full capacity.
to secure the fifth ranking on the index position by 2020, climbing
Petrochemical prices, particularly polymer prices, came down
up from the eleventh position in 2016.
significantly. However, the spread between naphtha and polyolefins
Manufacturing of chemicals and chemical products contributed to has remained at around USD 500/MT, resulting in decent margins/
over 8.8% of the overall GVA of the manufacturing sector in FY19. returns for polymer manufacturing companies. However, due to the
This has a significant importance in the overall manufacturing closure of polymer processing units and decreased uptake of end
sector, since chemicals and chemical products find application products, the demand for polymers had perished. This resulted
in most industrial classification segments ranging from food and in inventory build-up and working-capital erosion for polymer
beverages, textiles, leather, metal extraction and processing, manufacturers, leading to lower capacity utilisation.
petroleum refining, pharmaceuticals, rubber, etc. Consequently,
On the other hand, export options also turned out to be attractive
the manufacturing sector’s Index of Industrial Production (IIP) is
for polymer manufacturers based on the broad spreads. For
closely related to the manufacturing of chemicals in the country.
example, Reliance Industries strategised this through resorting
The IIP of the overall manufacturing and chemicals manufacturing to exports of almost 200 KT of polymers in one month, thus
segment has seen continuous increment in the last five years.20 sustaining robust capacity utilisation.
IIP comparison between overall manufacturing and manufacturing of chemicals
IIP trends in the manufacturing sector, April 2015–Dec 2020
IIP moving back to

pre-COVID level
160
140
120
100
80
IIP
60
40 Decline in IIP due to the impact of COVID-19
20
0
Au 5
Au 16
Au 17
Au 18
Au 19
Au 20
Ap 6
Ap 7
Ap 8
Ap 9
Ap 0
5
De 5
Ju 6
De 6
Ju 7
Ju 0
De 7
Ju 8
De 8
Ju 9
De 9
De 0
O 5
O 6
O 7
O 8
O 9
O 0
Fe 15
Fe 16
Fe 17
Fe 18
Fe 19
20
1
2
r-1
-1
r-1
-1
r-1
r-2
-1
r-1
-1
r-1
-1
-2
1
2
n-
n-
n-
n-
n-
n-
b-
b-
b-
b-
b-
g-
g-
g-
g-
g-
g-
c-
c-
c-
c-
c-
c-
ct
ct
ct
ct
ct
ct
Ap
Ju
Overall manufacturing Manufacturing of chemicals and chemical products
Source: Ministry of Statistics and Programme Implementation
The IIP recovered after May 2020 with the GoI’s progressive
initiatives, such as the Aatmanirbhar Bharat (self-reliant India)
economic stimulus package to kick-start the economy and various
sectors, including manufacturing. Since then, the manufacturing
sector’s IIP is on the path to recovery to pre-COVID levels.
20 Ministry of Statistics and Programme Implementation
India Chem 2021 19

An overview of the Indian
chemical industry
India has one of the largest global chemical markets, and is ranked economy and therefore plays an important role in shaping the
sixth in the world and fourth in Asia in terms of global sale of lives of individuals and India’s overall chemical output.
chemicals. India accounts for 2.5% of the world’s global chemical
The Indian chemical industry is fragmented with large, medium
sales.21 More than 80,000 chemicals are manufactured in the
and small companies manufacturing major petrochemicals, alkali
country and are consumed in diverse end-use sectors including
chemicals, inorganic chemicals, organic chemicals, pesticides,
textiles, automotive, agriculture, packaging, pharmaceuticals,
dyes and pigments and other chemicals. The chemical industry
healthcare, construction, and electrical and electronics.22 The
contributed around 8.8% of India’s manufacturing GVA and 1.4%
chemical industry touches every nook and cranny of the country’s
of its national GVA in FY19.
Contribution of the Indian chemical industry23
Covers >
80,000 Employs two million Contributes ~2.5% of global Ranked sixth in the world
products, an inevitable people chemical sales and fourth in Asia for
part of daily life chemical sales
Ranked third-largest Ranked fourth-largest Ranked second-largest Weightage of 7.87% – IIP

consumer of polymers producer of agrochemicals manufacturer and exporter
globally globally. of dyes
Contributes ~1.4% of the Contributes 8.8% of India’s Contributes 2.1% of total FDI Contributes 11.3% of India’s
national GVA manufacturing GVA equity inflows exports
21 https://cefic.org/our-industry/a-pillar-of-the-european-economy/facts-and-figures-of-the-european-chemical-industry/ (excludes pharmaceuticals)

22 http://chemicals.nic.in/
23 Ministry of Statistics and Programme Implementation (analysis at current prices for FY19), Department for Promotion of Industry and Internal Trade,
Ministry of Commerce and Industry, and PwC analysis
20 India Chem 2021

Market size and growth prospects chemical and chemical products manufacturing being on the verge
of attaining the pre-COVID index, the chemical industry is expected
India’s chemical industry was estimated to be worth USD 178 to witness a V-shaped recovery by FY22 by adapting to India’s
billion in FY20 and has a significant potential to reach USD 300 GDP growth trend. The industry is expected to grow at a CAGR of
billion by FY25. In terms of demand, the industry has grown at 9.2% by FY25, reaching up to USD 276 billion in the next
approximately 1.3 times the country’s average GDP growth in the five years.
last five years and shows a strong linkage with its GDP.
In order to achieve its target of USD 300 billion by FY25, the
COVID-19 has severely affected the Indian chemical industry chemical industry needs to grow at a CAGR of 11% in the next five
and disrupted supply chains and the demand for chemicals. years, which is possible considering Government initiatives and
Consequently, it is expected to show a downturn in FY21 while the growth in the consumer base, changes in lifestyle, increase in
still adapting to the shock expected in India’s GDP. With the IIP of disposable incomes and focus on healthcare and hygiene.
The chemical industry market by sub segments in

The Indian chemical industry market (in USD billion)24 FY20 (in USD billion)
11%
CAGR
9.2%
CAGR
Others (biotech,
300 pharma API 20%
276 and others)
Agrochemicals
and fertilisers 15%
51 39
178
166
Petrochemicals 19%
Of the total
consumption, about
Specialty
70% (USD 127 billion) 21%
chemicals
is produced in India
Production Imports Exports Demand Demand Bulk chemicals 25%
FY20 FY25 P
Business as usual Target
Source: DCPC and PwC analysis
India ranks sixth in imports and ninth in exports of global chemicals and chemical products grew at a CAGR of 7.2% between FY16
and chemical products (excluding pharmaceutical products). Its and FY20. Specialty chemicals account for a major share of more
imports increased at a CAGR of 5.4% between FY16 and FY2025 than 50% of chemical exports, dominated by agrochemicals, dyes
with petrochemical intermediates accounting for a major share of and pigments, etc.
over 30% in total imports. On the other hand, export of chemicals
24 PwC analysis
25 https://tradestat.commerce.gov.in/eidb/default.asp
India Chem 2021 21

