Knowledge and Strategic Partner A report on Chemical Industry Knowledge and Strategic Partner A report on Chemical Industry Knowledge and Strategic Partner A report on Chemical Industry Message Message Federation of Federation of Indian Chambers Indian Chambers of Commerce and Industry of Commerce and Industry Federation House Federation House Tansen Marg Tansen Marg New Delhi 110001 New Delhi 110001 Mr Deepak C Mehta T +91 11 23738760 (11 lines) T +91 11 2335 7364 Chairman - FICCI National Chemical Committee F +91 11 23320714 / 23721504 F +91 11 2332 9369 VC & MD, Deepak Nitrite Ltd E [email protected] Dr. A. Didar Singh E [email protected] CwIwNw: U.f9ic9c9i.9c9oDmL1956NPL002635 Secretary General CwIwNw: U.f9ic9c9i.9c9oDmL1956NPL002635 A T s Chairman of the FICCI National Chemical Committee, I must he Indian Chemical Industry is an integral part of Indian economy . The congratulate the Department of Chemicals and Petrochemicals, industry has key linkages with several other downstream industries such Government of India, iNDEXTb Government of Gujarat and Federation as agriculture, infrastructure, textiles, food processing etc. of Indian Chambers of Commerce and Industry for the initiative in organising There is need to give focus to and provide support to Knowledge based India Chem Gujarat 2015, with focus to Speciality Chemicals from October 28-30, segments of the chemical industry namely Speciality Chemicals. This is in view 2015 at Gandhinagar, Gujarat. It indeed is a very good initiative, as the Speciality of the large talent pool in the country, coupled with huge emerging market Chemicals sector has a very huge potential for growth. resulting from massive urbanization, infra building and increasing aspirations of The key growth drivers for specialty chemicals industry are exports base growth emerging middle class. Agrochemicals, Dyes, Food processing chemicals, coupled with increasing domestic demand. The domestic demand is rapidly Construction chemicals, personal care chemicals are some of such segments. increasing due to growth in end use industries and application (per capita The sector has huge unrealised potential. consumption) growth. Approx. 300 million Indian middle class consumers need I am happy to note that FICCI jointly with the Department of Chemicals and more high-quality end products (e.g. high quality textiles, cosmetics, high-end Petrochemicals, Government of India and Government of Gujarat is organising paints, paper etc.) and in order to improve quality of end products, product India Chem Gujarat 2015, an event with focus to Speciality Chemicals. manufacturers need to consume more high-end specialty chemicals I am sure it will be found useful by all stakeholders. I wish the event all the success. (Deepak C Mehta) A. Didar Singh Industry’s Voice for Policy Change Industry’s Voice for Policy Change Message Message Federation of Federation of Indian Chambers Indian Chambers of Commerce and Industry of Commerce and Industry Federation House Federation House Tansen Marg Tansen Marg New Delhi 110001 New Delhi 110001 Mr Deepak C Mehta T +91 11 23738760 (11 lines) T +91 11 2335 7364 Chairman - FICCI National Chemical Committee F +91 11 23320714 / 23721504 F +91 11 2332 9369 VC & MD, Deepak Nitrite Ltd E [email protected] Dr. A. Didar Singh E [email protected] CwIwNw: U.f9ic9c9i.9c9oDmL1956NPL002635 Secretary General CwIwNw: U.f9ic9c9i.9c9oDmL1956NPL002635 A T s Chairman of the FICCI National Chemical Committee, I must he Indian Chemical Industry is an integral part of Indian economy . The congratulate the Department of Chemicals and Petrochemicals, industry has key linkages with several other downstream industries such Government of India, iNDEXTb Government of Gujarat and Federation as agriculture, infrastructure, textiles, food processing etc. of Indian Chambers of Commerce and Industry for the initiative in organising There is need to give focus to and provide support to Knowledge based India Chem Gujarat 2015, with focus to Speciality Chemicals from October 28-30, segments of the chemical industry namely Speciality Chemicals. This is in view 2015 at Gandhinagar, Gujarat. It indeed is a very good initiative, as the Speciality of the large talent pool in the country, coupled with huge emerging market Chemicals sector has a very huge potential for growth. resulting from massive urbanization, infra building and increasing aspirations of The key growth drivers for specialty chemicals industry are exports base growth emerging middle class. Agrochemicals, Dyes, Food processing chemicals, coupled with increasing domestic demand. The domestic demand is rapidly Construction chemicals, personal care chemicals are some of such segments. increasing due to growth in end use industries and application (per capita The sector has huge unrealised potential. consumption) growth. Approx. 