Rising demand for chemicals & petrochemicals

D V Sadananda Gowda, Minister of Chemicals and Fertilizers, said the demand has been anticipated to increase to 9% annually for chemicals and petrochemicals. Furthermore, by 2025 the industry’s size is expected to reach US$ 300 billion. In the conference organized on 15 December 2020, by Assocham, the minister said the industry has transitioned into a matured sector in a liberalized economy. Before this, the industry was focused on the manufacturing of principal chemicals in a regulated economy.

Furthermore, the minister said, “Strong domestic demand, coupled with huge investments by domestic and foreign players, is making the industry scale new heights.” The factors responsible for the growth of the chemical and petrochemical sector are urbanization, increasing disposable income, rising demand from rural markets, growing penetration, and urbanization.

The industry had a size of US$ 163 billion in 2018, making a contribution of 13.4% in manufacturing GVA and 2.4% in national GVA. Furthermore, 2 million people are employed in the sector. The requirements for the industry such as licensing requirements, except for a few drugs and hazardous chemicals have been discarded by the Indian government. Also, for all chemicals except the hazardous ones, 100% FDI under automatic route is allowed. The peak rate of customs duty has been reduced to 7.5%. Furthermore, for the purpose to boost investment in this sector, Petroleum, Chemicals, and Petrochemical Investment Regions (PCPIRs) have been set up.