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Chemicals and Fertilisers Minister D V Sadananda Gowda on Tuesday said the demand for chemicals and petrochemicals is expected to rise 9 percent annually, and the size of the industry is likely to grow to $300 billion by 2025.
Addressing a conference organised by industry body Assocham, the minister said the Indian chemical industry, over the last one-and-a-half decade, has transformed from manufacturing principal chemicals in a highly regulated market to being a mature industry in a liberalised economy.
Majority of the chemicals produced in India comprise either upstream products or intermediates, which go into a variety of manufacturing applications including fertilisers, pharmaceuticals, textiles and plastics, agrochemicals, paints and dyes, he said, adding that end-use industries like automotives, electronics, packaged food and textiles are driving Indian specialty chemicals industry.
"Strong domestic demand, coupled with huge investments by domestic and foreign players, is making the industry scale new heights,” Gowda said.
The minister said rising disposable income, median age of population, urbanization and growing penetration, and demand from rural markets are the factors contributing to growth of chemical and petrochemical sector.
"As production and consumption shift towards Asian and Southeast Asian countries, the demand for chemicals and petrochemicals is expected to grow at 9 percent per annum, much faster than the expected GDP growth rate, to reach $300 billion by 2025,” Gowda said.
Gowda said the size of the industry was $163 billion in 2018, contributing 13.4 percent of manufacturing GVA (gross value added) and 2.4 percent of national GVA. The sector employs 2 million people.
He said Indian chemical and petrochemical industry plays an important role in all sectors of the economy.
Stating that successive governments have taken various initiatives to promote this sector, the minister highlighted that licensing requirements, except for hazardous chemicals and a few special drugs, have been removed.
Entrepreneurs are allowed to set up chemical industries following the Industrial Entrepreneurs’ Memorandum (IEM) route and under the automatic route, 100 percent FDI is allowed for all chemicals, except hazardous ones, he said.
Gowda said the peak rate of customs duty on most chemicals has been brought down to 7.5 percent, while the Petroleum Chemical Petrochemical Investment Regions (PCPIR) policy has been introduced to boost the development of chemicals and petrochemicals investment regions.
"I certainly believe that the Indian chemical and petrochemical sector holds a potential to emerge as global manufacturing hub. We are aware of the need to support the cluster based development of the sector through provision of world class infrastructure and logistics. The department is working on it,” he said.
Assocham National President Niranjan Hiranandani spoke about the importance of the sector in Indian economy.