300 million Indian middle class consumers need I am happy to note that FICCI jointly with the Department of Chemicals and more high-quality end products (e.g. high quality textiles, cosmetics, high-end Petrochemicals, Government of India and Government of Gujarat is organising paints, paper etc.) and in order to improve quality of end products, product India Chem Gujarat 2015, an event with focus to Speciality Chemicals. manufacturers need to consume more high-end specialty chemicals I am sure it will be found useful by all stakeholders. I wish the event all the success. (Deepak C Mehta) A. Didar Singh Industry’s Voice for Policy Change Industry’s Voice for Policy Change Foreword Manish Panchal Karthikeyan.K.S P S Singh Practice Head – Chemical & Energy Principal – Chemical Head- Chemicals & Petrochemicals Tata Strategic Management Group Tata Strategic Management Group FICCI Table of Contents [email protected] [email protected] [email protected] T his report on Indian Chemical and Petrochemical Industry is a part of FICCI and TATA Strategic Management Group (TSMG) Chemical Practice's endeavor to 1. Executive Summary......................................................01 highlight the utility of Chemicals in day-to-day life. 2. Gujarat: An Investment Destination ......................................10 From increased agricultural productivity and better cure for human diseases to smoother skin creams and sparkling toothpaste, chemicals play a vital role in everyday life. They are making 21st century living more enriching by contributing towards building energy- efficient homes, more comfortable bedding, longer-lasting paints and affordable CHEMICAL INDUSTRY SECTORIAL REPORT clothing. While there are negative perceptions about the chemical industry due to 3. Bulk Chemicals ..........................................................16 concerns over sustainability and pollution, the chemical industry is working hard to find solutions for many of the issues that a rising population presents to the society. 4. Petrochemicals ..........................................................21 The report highlights the importance of chemicals in everyday life by taking the reader through the key sub-segments- viz. Petrochemicals, Agrochemicals, Fertilizers and 5. Speciality Chemicals.....................................................25 Specialty Chemicals. It analyses the impact that each of these sub segments have in terms of the critical challenges they address that contributes towards economic, social or 6. Fertilizers................................................................28 industrial activity and impact on other sectors within the chemical industry. 7. Agrochemicals...........................................................30 Gujarat is at the forefront in chemicals industry and today known as the 'Petro Capital' of India. It contributes production of 62% of petrochemicals, 51% of chemicals and 35% of pharmaceuticals of the country's total manufacturing. Its business friendly policies have 8. Reverse SEZ - An opportunity for Indian Chemicals & ...................33 made it the first choice for investors. Petrochemicals Industry As always, it was very insightful experience for FICCI and Tata Strategic (Chemicals) 9. Crop Protection Chemicals industry-Imperatives of growth...............36 team to materialize this report. We hope it acts as a guiding light for the players in the chemical industry of India. 10. About Tata Strategic.....................................................38 Tata Strategic Contacts...................................................39 11. About FICCI..............................................................40 01 Knowledge and Strategy Partner Foreword Manish Panchal Karthikeyan.K.S P S Singh Practice Head – Chemical & Energy Principal – Chemical Head- Chemicals & Petrochemicals Tata Strategic Management Group Tata Strategic Management Group FICCI Table of Contents [email protected] [email protected] [email protected] T his report on Indian Chemical and Petrochemical Industry is a part of FICCI and TATA Strategic Management Group (TSMG) Chemical Practice's endeavor to 1. Executive Summary......................................................01 highlight the utility of Chemicals in day-to-day life. 2. Gujarat: An Investment Destination ......................................10 From increased agricultural productivity and better cure for human diseases to smoother skin creams and sparkling toothpaste, chemicals play a vital role in everyday life. They are making 21st century living more enriching by contributing towards building energy- efficient homes, more comfortable bedding, longer-lasting paints and affordable CHEMICAL INDUSTRY SECTORIAL REPORT clothing. While there are negative perceptions about the chemical industry due to 3. Bulk Chemicals ..........................................................16 concerns over sustainability and pollution, the chemical industry is working hard to find solutions for many of the issues that a rising population presents to the society. 4. Petrochemicals ..........................................................21 The report highlights the importance of chemicals in everyday life by taking the reader through the key sub-segments- viz. Petrochemicals, Agrochemicals, Fertilizers and 5. Speciality Chemicals.....................................................25 Specialty Chemicals. It analyses the impact that each of these sub segments have in terms of the critical challenges they address that contributes towards economic, social or 6. Fertilizers................................................................28 industrial activity and impact on other sectors within the chemical industry. 