Globalization of Indian Chemical Industry

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The process of globalization of Indian chemical industry was initiated in the early 1990s. The erstwhile Indian chemical industry suffered due to the absolute monopoly of the Government of India enterprises.

But with the opening of the Indian markets to Foreign Institutional Investors (FII) and Foreign Direct Investments (FDI) the monopoly of these Government institutions were curtailed substantially. This gave rise to the opening up of the Indian chemical industry to host of untapped opportunities. With the introduction of the open-market economic policy by the Government of India the process of globalization of Indian chemical industry took a steady rise.

The Department of Chemicals & Petrochemicals under Government of India is the concerned highest authority that regulates the Indian chemical industry and the allied areas of environmental concern. The chemical Industry of India is at par with world standard and it shares a good portion of chemical business in world market. Asian countries, African countries and even Arab world buys Indian chemical products. The demand for Indian chemical products is high across the world. The reason for this popularity is its high quality and competitive pricing. India's low cost and high end chemical products manufacturing expertise coupled with world class manufacturing infrastructure is the main leveraging factor for the rise of this industry. India offers high class chemical products at a substantial discount than its western counterparts while delivering the same grade of output.

The globalization of Indian chemical industry was initiated by the following bombastic chemicals -

Basic chemicals -
  • Ethylene
  • Propylene
  • Butadiene
  • Styrene
  • Benzene
  • Toluene
  • Orthoxylene
  • Paraxylene
  • Mixed xylenes
  • Ethylene oxide
Chemical intermediates are -
  • Monoethylene glycol
  • Phthalic anhydride
  • DMT
  • Vinyl Chloride
  • Caprolactin
  • Acrylonitrile
  • Linear Alkyl Benzene
Synthetic Fibers are -
  • Acrylic fiber
  • Nylon filament yarn
  • DMT
  • Polyester staple fiber
  • Polyester filaments yarn
Polymers are -
  • HDPE
  • PVC
  • Polystyrene
  • Poly propylen
Synthetic rubber -
  • Styrene butadiene
  • Poly butadiene
The advantages of manufacturing high class chemical products in India are as follows -
  • Friendly Government of India policies
  • Low cost labor
  • Low and world class infrastructure
  • Strong technical education
  • Large number of science and engineering graduates
  • Quality output
  • Highly skilled workforce
  • Usage of innovative process
  • Good client relationships
  • Huge scope for innovation
  • Expansion of existing relationships
  • Huge demand in overseas markets
  • Availability of more technical work force
  • Increased number and quality of training facilities
  • Large and very fast growing Indian petrochemical market
  • Huge trained talent pool
  • Competitive labor cost
Weaknesses of Indian chemical industry -
  • Insufficient basic infrastructure for the chemical industry
  • High feedstock cost in comparison to Middle East countries
  • Prevalence and use of old and outdated technology
  • Synthetic fiber industry is unorganized and operates in small clusters
Opportunities of Indian chemical industry -
  • Huge demand for polymer and synthetic fiber
  • Great opportunity for product development
  • Low consumption of polymer in comparison to global consumption rate
  • Ever increasing size of domestic markets
Threats to Indian chemical industry -
  • Stiff competition from other regional players like, china and the Middle East countries
  • Stiff rational pricing pressures
  • Environmental hazards concerns
  • Low market recognition
  • Relocation of manufacturing sites to region with abundance of feedstock
Notable points of Indian chemical industry -
  • It share stands at 2% of world market
  • Annual rate of growth of the Indian chemical industry is 10%
  • Its business is worth US$ 30 billion
  • Profit incurred is around 14%
  • Wide variety of products
  • Basic components are petrochemicals, inorganic chemicals and fertilizers
  • The Indian states of Gujarat, Maharashtra, West Bengal and Andhra Pradesh have the largest concentration of chemical and petrochemical units
The relevant Acts and Rules which governs the various type of chemical industry in India are as follows -
  • The Water (Prevention and Control of Pollution) Act, 1974
  • The Water Prevention and Control of Pollution Cess Act, 1977
  • The Air (Prevention and Control of Pollution)Act, 1981
  • The Environment (Protection) Act, 1986
  • The Batteries (Management and Handling) Rules, 2001
  • The Municipal Solid Wastes (Management and Handling) Rules, 2000
  • The Recycled Plastics Manufacture and Usage Rules, 1999
  • The Rules for the Manufacture, Use, Import and Export and Storage of Hazardous micro-organisms
  • Genetically engineered organisms or cells, 1989
  • The Manufacture, Storage and Import of Hazardous Chemical Rules, 1989
  • The Hazardous Wastes( Management and Handling ) Rules, 1989
  • The Bio-Medical Waste ( Management and Handling ) Rules, 1998
  • Dumping and disposal of fly ash discharged from coal or lignite based thermal power plants on land, 1999
  • Noise Pollution( Regulation and Control ) Rules, 2000
  • The Ozone Depleting Substances ( Regulation and Control )Rules, 2000
  • The 2-T Oil ( Regulation of Supply and Distribution) Order, 1998
  • The Public Liability Insurance Act, 1991
  • The National Environment Appellate Authority Act, 1997
  • The National Environment Tribunal Act, 1995
  • Forest (Conservation) Act, 1980
  • The Biological Diversity Act, 2002

Last updated on 3/18/2011

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