Aluminium Industry

1. Profile of the Aluminium industry
The Aluminium industry is highly concentrated, with just five plants accounting for the entire
production capacity of 7,02,000 tonnes per annum.


The per capita consumption of aluminium in India is only 0.5 kg as against 25 kg. in USA, 19 kg.
in Japan and 10 kg. in Europe. Even the World’s average per capita consumption is about 10
times of that in India. One reason of low consumption in the country could be that consumption
pattern of aluminium in India is vastly different from that of developed countries. The demand of
aluminium is expected to grow by about 9 percent per annum from present consumption levels.
This sector is going through a consolidation phase and existing producers are in the process of
enhancing their production capacity so that a demand supply gap expected in future is bridged.
However, India is a net exporter of alumina and aluminium metal at present.
In order to develop a guidelines for energy management policy for the plants comprising the
aluminium industry, it was decided to undertake a questionnaire survey that was followed up by
plant visits.


Salient features of Indian Aluminium Industry


·  Highly concentrated industry with only five primary plants in the country
·  Controlled by two private groups and one public sector unit
·  Bayer-Hall-Heroult technology used by all producers
·  Electricity, coal and furnace oil are primary energy inputs
·  All plants have their own captive power units for cheaper and un-interrupted power
supply
·  Energy cost is 40% of manufacturing cost for metal and 30% for rolled products
·  Plants have set internal target of 1 – 2% reduction in specific energy consumption in the
next 5 – 8 years
·  Energy management is a critical focus in all the plants
·  Two plants have declared formal energy policy
·  Each plant has an Energy Management Cell
·  Achievements in energy conservation are highlighted in the Annual Report of the
company
·  Energy targets are based on best energy figures achieved in their sector / region and by
the plant itself in the past
·  Generally, government policies were rated as conducive to energy management
·  ‘Task Force’ formed by BEE in this sector to work as catalyst in promoting energy
efficiency
·  High cost of technology is the main barrier in achieving high energy efficiency


2. Quantitative details:


2.1 Raw material and product type:
Bauxite and calcined petroleum coke are primary raw materials for this industry. However,
alumina is raw materials for smelters and aluminium metal is raw material for fabrication units.


2.2 Fuel Usage:
Coal, Furnace oil and electricity are primary energy inputs in aluminium production. Coal is
primarily used to generate steam, which is used in the process while fuel oil is mainly used in
Calcination of alumina and various furnaces in fabrication plants. Electricity is the major energy
input in aluminium production and is considered to be prime factor in determining economics of
aluminium production. Hence, all primary metal producers have installed their own captive power
plants to supply cheaper and uninterrupted power for their use. Majority of electricity consumed in
this industry is supplied by their captive power plants.


2.3 Technology Status:
Invented over 100 years ago, Bayer-Hall-Heroult is the only available commercial technology,
even today, for the production of aluminium. Alumina is the basic raw material for the production
of aluminium metal through electrolytic process. The production of alumina obtained from bauxite,
a mineral containing upto 60% in the form of mono/tribhydrate is carried out through the Bayer
route, which is an extractive hydro-metallurgical process.

Fertilizer industry

Introduction-


Though much euphoric services sector growth in Indian economy has drawn the attention over the globe, still its importance brings confusion when we come across the parameters like increasing inequality and a stalemate in condition.

Agriculture the backbone of Indian Economy still holds its relative importance for more than a billion peoples. The Government Of India from time to time has taken considerable steps for the upliftment of Agriculture Sector. Here we have analyzed the performance of Fertilizer Industry being one of the vital parts in agricultural production and Government's policy initiatives for the same.

Fertilizer in the agricultural process is an important area of concern. Fertilizer industry in India has succeeded in meeting the demand of all chemical fertilizers in the recent years.The Fertilizer Industry in India started its first manufacturing unit of Single Super Phosphate (SSP) in Ranipet near Chennai with a capacity of 6000 MT a year.

Production of Fertilizers


India has become third largest country with a total capacity of 11.07
million tons of N and 3.760 million tons of P2O5 in year 2000-2001.

Further capacity addition for N has now been stalled for the time being
due to very narrow demand supply gap at present and costly feed stock.

However, there will be some addition to the phosphatic capacity.
Domestic production of nitrogenous fertilizers was 11.004 million
tons in 2000-2001, whereas production of phosphatic fertilizers was 4.70
million tons, which are marginal higher compared to last year
production. All India capacity utilization has gradually improved over the
years and was maintained at almost cent per cent level for N. However,
during 2000-01 restrictions were imposed on capacity utilisation of Urea at
92% as a consequence the production of urea declined. The increase in
production of total N is observed due to increase in production of DAP
and other complexes which also have 'N'. Production of DAP during
2000-01 was 10 % higher compared to previous year



Imports of Fertilizers


Imports of urea has declined substantially during the past five years
. There has been no imports of urea during 2000-01. Already
there is a huge stock of urea, around 2.5 million tons as on march 31,
2001. Therefore there will be no need for any further stock building during
next six months. India is presently self sufficient in respect of urea.