7. Agrochemicals...........................................................30 Gujarat is at the forefront in chemicals industry and today known as the 'Petro Capital' of India. It contributes production of 62% of petrochemicals, 51% of chemicals and 35% of pharmaceuticals of the country's total manufacturing. Its business friendly policies have 8. Reverse SEZ - An opportunity for Indian Chemicals & ...................33 made it the first choice for investors. Petrochemicals Industry As always, it was very insightful experience for FICCI and Tata Strategic (Chemicals) 9. Crop Protection Chemicals industry-Imperatives of growth...............36 team to materialize this report. We hope it acts as a guiding light for the players in the chemical industry of India. 10. About Tata Strategic.....................................................38 Tata Strategic Contacts...................................................39 11. About FICCI..............................................................40 01 Knowledge and Strategy Partner I. Executive summary LIST OF FIGURES AND TABLES Figure 1 : Indian Chemical Industry Major Clusters .........................3 Figure 2 : Demand & Supply for Major Chemicals & Petrochemicals........... 5 Figure 3 : Import & Export of Major Chemicals & Petrochemicals ..............5 Figure 4 : Projected Market Growth till FY25 ...............................6 Figure 5 : Market share of sub-segments...................................6 Figure 6 : Chemical Industry Future Outlook ...............................7 Figure 7 : Gujarat's Contribution to Indian Economy........................10 Figure 8 : Contribution of Gujarat to India ................................11 Figure 9 : Leading Chemical players in Gujarat ............................12 Figure 10 : Overview of Chemical Industry in Gujarat .......................12 Figure 11 : Comparison of Infrastructure...................................14 T his report is developed by the TATA Strategic Management Group with Figure 12 : Integrated Approach..........................................15 support from FICCI as the knowledge partner for the Indiachem Gujarat Figure 13 : Demand & Supply Scenario of Organic Chemicals .................17 Conclave 2015. Figure 14 : Import-Export Scenario of Organic Chemicals.....................17 The Indian chemical market is estimated at USD 139 billion in 2014 and is Figure 15 : Demand & Supply Scenario of Inorganic Chemicals................18 expected to grow at ~9% per annum over the next five years. India stands at 12th worldwide in terms of volume contribution towards Global chemical industry. Figure 16 : Import-Export Scenario of Inorganic Chemicals ...................19 Figure 1: Indian Chemical Industry Major Clusters Figure 17 : Supply-Demand Scenario of Basic Major Petrochemicals ...........21 Figure 18 : Import-Export Scenario of Basic Major Petrochemicals .............22 CHEMICAL INDUSTRY: MAJOR CLUSTERS Planning stage In- principle approval Notified PCPIR Figure 19 : Petrochemical Industry Future Outlook ..........................23 Figure 20 : Speciality Chemicals Industry Future Outlook .................... 25 Gujarat accounts for 53% of major Figure 21 : Total Production & Consumption scenario of Fertilizers.............28 chemical production Haldia > Area: 250 sq km Figure 22 : Indian Crop Protection Industry Outlook .........................31 Paradip Dahej > Anchor tenant: IOCL > Anchor tenant: Opal > Area: 285 sq km > Area: 454 sq km Vizag > Anchor tenant: HPCL/ GMR Maharashtra accounts for 9% of > Area: 604 sq km major chemical production Cuddalore > Anchor tenant: Nagarjuna Oil Corporation Mangalore > Area: 252 sq km > Anchor tenant: ON-GC MRPL Tamil Nadu accounts for 6% of > Area: 300 sq km major chemical production Source: Industry reports, Analysis by Tata Strategic 02 03 Knowledge and Strategy Partner Knowledge and Strategy Partner I. Executive summary LIST OF FIGURES AND TABLES Figure 1 : Indian Chemical Industry Major Clusters .........................3 Figure 2 : Demand & Supply for Major Chemicals & Petrochemicals........... 5 Figure 3 : Import & Export of Major Chemicals & Petrochemicals ..............5 Figure 4 : Projected Market Growth till FY25 ...............................6 Figure 5 : Market share of sub-segments...................................6 Figure 6 : Chemical Industry Future Outlook ...............................7 Figure 7 : Gujarat's Contribution to Indian Economy........................10 Figure 8 : Contribution of Gujarat to India ................................11 Figure 9 : Leading Chemical players in Gujarat ............................12 Figure 10 : Overview of Chemical Industry in Gujarat .......................12 Figure 11 : Comparison of Infrastructure...................................14 T his report is developed by the TATA Strategic Management Group with Figure 12 : Integrated Approach..........................................15 support from FICCI as the knowledge partner for the Indiachem Gujarat Figure 13 : Demand & Supply Scenario of Organic Chemicals .................17 Conclave 2015. Figure 14 : Import-Export Scenario of Organic Chemicals.....................17 The Indian chemical market is estimated at USD 139 billion in 2014 and is Figure 15 : Demand & Supply Scenario of Inorganic Chemicals................18 expected to grow at ~9% per annum over the next five years. India stands at 12th worldwide in terms of volume contribution towards Global chemical industry. Figure 16 : Import-Export Scenario of Inorganic Chemicals ...................19 Figure 1: Indian Chemical Industry Major Clusters Figure 17 : Supply-Demand Scenario of Basic Major Petrochemicals ...........21 Figure 18 : Import-Export Scenario of Basic Major Petrochemicals .............22 CHEMICAL INDUSTRY: MAJOR CLUSTERS Planning stage In- principle approval Notified PCPIR Figure 19 : Petrochemical Industry Future Outlook ..........................23 Figure 20 : Speciality Chemicals Industry Future Outlook .................... 