Import and export of chemicals and petrochemicals for FY16–20 (in USD billion)
60 56
49
50 43
40 40 41 41
40 34
USD billion
29 28
30
20
10
-
FY16 FY17 FY18 FY19 FY20
Imports Exports
Source: Ministry of Commerce
The specialty chemicals segment has grown at an impressive In addition to the industry’s historic growth trajectory, the
rate of approximately 11.7% in terms of value in the last five Government has taken progressive steps, such as the economic
years.26 The COVID-19 pandemic had a positive impact on the stimulus package, Production Linked Incentive (PLI) Scheme,
demand for flavours and fragrances, personal care chemicals, tax and labour reforms, setting up of the National Infrastructure
nutraceutical ingredients and surfactants as a result of increased Pipeline (NIP) and various chemical industry specific policies
consumption of hygiene products, packaged foods, energy drinks and schemes, including its public procurement policy, mandatory
and nutraceuticals. The pandemic had a neutral or negative impact BIS standards, skill development programmes and renewal of
on the demand for other products such as polymer additives, paints the PCPIR policy. The Indian chemical industry has tremendous
and coatings, dyes and pigments, water treatment chemicals, and potential and a positive outlook, and is set to achieve the USD 300
textile and construction chemicals due to the lockdown. billion mark by FY25 and emerge as a global manufacturing hub.27
The segment has immense growth potential due to the

increasing demand from construction, automotive, packaging,
water treatment, home and personal care, food processing,
nutraceuticals and other demand-driven sectors.
The Chemicals and Petrochemicals

sector could emerge as a leading sector
in achieving Prime Minister Narendra
Modi’s vision of reaching USD 5 trillion
economy at the earliest
Sadananda Gowda, Union Minister

of Chemicals and Fertilisers at the
10th National Awards for Technology
Innovation in Petrochemicals and
Downstream Plastics Processing
Industry (Feb 2021)
26 FICCI
27 Quote and data source: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1700280
22 India Chem 2021

Key trends shaping the Indian chemical industry
Shift in customers’ preferences: Customers are

increasingly getting interested in environmentally friendly
and socially responsible products and services. Moreover,
they are becoming conscious of health and hygiene and are
demanding milder and safer products with pure ingredients.
Increasing per capita consumption: The current per capita

consumption of chemical products in India is about one-tenth
of the global average and is expected to double by 2025.
Digitalisation and Industry 4.0: Digitalisation offers

competitive advantages through improved horizontal
and vertical integration, a new definition of operations
management, and innovation and new digital business
models. Chemical companies are implementing digitalisation
initiatives and tools in their supply chains, demand planning
and pricing strategies.
Increasing M&A and investment-related activity:

Downstream value-added opportunities, the continued
strength of specialty chemicals and realignment of portfolios
are the key drivers of strong M&A and investment activities.
Global oil and gas majors and leading chemical companies
are looking for downstream opportunities in India and other
high-growth economies. The trend has already begun with
Saudi Aramco, Total and BASF showing their interest in the
Indian chemical industry.
China shift: Consolidation in the industry, environmental

reforms and tightened financing is changing the structure
of China’s chemical industry, resulting in uncertainty for
companies dependent on the country for their supply of raw
material. In addition, the COVID-19 outbreak has compelled
companies to move their supplier base and look for alternative
locations such as India that offer the advantage on low-cost
labour and favourable investment policies.
Innovation and sustainability: Adding value by balancing

the economic, social and environmental impact of the
pandemic is becoming an overarching management principle
in the chemical industry value chain. Chemical companies are
incorporating sustainability and green-chemistry initiatives by
constantly improving products, technology and processes,
and working closely with customers and suppliers across their
value chains. Expenditure on R&D in the chemical industry
in India increased at a CAGR of 7.91% between 2009 and
2019.28
28 https://cefic.org/our-industry/a-pillar-of-the-european-economy/facts-and-figures-
of-the-european-chemical-industry/
India Chem 2021 23

Opportunities in the
Indian chemical industry
Petrochemicals
The majority of Indian petrochemical companies has evolved the scenario is expected to change by FY25 with the launch of new
from petroleum refineries with the intention of achieving higher petrochemical capacities. The per capita consumption of chemicals
net realisation. Therefore, the chemical industry is dominated by in India is one-tenth of the global average. This leaves headroom
basic commodity chemicals in terms of volume (with one-two step for further penetration, which is expected to be mainly driven
downstream derivatisation). by local consumption. The following detail the key opportunities
expected in different chemical value chains:
India has faced a deficit in supply of olefins in the recent past due
to the focus of manufacturers being on high margin polyolefins, but
Demand growth vs supply demand gap for 2019–25 (in ‘000 MT)29
C2/ C3/
Derivatives C1 C2 C3 C4
C6 C6
C8
Excess
3,000 supply
Supply Demand Gap (000’ MT), FY 25
PX
2,000
PP
1,000 LLDPE
Butadiene PET
Phenol Acetone EO
PS HDPERubber
0
Caprolactum LDPE SBR ABS
Propylene MEG
EDC Acrylonitrile
oxide
-1,000 Acetic acid
VCM Styrene PTA
-2,000 Methanol Supply
deficit
-3,000 PVC
-4,000
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
CAGR of demand growth percentage (2019–25)
Source: DCPC and PwC analysis

Note: Bubble size indicates the supply-demand gap and estimations include impact of COVID-19
24 India Chem 2021

• C1 derivatives: Accessibility to the technology for There is a significant opportunity in manufacturing acrylonitrile
manufacturing acetic acid from carbon monoxide is limited to due to its high demand and the absence of local manufacturers.
four–five providers. Additionally, the availability of syngas as a Access to the technology, handling the manufacturing process
raw material for standalone plants is limited. On the other hand, that involves usage of hydrogen cyanide and disposal of the
a major chunk of acetic acid is used in manufacturing purified effluent are the key challenges in manufacturing acrylonitrile.
terephthalic acid (PTA), which presently has limited capacities in However, integrated projects based on hydrogen-cyanide
India and is dependent on imports. Thus, manufacturing acetic derivatives may be explored.
acid is a lucrative business option to substitute imports. The
Consumption of propylene makes its availability limited for the
presence of limited players in the acetic acid value chain also
merchant market. The availability of propylene may trigger new
offers technology tie-up opportunities.
capacities in the C3 value chains and result in manufacturing
• C2 derivatives: The shortfall in the supply of mono-ethylene capacities of propylene oxide, propylene glycol, polyols, acrylic
glycol (MEG) is expected to be substantial by 2025. Consumers acid, oxo alcohols, cumene, bisphenol, etc., being explored.
and distributors of MEG depend on imports due to India’s limited
• C4 derivatives: India has surplus butadiene capacity. The
domestic production capacities. However, investors shall also
availability of styrene and acrylonitrile is a challenge for C4
consider the recent announcement on reduced custom duty
derivatives. Integrated acrylonitrile-butadiene-styrene co
on caprolactam and nylon while evaluating MEG projects as
polymer (ABS), styrene butadiene rubber (SBR) and butadiene
polyesters are expected to face competition from nylon.
derivative projects may be explored in the long term.
The demand for polyvinyl chloride (PVC) is rising owing to
• C2 /C6 derivatives: General-purpose polystyrene grade is the
its increased usage in construction, furniture and household
major grade of styrene which is consumed in the production of
applications. At present, the capacity of PVC production is
single-use disposable articles. On the other hand, high-impact
limited and expected to face a deficit in the near future, given
polystyrene grade and expanded polystyrene grade have limited
the challenge of chlorine availability. PVC production based
demand. The demand for general-purpose polystyrene grade
on ethylene dichloride (EDC) imports can also be evaluated
is likely to be contained in the near term as the regulations on
alternatively.
single-use plastics increase. Commercial-scale plants need to
be built at minimum 600 kilo tonnes (KT) capacity for profitable
From a long-term perspective, the demand for linear low-density
operations as large capacities in the Middle East are integrated
polyethylene (LLDPE) is likely to be contained due to its major
with gas crackers and hold cost advantage. This has resulted in
application in plastic films, the usage of which is increasingly
styrene projects failing in India, though they can still be explored
being regulated due to waste-management initiatives. As the
considering optimised techno-economics.
demand for high-thickness films increases, investors should be
selective about technologies that are capable of manufacturing • C3 /C6 derivatives: Integrated phenol projects can be explored
metallocene-grade LLDPE along with other grades. given the increasing demand for phenol resins and the presence
of limited players in the phenol and derivatives value chain.
Low-density polyethylene (LDPE) is also expected to face a
The recent imposition of customs duty on bisphenol A holds
shortage in supply as the demand for the product is increasing
a positive outlook for forward integration. However, access to
and there is no scope for new capacity additions in the near
propylene may pose a challenge.
future.
• C8 derivatives: Purified terephthalic acid (PTA) is majorly used
• C3 derivatives: Polypropylene (PP) is a versatile polymer that
as a raw material in the manufacturing of polyesters and the
has replaced multiple applications of its peers owing to its
demand for polyesters is increasing at an annual growth rate
excellent strength and durability. India is expected to become a
of over 8–9%, majorly driven by the polyester yarn. Limited
net exporter of PP by 2025 and explore long-term manufacturing
availability of PTA and the promising demand for polyesters
and export opportunities.
make PTA a lucrative investment opportunity.
29 PwC analysis
India Chem 2021 25

