Region/Countries: Asia, India Industry: Other Date: February 2019

Why this is important to Wisconsin businesses: The industry's rapid growth presents opportunities for Wisconsin companies.

The Indian chemical industry is the sixth-largest in the world and third-largest in Asia. With a diversified range of more than 80,000 commercial products, it is one of the fastest-growing markets in this sector globally—a projected annual growth rate of 9% to reach $304 billion by fiscal year 2025, from $163 billion in FY18. Meanwhile, the industry is the largest consumer of its own products in the domestic market, and this consumption is also expected to rise.

Western India has emerged as the primary chemical manufacturing hub. Gujarat and Maharashtra are the two states where the majority of small, midsize and large chemical units are located. Meanwhile, Andhra Pradesh, Tamil Nadu, Karnataka and West Bengal also have some chemical industry presence.

India exported chemicals (organic, inorganic, tanning and dyeing, and miscellaneous) worth $23.37 billion during FY18, an increase of more than 22% from FY17. Most of the exports were to the U.S., China, Indonesia, Germany, the UAE and Brazil. Meanwhile, organic chemicals, at 63%, were the largest subcategory of chemical exports.

India’s imports of chemicals during the same period were higher than exports, coming in at $32.7 billion—an increase of 23% from 2016-17—and accounting for 7% of the country’s total imports. Major sources of India’s chemical imports are the U.S., China, Saudi Arabia and Singapore. Organic chemicals constitute around 58.7% of India’s total chemical imports, followed by inorganic chemicals at 18.3%, miscellaneous chemicals at 16.8%, and dyes and dyestuffs at 6.1%.

In particular, there has been a sharp increase (53%) in organic chemical imports from the U.S. Imports increased from $801 million in FY17 to $1.22 billion in FY18.

The Indian government allows 100% foreign direct investment (FDI) in the chemical industry. Aside from fertilizers, the industry attracted cumulative investment of $15.39 billion in the period 2000-2018, of which around $1.3 billion FDI was received in FY18 alone. India has delicensed the manufacturing of most non-hazardous chemical products. Overall, the chemicals industry’s share of the manufacturing sector’s total GDP is estimated at 16%, with a government target to increase it to at least 25% by 2025.

The government of India has brought in a number of reforms to encourage foreign companies to do business with India, contributing to the country’s rise in the World Bank’s Ease of Doing Business rankings—a jump of 30 spots into the top 100.

India’s per capita consumption of chemicals is about one-tenth of the world average, indicating immense potential for growth in the industry. The growing domestic demand for chemicals in the automotive, electronics and construction industries presents a great opportunity for Wisconsin companies.