25 Gujarat accounts for 53% of major Figure 21 : Total Production & Consumption scenario of Fertilizers.............28 chemical production Haldia > Area: 250 sq km Figure 22 : Indian Crop Protection Industry Outlook .........................31 Paradip Dahej > Anchor tenant: IOCL > Anchor tenant: Opal > Area: 285 sq km > Area: 454 sq km Vizag > Anchor tenant: HPCL/ GMR Maharashtra accounts for 9% of > Area: 604 sq km major chemical production Cuddalore > Anchor tenant: Nagarjuna Oil Corporation Mangalore > Area: 252 sq km > Anchor tenant: ON-GC MRPL Tamil Nadu accounts for 6% of > Area: 300 sq km major chemical production Source: Industry reports, Analysis by Tata Strategic 02 03 Knowledge and Strategy Partner Knowledge and Strategy Partner Gujarat, Maharashtra and Tamilnadu are leading the charge being the major When the past trends of demand and supply of the total major chemicals and chemical manufacturers in the country. The key driver being the significant petrochemicals are considered, it can be understood that the demand (Fig 2) has coastlines the states are endowed with (Fig 1). The country's chemical industry been on high rise and has grown nearly at 6% from ~35 MnTPA in FY10 to ~44 has the potential to reach USD 214 billion by FY19 growing at a CAGR of ~9%. MnTPA in FY 14, whereas the supply has grown at slightly slower rate i.e. 5% and The growth is expected to be driven by rising demandin end-use segments and reached up to nearly 37 MnTPA in FY 14. On the other hand, this has given expanding exports fuelled by increasing export competitiveness. The success, simultaneously rise to the imports of the major chemicals and petrochemical however, will depend on how well it's key challenges are addressed such as high products which have grown at ~11% from ~8 MnTPA in FY 10 to reach ~13 dependence on imports, small installed capacities, low focus on technology up- MnTPA in FY 14, whereas the exports are growing at ~9% which is lower as gradation and the availability of vocationally trained manpower. compared to the imports. (Ref Fig 2 &3) Figure 2: Demand & Supply for Major Chemicals & Petrochemicals 1.1 Chemicals - A way of Life! Demand & Supply for Total Major Chemicals & Petrochemicals in India (000’ Tonnes) Chemical industry is the responsible for converting raw materials like water, 43097 44016 crude oil, natural gas, air, metals, and minerals, etc. into other valuable products. 40262 It is involved in almost every industrial process and therefore plays a significant 34949 37209 35464 36064 36755 32192 30235 role in global economic and social development. R&D in the field of chemistry is now focusing on rendering a green and sustainable solution for the long run. Thus, chemistry might come across as a complicated theory but in true essence it has offered products and solutions for virtually all sectors of economy. Hence, Chemicals are truly a way of life, it has simplified our way of living as compared to the past; and have also fostered comfort and growth in human lifestyle. FY 10 FY 11 FY 12 FY 13 FY 14 Demand Supply 1.2 Chemical Industry Source: Ministry of Chemicals and, Petrochemicals Analysis by Tata Strategic I. Overview Figure 3: Import & Export for Major Chemicals and Petrochemicals With immense thrust on knowledge building and an inherently capital intensive nature, the Chemical industry has a significant role to play in the global economic Import & Export for Total Major Chemicals & Petrochemicals in India (000’ Tonnes) and social development. It is also a highly human resource intensive industry employing a large number of people. Globally, nearly 20 million people are 13009 12330 employed in this industry. The diversification within the chemical industry is large and covers more than 80000 commercial products with myriad applications 10261 9928 that one needs to only look around oneself to gauge how deeply connected one is 8677 to the world of chemicals 5463 5297 5748 Over the last few decades, the chemical industry has seen an increasing shift 4910 3963 towards Asia. This is in line with shift of key consumer industries (e.g. Automotive, Electrical and Electronics) towards Asia. Looking particularly towards the Indian chemical industry, it stands out to be the 3rd largest producer in Asia. The chemical industry in India has started to evolve rapidly since the last FY 10 FY 11 FY 12 FY 13 FY 14 five years. Despite its large size and significant GDP contribution, the industry Import Export accounted for ~3.4% of the global chemicals industry (~USD 4 Trillion). Source: Ministry of Chemicals and Petrochemicals, Analysis by Tata Strategic 04 05 Knowledge and Strategy Partner Knowledge and Strategy Partner