Projects under implementation and in consideration
Given the strong underlying demand trends, India’s petrochemical Both refiners and domestic petrochemical players are expanding
sector is expected to witness a significant investment boom, with their petrochemical capacities. For example, Reliance and IOCL
a number of multibillion-dollar capital investments either already have already expanded their petrochemical production in the past
being implemented or expected within the next few years. couple of years. Domestic players such as Deepak Phenolics
and ONGC Petro additions Limited (OPaL) have also entered the
petrochemical space recently.
Petrochemical projects under implementation
HRRL, Barmer (2023–24) HMEL Bhatinda (2021)

IOCL, Barauni (2023)
Investment: ~USD 6.8 billion Investment: USD 2.6 billion Investment: USD 2.6 billion
Indicative products Indicative products Indicative products
• PP 980 KTPA • PP 500 KTPA • PP- 200 KT
• HDPE/LLDPE 832 KTPA • HDPE/LLDPE 1,250 KTPA
IOCL, Dumad (2022–23) GAIL Pata UP (2023)

Investment: USD 0.6 billion GAIL, Usar Investment: USD 0.13 billion
Maharashtra (2024) Indicative products
Indicative products
• Acrylic acid- 90 KT Investment: USD • PP- 60 KTPA
• Butyl acrylate- 153 KT 1.2 billion
• Butanol- 100 KT Indicative products
JBF Mangalore (2021-22)
• PP- 500 KTPA Investment: USD 0.8 billion
Indicative products
• PTA- 1,250 KTPA
BPCL Kochi (2022–23)
BPCL, Kochi in (2021) #
Investment: USD 1.5 billion
Investment: USD 0.7 billion IndianOil Corporation Ltd,
Indicative products Chemplast Cuddalore
Indicative products Paradeep (2021-24)
• Polyols- 250 KT Vinyls Limited (2022–23)
• MEG- 110 KT • Acrylic acid- 47 KT Investment: ~USD 0.1 billion Investment: USD 2.7 billion
• Propylene Glycol- 110 KT • Butyl acrylate- 180 KT
Indicative products Indicative products
• 2-Ethyl Hexyl Acrylate-
• PVC -170 KTPA • Ethylene glycols- 350 KT
10 KT
• PX- 800 KT
• Butanol- 45 KT
• PTA- 1,200 KT
• 2 Ethyl-Hexanol- 47 KT
Total Investment: ~USD 17.1 billion
#: The complex is mechanically completed and is under commissioning.

Source: Chemical and Petrochemicals Manufacturers Association (CPMA) and industry sources
26 India Chem 2021

In the next three to five years, HPCL-Mittal Energy Limited (HMEL) Saudi Aramco, Rosneft (Nayara) and others have announced plans
is expected to quadruple its petrochemical capacity, whereas to invest in Indian petrochemical manufacturing. Thr West Coast
HPCL Rajasthan Refinery Limited (HRRL) and Bharat Petroleum refinery is being planned as a joint venture between the Abu Dhabi
Corporation Limited (BPCL) will join the list with their refinery- National Oil Company, Saudi Aramco, IOCL, BPCL, and HPCL.
integrated petrochemical assets.
Furthermore, with recent revisions in the basic customs duties
International players have also announced partnerships to enter of naphtha, petrochemical and chemical intermediates, further
the Indian market. Over the past three years, global firms such as traction in investments is expected in the coming years.
Petrochemical projects under consideration
Nayara Energy, Vadinar, Gujarat under construction ISRPL, Panipat, Haryana

Investment: ~USD 6.8 billion Investment: USD 0.2 billion
• Petroleum products Haldia Petrochemicals, Haldia,
• BR/SSBR- 60 KTPA
• Petrochemicals- PP, HDPE, LLDPE, LDPE/ EVA, West Bengal
• ESBR 60 KTPA
Benzene, Cumene, MEG, LAB, C2, C3 Investment: ~USD 0.35 billion
Indicative products
GAIL/OPaL, Dahej, Gujarat
• PBR/ SBR- 100-123 KTPA
Investment: ~USD 0.15 billion
Indicative products
• PBR- 110 KTPA Haldia Petrochemicals, Balasore, Orissa
Investment: USD 10.5 billion
Reliance Jamnagar, Gujarat
Investment: USD 10 billion Indicative products
• PE 1,080 KTPA
Indicative products • PX 1,600 KTPA
• PE 3.5 MMTPA • PTA 1,250 KTPA
• PP 5.2 MMTPA
• PVC 4.5 MMTPA
• Synthetic rubber
RRPCL, Ratnagiri, Maharashtra BPCL Raigad, Maharashtra

Investment: USD 40 billion Investment: USD 6.2 billion
• Petroleum products • PP- 450 KTPA
• Petrochemicals • PE- 1,500 KTPA
Total investment: USD 87.4 billion
Source: CPMA and industry sources
India Chem 2021 27

Specialty chemicals30
Agrochemicals
• The average per-hectare consumption of agrochemicals in India is

about one-tenth of the US and the UK, and one-twentieth of Japan
and China.
• India imports over 50% of its agrochemical raw materials and

intermediates. The increasing environmental reforms in China have
reduced the supply, resulting in supply shortage and price increase.
• Contract manufacturing and export opportunities for off-patent

molecules are areas of concern as about 26 technicals are about to
go off patent in 2022.
• Shifting preferences towards biopesticides, biological control agents

and bio stimulants have resulted in an annual growth of more than
10% in recent years.
Active pharmaceutical ingredients (APIs) and key

starting materials (KSMs)
• India imported APIs and KSMs worth approximately USD 3 billion,

as per the trade statistics of 2019. These APIs and KSMs account
for over 60% of the total imports by pharmaceutical companies.
• Attractive investment opportunities exist in the domestic

manufacturing of APIs and KSMs, fuelled by lucrative incentives
from the PLI Scheme.
Surfactants
• The LAB market in India is expected to undergo a supply deficit

in the coming years due to the increasing demand of home care
products and reluctance of manufacturers to invest in high-
capex technologies.
• Opportunities in manufacturing alpha olefin sulfonates and

fatty alcohol ethoxylates exist with the increasing demand for
premium detergents and liquids.
• The global biosurfactants market is picking up and suitable

export opportunities exist.
Water treatment chemicals
• Imports account for over 90% of the total demand for water
treatment membranes (ultrafiltration, reverse osmosis and
nano filtration) in India. Polymer-manufacturing companies may
explore this business that has options for product diversification.
• Stringency in effluent discharge norms and policies related to

chemical regulations (in the making) offer opportunities for the
development of advanced membranes and specialty chemicals
for industrial effluent treatment and zero liquid discharge.
30 Industry Sources, FICCI, news articles, Chemical Weekly, Chemical News and PwC analysis
28 India Chem 2021

