Sachin Jagdale – Mumbai
A s part of its endeavour to promote India’s international trade, Export-Import bank of India (Exim Bank) recently released a study titled ‘Indian Chemical Industry: Exploring Global Demand’ Exim Bank identifies sectors with potential for exports. Based on a detailed analysis of these sectors, specific studies are brought out, by way of publications. The bank had recently completed a study on the Indian chemical industry. This report highlights the pattern of India’s international trade in chemicals with the primary objective of assessing the potential for exports of this sector by mapping it with the trends in international demand for chemical products.
The scope of analysis has been confined to basic, specialty and agricultural chemicals. Thus the analysis in the study has included organic and inorganic chemicals, tanning, dye extracts and insecticides and pesticides. The Indian chemical industry is estimated to be the fifth largest in the world and second largest in Asia after China. The industry accounts for about 10 per cent of the output of the Indian manufacturing sector, 13 per cent of India’s total exports, and nine per cent of the country’s total imports.
In terms of segmentation, basic chemicals is the largest sector with total revenues estimated at $43 billion, equivalent to about two-third of the industry’s overall value in 2010. Within this, the contribution of small and medium enterprises (SME) in terms of production of the chemical sector is estimated to be as high as 40 per cent, an indication of the significance of SMEs, and as a corollary, the importance of this sector in employment generation.
As far as India is concerned while chemical export is growing, imports are growing even faster. Moreover, volume-wise growth of Indian chemical industry is almost stagnant. India is exporting to almost similar markets that they used to export before. So, perhaps India could not identify and diversify its potential markets. Nadir Godrej, MD, Godrej Industries, said, “Different kinds of duties on raw materials is an issue for the chemical industry in India. Specialty chemical segment has an advantage as we have trained manpower. India has a lot of potential in chemical export. We should export to the countries where we haven’t exported before.”
Dr Arup Basu, President, Tata Chemicals, echoed Godrej’s views. He said, “Access to raw materials will always remain important. Specialty chemical business needs assured access of raw materials. Supply chain is a challenge for the chemical industry. There are hazardous chemicals where supply management is very important. All the MNCs are looking at Indian market but they are struggling as they are not getting fast approvals and this is the common complaint from all the MNCs. India has millions of consumers and that itself is a big attraction.”