Pigments
• The per capita consumption of paints in India is about one-

fourth of the global average, thereby leaving significant space
for increase in consumption.
• The domestic manufacturing capacity of titanium dioxide, an

inorganic white pigment widely used in paints, plastics and
paper industries, can be expanded with sustainable technology
developments. India has sizeable reserves of the ore required
for manufacturing titanium dioxide.
Specialty packaging and additives
• Consumers are emphasising more on food safety and hygiene,

and willing to pay a premium price for more sustainable food
packaging. This is in turn is opening up opportunities for green
packaging materials and polymers.
• Opportunities exist in the plastic-recycling industry, especially

for thermoplastics which account for over 80% of the total post-
consumer plastic waste generated in India.
• Sustainable packaging would lead to the requirement of

innovative resins and additives to improve the performance of
recyclate/recycling conditions.
Personal and home care ingredients
• Shifting consumer preferences towards milder, safer and natural

ingredients offer opportunities for new developments in bio-based
and bio-sourced ingredients.
• Increasing penetration of home and personal care products,

especially in rural areas, product premiumisation and increasing per
capita income shall open up investment opportunities.
Battery materials and chemicals
• The shift to electrical vehicles (EVs) has already begun, with

lithium-ion batteries (LIBs) at the forefront of their development.
Potential opportunities will arise for manufacturing chemicals
and materials such as electrolytes, anode and cathode
separators such as ultra-high molecular weight polyethylene
and PVDF resin.
• At the same time, opportunities exist in recycling of LIBs,

photovoltaic cells, etc., to recover nickel, cobalt and lithium.
India Chem 2021 29

India’s competitiveness in
the global petrochemical
industry
Easy access to feedstock, presence of a strong domestic Market access: The current per capita consumption of chemicals
demand, lower capital and operating costs, and timely project in India is low compared to the global average. A large population
implementation are in general, important factors for determining base, increasing per capita income and rising demand from the
the competitiveness of petrochemical plants. Some of the aspects end-use industries makes India an attractive market.
describing India’s competitiveness in the petrochemical industry
Capital cost: India offers a competitive cost of fabrication
are defined below:
compared to other countries because of the presence of a large
Feedstock access: The Indian petrochemicals industry is fabrication market, low cost of labour and a favourable location.
highly dependent on imports, with over 65% of the installed
Operating cost: The availability of competent and low-cost labour
refining capacity dependent on crude oil. About 80% of India’s
along with cheaper electricity rates keeps the operating cost of
petrochemicals capacity is integrated with petroleum refineries.
petrochemical plants competitive.
This gives India an edge in terms of petrochemical feedstock
certainty.
Competitiveness in the Indian petrochemical industry
Feedstock Market access2 Capital cost3 Operating cost4 Commissioning Overall

access1 period5
Middle East 4 2 3 1 1 2.2
US 1 1 1 2 2 1.4
Europe 1 1 1 2 1 1.2
India 1 4 4 4 4 3.4
China 1 3 3 3 4 2.8
Southeast
1 2 4 2 2 2.2
Asia
(1) Based on the local availability of petrochemical feedstocks

Unattractive
(2) Based on average demand growth rate of major petrochemicals for 2019-2030
(3) Based on location factor, pre fabrication and construction costs
Highly attractive
(4) Based on average monthly salary of employee, low-cost electricity
(5) Commissioning period based on large petrochemical projects
Source: Data on minimum monthly wages was collected from various sources, including: India (Nagaland - Dept of Labour, Delhi - Govt of NCT of
Delhi State Govt), ASEAN Briefing – November 2019 (Indonesia, Central Java, DKI Jakarta), Vietnam Briefing – November 2019 (Vietnam, Region
IV, Region I), Reuters – December 2019 (Mexico, Non-border, Border Zone), MOHRSS – June 2018 (China, Liaoning, Shanghai), Bangkok Post –
December 2019 (Thailand, Yala, Chon Buri and Phuket), Bloomberg – January 2020 (Brazil, National), ASEAN Briefing – February 2020 (Malaysia,
National), US Dept. of Labor, Wage Indicator Foundation, World Bank and global petrol prices. Data on electricity charges was sourced from
GlobalPetrolPrices.com as accessed on 20 February 2021.
30 India Chem 2021

Advantage India
Strategic location India’s western and southwestern coasts have been the transit
landfall for Middle-East crude oil. India is dependent on crude oil
Surrounded by water on three sides, India’s geographic for over 65% of its feedstock mix and maritime trade enables the
coordinates are distinctly advantageous for trade, and its large country to fulfil its feedstock needs.31
internal market, maritime exports and a thriving private sector play With major refineries and petrochemical plants located over India’s
crucial parts in strengthening the country’s economy. coastline, the country’s position in the global chemical industry is
India is located at the centre of the trans Indian Ocean route unique as it has easy access to petrochemical feedstock and major
connecting the western continents and East Asia, and these demand centres, both catered through ports.
strategic coordinates have enabled the country to establish close
contact with West Asia, Africa and Europe from the Western coast,
and Southeast and East Asia from the Eastern coast.
Strategic location of India
Germany
United Saudi China South Korea

States Arabia
!"#$%
Taiwan
Thailand Vietnam
Malaysia
Indonesia
Access Singapore
Access
Skilled and competent manpower 2014 and launched the Skill India programme in 2015 to achieve
the vision of removing the disconnect between demand and
The GoI has taken proactive steps to develop a skilled workforce supply of skilled manpower, develop vocational and technical
for the manufacturing and services industry. The Ministry of Skill training frameworks for existing jobs and create new employment
Development and Entrepreneurship (MSDE) was incorporated in opportunities.32
31 PwC analysis
32 https://www.skillindia.gov.in/
India Chem 2021 31

Key skill development initiatives
The Skill India programme aims to train 400 million people to make India the skill capital of
Skill India Programme
the world by the year 2022.
Skill Development The Skill Development Mission aims to build a strong institutional framework at both the Central
Mission and state levels for implementing activities for the enhancement of skill level in the country.
Pradhan Mantri Pradhan Mantri Kaushal Vikas Yojana is a flagship scheme launched to impart training for the
Kaushal Vikas Yojana youth focusing on improved curricula, trained instructors and better method of teachings.
Skill Loan is a unique initiative aimed at providing financial support of up to USD 2,100 (INR
Skill Loan
150,000) to aspiring individuals for skill development.
Source: Skill India website
Various training programmes specific to the chemical and The cost of labour in India is competitive compared to other
petrochemicals sector have been launched by the MSDE. These developing and developed countries. Since, labour cost
programmes provide training to individuals for roles such as accounts for a significant share in the fixed-cost component of
process operator, plastic processing machine operator, advanced chemical manufacturing, overall production cost has a positive
plastic mould manufacturer, mill operator, analytical instrument impact on profit margins.
operator, aroma chemical assistant, fitting and measurement
The availability of a competent workforce at a competitive
operator, boiler attendant, effluent treatment plant operator,
cost contributes to the reduction in overall capex by lowering
laboratory assistant, chemical storage management operator,
fabrication cost and increasing profit margins.
distillation unit operator, electroplater, fertiliser marketing executive
and many others.
Range of labour wages in 2019 (in USD per month)

Labour rates in USD per month
341
275 277 285

258 256
190 199
183
158
132 134
118
60
Brazil Vietnam Mexico India Thailand Malaysia Indonesia China
Lowest labour rates Highest labour rates
Source: Data on minimum monthly wages was collected from various sources, including: India (Nagaland - Dept of Labour, Delhi – Govt of NCT of
Delhi State Govt), ASEAN Briefing – November 2019 (Indonesia, Central Java, DKI Jakarta), Vietnam Briefing – November 2019 (Vietnam, Region
IV, Region I), Reuters – December 2019 (Mexico, Non-border, Border Zone), MOHRSS – June 2018 (China, Liaoning, Shanghai), Bangkok Post –
December 2019 (Thailand, Yala, Chon Buri and Phuket), Bloomberg – January 2020 (Brazil, National), ASEAN Briefing – February 2020 (Malaysia,
National), US Dept. of Labor, Wage Indicator Foundation, World Bank and global petrol prices
32 India Chem 2021

Logistics and infrastructure NIP. 14 projects worth USD 2.65 billion and focusing on the
development of road, airport, water supply, electricity distribution
have been proposed by the Paradeep PCPIR. Similarly, the Dahej
National Infrastructure Pipeline PCPIR has proposed five projects worth USD 0.52 billion, focusing
Launched in 2019, the National Infrastructure Pipeline (NIP) on the development of roads, bridges, water supply and effluent
is a group of social and economic infrastructure projects to be treatment/ disposal.35
implemented over a period of five years. NIP aims to invest
in a total 7,604 identified infrastructure projects worth USD Industrial corridor projects
1,826.46 billion spanning across transportation, logistics, energy,
The GoI is developing various industrial corridor projects as a
communication, water and sanitisation, and social and commercial
part of the National Industrial Corridor Programme which aims to
infrastructure.33
develop futuristic industrial cities in India that will compete with the
The GoI aims to reduce the cost of logistics incurred from 14% best manufacturing and investment destinations in the world.
of the GDP at present to less than 10% by 2022. As of 2021,
The industrial corridors comprising multimodal transport services
3,697 projects worth USD 754.12 billion have been identified for
will pass along the National Investment and Manufacturing Zones
the transportation sector, focusing on the development of roads
(NIMZs) and freight cargo will be brought to the industrial corridor
and bridges, railway tracks, urban public transport, airports and
via rail and road feeder links that provide last-mile connectivity.
aviation infrastructure, ports, railway rolling stock, railway terminal
infrastructure, inland waterways, shipyards, etc.34 Industrial corridors offer effective integration between industry
and infrastructure. World-class infrastructure comprising high-
Around 160 projects worth USD 38.62 billion have been identified
speed transportation network, (rail and road), ports with state-
for the development of bulk material transportation pipelines and
of-the-art cargo handling equipment, modern airports, special
logistics transportation to strengthen the logistics network in India.
economic zones (SEZs)/industrial clusters, logistic parks, urban
Additionally, 631 projects worth USD 75.03 billion have been infrastructure, etc., will lower logistics costs and enable firms to
specifically identified for the development of common infrastructure focus on their areas of core competence.
for industrial parks. This will further aid in the expansion of the
Newly built industrial corridors are likely to lower logistics cost as
manufacturing sector, including the chemical and petrochemicals
well as improve delivery time. Doing so will improve the efficiency
sector.
of industrial production structure. 11 industrial corridors are being
Petroleum, Chemicals and Petrochemicals Investment Region built and 32 projects are expected to be developed in four phases
(PCPIR) infrastructure projects are also being prioritised in the by FY25.
33 https://www.investindia.gov.in/
34 Ibid.
35 https://economictimes.indiatimes.com/news/economy/infrastructure/new-pcpir-policy-moots-central-funding-for-infrastructure/articleshow/79601634.cms?from=mdr
India Chem 2021 33

National Industrial corridor programme
Industrial corridors
Source: Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, GoI
Sagarmala Programme Existing and upcoming ports in India
It is expected that cargo traffic at Indian ports will be approximately

2,500 million metric tonne per annum (MMTPA) by 2025, while
the current cargo handling capacity of Indian ports is only 1,500 Existing ports
MMTPA. The Union Cabinet approved the Sagarmala Programme Upcoming ports
on 25 March 2015 to cater to the increased port traffic. The
programme envisages to develop India’s 7,517 km coastline and
14,500 km of potentially navigable waterways and maritime sector.
As a part of the Sagarmala Programme, around 577 projects worth
USD 130 billion have been identified for development between
Sagar Island
2015–2035 to reduce logistics cost for export-import (EXIM) and Kandla
Kolkata
domestic trade with minimal infrastructure investment. The projects Porbandar Vadhavan
Haldia
under the Sagarmala Programme are channelised towards port Mumbai Paradip Satallite Port
modernisation and new port development, port connectivity Paradip
JNPT
enhancement, port-led industrialisation and coastal Vizag
community development.36 Marmagoa Machilipatnam/Vodarevu
Ennore
• Under the Sagarmala Programme, Project Unnati has been Mangalore Chennai
launched by the Government to improve the efficiency and Cuddalore/Sirkazhi
productivity key performance indicators (KPIs) for the 12 major Kochi
Tuticorin
ports in India. Around 116 initiatives were identified across
12 major ports to unlock more than 100 MMTPA capacity just
Source: Ministry of Ports, Shipping and Waterways
through efficiency improvement. 93 initiatives have already
been implemented to unlock more than 80 MTPA capacity.37 • Radio frequency identification system has been installed in 11
• Greenfield ports are also proposed to be developed at major ports to enhance security and remove bottlenecks for
Vadhavan (Maharashtra), Sagar Island (West Bengal), seamless movement of traffic across port gates.
Paradip Satellite Port (Odisha), Cuddalore/Sirkazhi (Tamil • E-delivery orders, e-invoice and e-payments are being issued
Nadu) and Machilipatnam/Vodarevu to fulfil the cargo across all major ports, reducing paperwork and improving
handling capacity gap. processing time.
36 http://sagarmala.gov.in/
37 http://sagarmala.gov.in/projects/projects-under-sagarmala
34 India Chem 2021

Maritime infrastructure and shipping will
play a pivotal role in India’s economic
engagement with the rest of the world. India
is blessed with one of the longest coastlines
located in the most strategic global trade
routes. Harnessing it will generate rich
Our coastal area can be a economic dividend to the country.
channel for global trade.
Narendra Modi, Prime
Nitin Gadkari,
Minister of India, during
Minister of Shipping,
his maiden speech in the
Road Transport and Highways
Parliament (June 2014)
Tax structure and incentives The reduced CIT rate makes return on investments made in India
more attractive. The reduced rate and other favourable factors
In September 2019, Finance Minister Nirmala Sitharaman also pave the way for cementing India’s status as a favourable
announced the largest reduction in corporate income tax (CIT) rates manufacturing destination against the backdrop of existing global
in the last three decades through the Taxation Laws (Amendment) trade dynamics. With the headline CIT rate for newly incorporated
Ordinance, 2019. India’s CIT rate is now closer to the worldwide domestic manufacturing companies being reduced to 15%, the
average statutory CIT rate of 23.03%.38 manufacturing sector is one of the largest beneficiaries.
Percentage of comparative corporate tax rates in 2019
Reduced tax rates for

existing companies
For new manufacturing 30% 30%
28%
companies 25% 25%
24%
22%
21%
20% 20%
17% 17%
15%
a
am
SA
ia
na
ia
il
a
ng
nd
ric
az
di
ic
di
or
ys
s
hi
Ko
la
ne
ex
U
In
In
n
ap
Af
Br
a
ai
C
et
al
M
do
ng
g
Th
h
Vi
M
on
ut
In
Si
So
H
Source: PwC’s Worldwide Tax Summaries
Effective tax rates in India, including surcharge and cess, are • For domestic companies opting for concessional rates, certain
17.16% for new manufacturing companies and 25.17% for existing exemptions, deductions and allowances (including additional
companies not claiming prescribed deductions/exemptions. depreciation) will not be available. Minimum Alternative Tax
(MAT) will not apply in this case and accumulated MAT credit
Some of the implications of the new CIT rate reduction are:39
cannot be utilised.
• Effective CIT rates have been slashed for existing domestic
• The effective MAT rate for domestic companies not opting for
companies from 34.94% to 22% from FY20 onwards.
the concessional tax rates has been reduced from 21.55% to
• For new domestic companies set up on or after 1 October 2019 17.47%. They will continue to enjoy the benefit of specified
and commencing manufacturing before 31 March 2023, the deductions/incentives, where applicable.
applicable effective CIT rate is 17.16%.
38 https://finmin.nic.in/ 39 https://taxsummaries.pwc.com/
Quotes: Ministry of External Affairs
India Chem 2021 35

Labour reforms
The GoI is trying to reform the archaic labour laws that were limiting the investment interest by foreign companies. In order to simplify and
consolidate the existing labour laws of India, the Government has recently introduced four labour codes, namely The Code on Wages,
2019, The Code on Social Security, 2020, The Occupational Safety, Health and Working Conditions Code, 2020 and The Industrial
Relations Code, 2020.
The new codes have extended the benefits to workers of the unorganised sector and platform and gig workers. On the other hand,
employers have benefitted from the streamlined laws of regulating industrial disputes and trade unions in India.
Labour reforms in 2020
1 The Code on Aims to standardise wages, renumeration and bonus provisions for employees with unified definition of
Wages, 2019 ‘wages’ and increases the wage threshold to INR 18,000 for exclusion from the definition of worker, etc.
The Occupational Safety, Health and

2 The Code on Social Security, 2020 3 4 The Code on Social Security, 2020
Working Conditions Code, 2020
Aims to provide better social security Aims to regulate the occupational safety, Aims to streamline the laws regulating
benefits such as provident fund, insurance health and working conditions, and industrial disputes and trade unions in
and gratuity promote gender equality India
• The code extends the reach of • To circumvent the prolonged • For the benefit of employers, the IR
the Employees’ State Insurance delays in administrative processes, Code has increased the threshold
Corporation and Employees’ Provident establishments registered under any of workers to three hundred (300)
Fund Organisation to workers in the concerned law shall be deemed to be for obtaining the consent of the
unorganised sector and platform and registered under OSH code. concerned government in case of lay
gig workers. off, retrenchment or closure of the
• The OSH Code has dropped the
establishment.
• It plans to provide gratuity benefit to earlier provision for temporary
fixed-term employees without any accommodation of workers near • It has also proposed to set up a
condition for a minimum service period. worksites and has proposed a journey reskilling fund for training retrenched
allowance or a lump sum amount of workers, with the employer contributing
• Aggregators employing gig workers will
fare to be paid by the employer for an amount equal to 15 days of last-
have to contribute 1–2% of their annual
to-and-fro journey of the worker to their drawn wages of workers.
turnover for social security, with the
native place from the place of their
total contribution not exceeding 5% of
employment.
the amount payable by the aggregator
to gig and platform workers.
Source: Ministry of Labour and Employment
Trade and economic cooperation agreements

India is negotiating with the US, the European Union (EU), Australia and Africa to sign new trade agreements.40
Existing trade and economic cooperation agreements
Economic cooperation Free trade agreements

• Croatia • Bulgaria • South Asia • Japan
• Finland • Czech Republic • ASEAN countries • Korea
• Slovak Republic • Romania • Sri Lanka
Preferential trade agreement

• Chile • MERCOSUR – Comprehensive economic
• Afghanistan Argentina, Brazil, cooperation agreement
Paraguay and
Uruguay • Singapore • Malaysia
40 Ministry of Commerce
36 India Chem 2021

Recent Government
initiatives
Public procurement policy for chemicals and
petrochemicals
As a part of the Make in India initiative, the Department of At present, the policy is applicable to over 28 chemicals,
Chemicals and Petrochemicals (DCPC) has notified all procuring petrochemicals, pesticides and dyestuff. The minimum local
entities to comply with the local content criteria for a set of content will progressively increase till FY25.41
chemicals, petrochemicals and pesticides irrespective of the
purchase value.
Year FY19 FY20 FY21–23 FY23–25
% Local content
(value)
50% 60% 70% 80%
Mandatory BIS grades Scheme for setting up plastic parks

The DCPC, Government of India, has passed mandates on the The 64-year-old plastic industry in India contributes more than USD
import of certain chemicals and petrochemicals to comply with 4.2 billion to India’s GDP. The industry has grown at a high CAGR
specified levels/grades set by the Bureau of Indian Standards of about 10% in the last decade. The per capita consumption of
(BIS). The Government intends to use this initiative to improve the plastics stands at approximately 13.6 kg, which is much below the
quality of chemicals/petrochemicals produced in the country, as global average of 30 kg.42 This lower consumption, as compared to
well as control the quality of imported chemicals. other developing and developed nations, indicates that there is a
huge opportunity for the industry to grow over the coming years.
So far, phthalic anhydride, acetic acid, methanol, poly aluminium
chloride, high-density polyethylene (HDPE)/polypropylene (PP) On the other hand, the export of plastic products has increased
woven sacks for packaging, pyridine, gamma picoline, beta at a CAGR of 9.6% between FY15–20,43 though India’s share in
picoline, potassium carbonate, hydrogen peroxide, and sodium global exports is relatively small. This is mainly because the plastic
tripolyphosphate are considered for the BIS quality standard industry is highly fragmented with micro, small and medium units
compliances which are proposed to come into effect starting dominating the landscape. It lacks the capacity to significantly tap
March 2021. into the export opportunity. Owing to the increasing demand and
targeted increase in the export of plastic products, the DCPC has
As per the notified provisions, the manufacturers of the listed
formulated a scheme for setting up plastic parks. These aim at
chemicals are required to comply with the mandatory BIS grades
creating an ecosystem to consolidate and synergise the capacities
and bear the Standard Mark under licence from the BIS. This is
of the domestic downstream plastic processing industry through a
also applicable to the import of the listed chemicals, for which
cluster-development approach.
the exporter has to apply for a BIS licence under the Foreign
Manufacturers Certification Scheme.
42 http://ficci.in/ .
43 Ministry of Commerce and Industry (HS Code 39)
India Chem 2021 37

The objective of the scheme is to increase the competitiveness Scheme for setting up centres of excellence
of the polymer processing industry by attracting investments
to improve polymer absorption capacity and facilitate the Back in June 2018, the DCPC proposed a scheme for setting up
development of quality infrastructure and modern research and centres of excellence in the field of petrochemicals as a part of the
development (R&D) measures. The scheme also aims to increase National Policy of Petrochemicals.46 Under the scheme, the DCPC
the share of exports and achieve environmentally sustainable will provide funding to eligible Government institutes/organisations
growth through new methods of waste management, recycling, etc. to develop R&D projects in petrochemicals and polymers through
support in setting up centres of excellence.
Six plastic parks have been approved under the scheme so far and
the Government is planning to build more. The established centres will play a pivotal role in the development
of existing polymer products, new polymer applications, plastic
Funding of up to 50% of the project cost, subject to a ceiling recycling technologies, bio and biobased polymer, biodegradable
of USD 5.6 million per project, is being awarded to the eligible polymers, engineering polymers, polymer composites and
proposed plastic park. nano composites, specialised coatings and adhesives, polymer
membranes, polymers-based systems for healthcare and
Trade intelligence biomedical device, polymer blends and alloys, energy-efficient
processes and various specialty applications of polymers.
In order to curtail tax evasion and enable a better trade intelligence
The DCPC also felicitates/incentivises meritorious innovations and
of certain chemical products that currently fall under the other
inventions in the field of polymeric materials, products processes
category of the Harmonized Commodity Description and Coding
and other areas of national and social importance in the form of
System, the Government has made it mandatory to mention the
national awards.
eight-digit HS code for 49 chemical-based products while issuing
GST invoices. The mandate came into force on 1 December
2020 and the Government is proposing that separate eight-digit Intellectual property treaties
HS Codes be allotted to another group of 106 chemicals and
In June 2019, India accepted the three important classification treaties
petrochemicals.44
of the World Intellectual Property Organization that are designed to
ease the search for trademarks and industrial designs, thereby helping
Export promotion schemes brand owners and designers in their efforts to obtain protection for their
Various export promotion schemes have been implemented by the own work.47 The treaties accepted by India are:
Government to improve India’s share in global trade.45 Some of the • Vienna Agreement to establish an International Classification of
notable schemes recently announced are: the Figurative Elements of Marks
• Administrative assistance to SEZs • Nice Agreement for International Classification of Goods and
• Fiscal incentives to SEZs Services for the Purposes of the Registration of Marks
• Market Access Initiative • Locarno Agreement for establishing an International

Classification for Industrial Designs
• National Export Insurance Account
Additionally, the Indian Patent Office has worked towards reducing
• Interest Equalisation Scheme the processing time for filing IP application and appointing
• Investment in Export Credit Guarantee Corporation. specialist judges in commercial courts to ensure the effectiveness
of IP rights enforcement.
Chemicals Promotion and Development Scheme

The DCPC has implemented the Chemicals Promotion and
Development Scheme (CPDS) scheme to facilitate growth and
development of the chemical and petrochemicals industry by
creation of knowledge products through studies, surveys, data
banks and promotional material, and dissemination of knowledge
through seminars, conferences and exhibitions to facilitate the
development of the sector.48
The scheme also aims to incentivise research and innovation

by awarding outstanding efforts in the field of chemicals and
petrochemicals.
44 https://www.businesstoday.in/current/economy-politics/govt-makes-it-compulsory-to-mention-8-digit-hsn-code-in-gst-tax-invoice-for-49-chemical-based-products/
story/423694.html
45 https://commerce.gov.in/about-us/export-promotion-councils/basic-chemicalscosmetics-and-dyes-export-promotion-council-chemexcil/; https://afleo.com/learn/export-
incentive-schemes-india/#Market_Access_Initiative_MAI_Scheme
47 https://www.wipo.int/portal/en/news/2019/article_0021.html
48 https://chemexcil.in/
38 India Chem 2021

Development Council and Advisory Forum The Government has overhauled the previous PCPIR policy and is
taking active steps to make necessary amendments and speed up
The DCPC has set up a Development Council and Advisory the completion of ongoing projects. With the Central Government
Forum to address the issues and challenges faced by chemical taking over the lead role of a developer, the concept of PCPIR is
and petrochemicals companies in India. Issues such as delays in being redrawn to attract a combined investment of over USD 420
getting green clearances and in restoring tax incentive for R&D are billion through the proposed new PCPIR policy that is set to be
being resolved by the forum to enable increased R&D expenditure implemented between 2020–35. As per the updated policy, the size
and focus towards sustainability and green chemistry. requirement of a PCPIR is being reduced from 250 sq. km to 50 sq.
km, with specific cluster-integration strategy.
Draft Chemical (Management and Safety) Rules
The Government is also planning to provide a viability gap funding
In December 2020, the Government released the fifth draft for infrastructure projects and smart utilities for a value of up
amendment to the Chemical (Management & Safety) Rules to 20% each. The smart utilities would cover common effluent
(CMSR), which will supersede the two existing rules – treatment plants, integrated solid waste management projects,
Manufacture, Storage and Import of Hazardous Chemical environmental monitoring systems, etc. Additionally, funding for
Rules, 1989, and the Chemical Accidents (Emergency Planning, project design and management consultancy is also being planned
Preparedness and Response) Rules, 1996.49 for PCPIRs.50
With the proposed draft rules, the Government intends to;

Production Linked Incentive (PLI) Scheme
• promote greener and safer chemistry within chemical
India imports APIs and KSMs worth more than USD 3 billion,
manufacturing, transport, use and disposal
which also account for 63% of all the imports by the Indian
• enhance competitiveness in the domestic chemical industry pharmaceutical industry.51 In order to reduce the dependency
on imports and catalyse investments in greenfield projects
• pre-use registration and inventory management.
for manufacturing APIs, KSMs and drug intermediates, the
The draft CMSR provides for notification, registration and Department of Pharmaceuticals, Ministry of Chemicals and
restrictions, or prohibitions, as well as requirements related to Fertilisers, outlined the details of the PLI Scheme in July 2020.
labelling and packaging of substances, substances in mixtures,
With a project outlay of over worth USD 1 billion, financial
substances in articles and intermediates, and introduce
incentives shall be provided for six consecutive years on the sales
Registration, Evaluation, Authorisation and Restriction of
of 14 fermentation-based APIs, 23 chemically synthesised APIs,
Chemicals (REACH) like registration requirements for certain
and four KSMs at the following rates starting from FY22–23:52
priority substances having a quantity of ≥ one tonne per year.
The CMSR will apply to all substances, substances in mixture, • incentives for the fermentation-based products – 20% for
substances in articles and intermediates that are manufactured, FY23–24 to FY26–27, 15% for FY27–28 and 5% for FY28–29
imported or placed in the Indian territory.
• incentives for chemical synthesis-based products – 10% for
The draft rules require manufacturers, importers or authorised FY22–23 to FY27–28.
representatives to notify new and existing substances, and register
The scheme has received a positive response and the Government
substances that need registration.
has approved 19 applications with committed investments worth
USD 660 million so far.
Proposed New PCPIR Policy 2020–35
The scheme has a direct impact on the chemical industry as APIs
In order to promote investment in the chemical and petrochemicals
are an integrated part of downstream chemicals.
sector, and make India an important hub for both domestic
and international markets, the Government had launched the In addition to being approved for medical devices, the scheme
Petroleum, Chemicals and Petrochemical Investment Regions has recently been extended to ten new sectors with a total outlay
(PCPIRs) policy in April 2007. At present, PCPIRs are being of USD 19.6 billion. The chemical industry’s applications are
developed in the states of Andhra Pradesh (Vishakhapatnam), spread across all these sectors and they are expected to indirectly
Gujarat (Dahej) and Odisha (Paradeep) with little success in their impact the increased consumption of polymers, resins, fibers, bulk
overall progress. The previously proposed PCPIR in Tamil Nadu chemicals, paints, pigments, battery chemicals, food additives, etc.
(Cuddalore and Nagapattinam) has been scrapped majorly due
to protests from the local residents and authorities. A new PCPIR
is being developed in the vicinity of the Hindustan Petroleum
Corporation Limited (HPCL) Rajasthan Refinery Limited and the
Petrochemical Complex in Barmer district of Rajasthan.
49 http://files.chemicalwatch.com/191213__Draft_Chemical_Safety_Rules__Final_%281%29.pdf
50 https://www.constructiontechnology.in/news/details/4120
51 Department of Pharmaceuticals
52 Business Today, Department of Pharmaceuticals and Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers,
Govt. of India, and industry sources
India Chem 2021 39

40 India Chem 2021

Financial outlay Objectives of the PLI Scheme
High-efficiency solar 4% Competitive and efficient domestic

PV modules 3%
4% manufacturing
White goods (ACs 5%
and Amp, LED) 39% 7%
Total:
Textile products Attract investment in core sectors and
USD 19.6 8%
Telecom and networking cutting-edge technologies
billion
products 8%
Advance Chemistry
Cell (ACC) battery 12% 10% Enable economies of scale and exports
Electronic/technology
products
Automobiles and Make India a part of the global supply
auto components chain
Speciality steel
Food products
Pharmaceuticals
Impact of the PLI Scheme
Indirect impact on the chemical industry

1 The minimum production value in the country – as an outcome of the
PLI Scheme – stands to be around worth USD 56 billion in the Polymers, resins, fibres, APIs, bulk
next five years. chemicals, paints, pigments, food
additives, etc.
Cashback and incentives between 2–20% of the incremental sales
2 revenue (over the base year) and incremental exports revenue are
expected to be generated, depending on the sector.
3 Potential to create ~14 million man-months’

worth of jobs directly from 2021–22
Source: Ministry of Chemicals and Fertilizers, and industry sources
Revision in basic customs duty levied on naphtha, petrochemicals and chemicals
After the global economic slowdown due to the COVID-19 Local availability of petrochemical feedstocks, especially
pandemic, the Indian chemical industry expected the naphtha, has always been a challenge for the downstream
Government to develop a framework in the Union Budget 2021 chemical sector as over 80% of the refineries have
for bringing back the high growth trajectory. At a broader level, forward integration in the production of petrochemicals.
the Government outlined a strategy in line with its vision of Competitiveness in the industry is likely to improve with the
building an Aatmanirbhar Bharat (self-reliant India). The budget basic customs duty reduced from 4% to 2.5%.53 Low-cost
has made some provisions to improve the competitiveness of naphtha will make a way into the higher availability of olefins for
the chemical industry. petrochemical intermediates in C2, C3, C4/C6 value chains and
may trigger new investments in naphtha-based crackers.
A specific policy provision pertaining to the chemical sector
was not expected as it is not administered or regulated directly The focus of the Government is to continue removing
by the Government. However, the changes proposed by the anomalies and challenges in the indirect tax regime – especially
Government on the customs duty levied on raw materials used the inverted duty structure – which impedes the Make in India
by domestic manufacturers result in reduced cost of inputs and policy. For this purpose, the customs duty rates on key raw
correction of the inverted duty structure. materials and inputs/components has been rationalised.
53 Union Budget 2021‒22
India Chem 2021 41

Ease of doing
business in India
India has improved its Ease of Doing Business (EODB) ranking
from 142 in 2014 to 63 in 2019. One of the objectives of the Make
in India initiative is to create a more business-friendly environment
in India. The efforts have yielded substantial results, with India
jumping 79 places in the last five years.54
63
EODB ranking 77
Key initiatives which helped improve India’s rank:

100
Process Single form for company formation
Time Fast-track approval for construction permits

130 130
Trade Indian Customs Single Window project implemented 142
Commercial courts and appellate division of high

Legal
courts established
Insolvency and Bankruptcy Code, 2016, for

Exit
resolving insolvency 2014 2015 2016 2017 2018 2019
54 https://www.doingbusiness.org/en/rankings
42 India Chem 2021

EODB: Top parameter-wise rankings
For India, the 2014 rankings are given in brackets
Trading across Resolving

Overall rank Getting credit Getting electricity
borders insolvency
India 63 (142) 25 (36) 68 (126) 52 (137) 22 (186)
Vietnam 70 25 104 122 27
Brazil 124 104 108 77 98
Mexico 60 11 69 33 106
Indonesia 73 48 116 38 33
*Lower rank in a given parameter represents better positioning of the respective country
Source: World Bank
India will continue to remain one of the world’s fastest-growing chains. Several global oil and gas and chemical companies are
economies. Recent policy interventions and economic measures considering setting up large manufacturing operations in India
have strengthened the positive outlook towards the Indian and the country is emerging as a suitable destination for its good
economy. Firms are looking to diversify their production bases governance practices, high-quality infrastructure, robust
and the markets they serve in the new normal. Their primary trade and investment policy, strong regulatory framework
objective in a post-pandemic world is to bring in resilience in supply and availability of quality labour at competitive prices.
India Chem 2021 43

Notes
44 India Chem 2021

Notes
India Chem 2021 45

About FICCI Contacts
Rinky Sharma
Established in 1927, FICCI is the largest and oldest apex
business organisation in India. Its history is closely interwoven Senior Assistant Director
with India’s struggle for independence, its industrialization, Phone: +91-11-23487473
and its emergence as one of the most rapidly growing global rinky.sharma@ficci.com
economies.
A non-government, not-for-profit organisation, FICCI is the

Samidha Hasija
voice of India’s business and industry. From influencing policy
to encouraging debate and engaging with policymakers Research Associate
and civil society, FICCI articulates the views and concerns Phone: +91-11-23487473
of industry. It serves its members from the Indian private samidha.hasija@ficci.com
and public corporate sectors and multinational companies,
drawing its strength from diverse regional chambers of
commerce and industry across states, and reaching out to
over 2,50,000 companies.
FICCI provides a platform for networking and consensus

building within and across sectors and is the first port of
call for Indian industry, policymakers and the international
business community.
46 India Chem 2021

About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155
countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax
services. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate
legal entity. Please see www.pwc.com/structure for further details.
Find out more about PwC India and tell us what matters to you by visiting us at www.pwc.in.
© 2021 PwC. All rights reserved.
Authors
Deepak Mahurkar Gaurav Gupta
Partner and Leader, Oil and Gas Industry Practice Associate Director, Chemicals Practice
PwC India PwC India
Mobile: +91 98186 70797 Mobile: +91 98999 72220
deepak.mahurkar@pwc.com gaurav.g.gupta@pwc.com
Nikhil Kalane Moin Bhutto

Consultant, Chemicals Practice Consultant, Chemicals Practice
PwC India PwC India
Mobile: +91 97668 46822 Mobile: +91 78019 79859
nikhil.kalane@pwc.com moin.bhutto@pwc.com
Contact us
Deepak Mahurkar Gaurav Gupta
Partner and Leader, Oil and Gas Industry Practice Associate Director, Chemicals Practice
PwC India PwC India
deepak.mahurkar@pwc.com gaurav.g.gupta@pwc.com
India Chem 2021 47

Data Classification: DC0 (Public)
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sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this
information is accurate or complete. Any opinions or estimates contained in this document represent the judgment of PwCPL at
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PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information
contained within it or for any decisions readers may take or decide not to or fail to take.
© 2021 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers
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March 2021

India: A global manufacturing

Petrochemical report_updated.indd 1 15/03/21 9:59 PM

Petrochemical report_updated.indd 2 15/03/21 9:59 PM

Petrochemical report_updated.indd 3 15/03/21 9:59 PM

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The Indian chemical industry is one of the fastest-growing sectors

India Chem 2021 5

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6 India Chem 2021

Petrochemical report_updated.indd 6 15/03/21 9:59 PM

India Chem 2021 7

Petrochemical report_updated.indd 7 15/03/21 9:59 PM

8 India Chem 2021

Petrochemical report_updated.indd 8 15/03/21 9:59 PM

India Chem 2021 9

Petrochemical report_updated.indd 9 15/03/21 9:59 PM

The chemical industry has played a pivotal role in shaping

I take this opportunity to wish India Chem 2021 a grand success.

10 India Chem 2021

Petrochemical report_updated.indd 10 15/03/21 9:59 PM

India’s strategic location advantage, skilled and competent

6 RBI, IMF and industry sources

India Chem 2021 11

Petrochemical report_updated.indd 11 15/03/21 9:59 PM

12 India Chem 2021

Petrochemical report_updated.indd 12 15/03/21 10:00 PM

Petrochemical report_updated.indd 13 15/03/21 10:00 PM

The Indian economy Social conditions

• The income levels of Indians are projected to rise three times

14 India Chem 2021

Petrochemical report_updated.indd 14 15/03/21 10:00 PM

Several schemes have been implemented to develop the

• USD 200 million has been earmarked to boost digital

• Tax incentives are to be provided to businesses on capital

Political environment Narendra Modi, Prime Minister

• Past and the present measures taken by the Government

India Chem 2021 15

Petrochemical report_updated.indd 15 15/03/21 10:00 PM

Recent Government initiatives on pollution control and waste management17

17 Ministry of Environment, Forest and Climate Change; https://www.indiabudget.gov.in/doc/bh1.pdf

16 India Chem 2021

Petrochemical report_updated.indd 16 15/03/21 10:00 PM

Narendra Modi, Prime Minister of

India Chem 2021 17

Petrochemical report_updated.indd 17 15/03/21 10:00 PM

• The Global Investment Trend Monitor Report ranked India as

• India was ranked sixth among the top manufacturing countries

• According to the World Economic Forum’s (WEF) Global

Machinery and equipment Metal and metal products

18 India Chem 2021

Petrochemical report_updated.indd 18 15/03/21 10:00 PM

IIP comparison between overall manufacturing and manufacturing of chemicals

IIP trends in the manufacturing sector, April 2015–Dec 2020

IIP moving back to

Overall manufacturing Manufacturing of chemicals and chemical products

Source: Ministry of Statistics and Programme Implementation

20 Ministry of Statistics and Programme Implementation

India Chem 2021 19

Petrochemical report_updated.indd 19 15/03/21 10:00 PM