Investment in Fertilizer Industry

Fertilizer production is capital intensive and presently the cost of
production of indigenous material is high and returns on investment are
low. The Indian fertilizer industry which achieved phenomenal growth in
eighties, witnessed decline in the growth rate during the nineties. In the
recent past, the fertilizer industry has not attracted any significant
investment. No multinational has invested in fertilizer sector in India.

Due to sufficient indigenous capacity and low international prices of
urea the Government of India in Feb. 2000 decided that no new
grassroots projects will be allowed during the next three years in either
public, private or cooperative sector. So even if the Government reviews
its decision, the earliest a project could start would be by 2004-05.

Government is also considering disinvestment of its equity of public
sector fertilizer units upto 51 per cent or even more. Thus, handing over
the management control of the company to a strategic buyer. The
disinvestment in National Fertilizer Limited (NFL), a major urea producer
in the country is underway.

Lack of availability of natural gas in the country has prompted
investors to collaborate for joint ventures abroad for urea production. Gulf
countries, due to abundant availability of gas, nearness to Indian shores
and investment friendly environment, are becoming the first choice for
joint ventures.

Among the Public Sector Units, The Fertilizer Corporation of India
Limited (FCI), Hindustan Fertilizer Corporation Limited (HFC), Projects &
Development India Limited (PDIL), Pyrites, Phosphates & Chemicals
Limited (PPCL) were declared sick. They are under consideration of
Bureau of Industrial and Financial Restructure (BIFR).

As India does not have potential rock phosphate reserve, it is
completely dependent on import of either rock phosphate or phos acid or
DAP. There has been new capacity addition by way of importing rock
phosphate and converting it to phos acid and then to DAP/NPK or
conversion of phos acid at rock phosphate mines abroad in JV and
importing phosphoric acid for further conversion to DAP/NPK. It is
heartening to note that apart from the operating joint venture plants for
phosphoric acid in Senegal, Jordan and Morocco some more projects and
expansions are being contemplated by the Indian companies.





Distribution Network of Industry

Fertilizer distribution of urea and its interstate movement is under
Government control and is regulated under the Essential Commodity Act
(ECA). Under ECA, supply plan for urea is formulated by the Government
in consultation with the State Departments of Agriculture and Fertilizer
Industry during "Zonal Conferences" held twice a year. The objectives of
such exercises has been to minimise transportation cost by avoiding
criss-cross movement of material and to ensure availability as per
requirement all over the country.

Removal of distribution control on urea under ECA is proposed in
the phase I of the long term policy for the fertilizer sector. Apart from
fixing ex-factory price based on High Power Committee (HPC) formula,
Government will continue to regulate the MRP till 2004-05. The
distribution cost has to come out of the ex-factory uniform Normative
Retention Price (NRP) which may impair the viability of domestic
producers.

Phosphatic and Potassic fertilizers were decontrolled since August,
1992 and their distribution is taken over by the manufacturer importers.
Government is, however, still fixing the MRP and giving an adhoc
concession on per ton of product sold.


General Health of the Industry


It is feared that several fertilizer units will be closed down in the
process of switch over from the present administered pricing mechanism
to a market based regime. This would mean substantial loss of domestic
fertilizer production and corresponding increase in import of urea to meet
the demand. Even under the present circumstances health of industry is
not good and several units have become loss making.

According to Expenditure Reform Committee (ERC)
recommendation, instead of unit-wise retention price there will be a
group-wise lump sum concession per ton of urea based on feed stock
which will harm some units and benefit others and there will be wide
spread sickness in the urea industry

Sugar Industry

History-


Sugar is one of the oldest commodities in the world and traces its origin in 4th century AD in India and China. In those days sugar was manufactured only from sugarcane. But both countries lost their initiatives to the European, American and Oceanic countries, as the eighteenth century witnessed the development of new technology to manufacture sugar from sugar beet. 
However, India is presently a dominant player in the global sugar industry along with Brazil in terms of production. Given the growing sugar production and the structural changes witnessed in Indian sugar industry, India is all set continue its domination at the global level.


Sugar consumption rate is highest in India as shown in the statistics received from USDA Foreign Agricultural Service. However, as per production is concerned, India has notched up 2nd position following Brazil, the largest sugar producer in the world. 



Maps-


The Indian sugar industry uses sugarcane in the production of sugar and hence maximum number of the companies is likely to be found in the sugarcane growing states of India including Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh. Uttar Pradesh alone accounts for 24% of the overall sugar production in the nation and Maharashtra's contribution can be totaled to 20%.

There are 453 sugar mills in India. Co-operative sector has 252 mills and private sector has 134 mills. Public sector boasts of around 67 mills. 


Overview-


The report provides a comprehensive picture of the Indian sugar market. The status of Indian sugar industry has been compared with the rest of the world in terms of raw material availability, crushing period, size of the sugar mill, production cost and prices in the report. The advantages that Indian sugar mills have over others in cost terms have been emphasized too.

Indian sugar industry is highly fragmented with organized and unorganized players. The unorganized players mainly produce Gur and Khandari, the less refined forms of sugar. The government had a controlling grip over the industry, which has slowly yet steadily given way to liberalization.
 The report provides comprehensive analysis about the structure of Indian sugar industry by explaining the above facets. Besides the classification of sugar products and by- products like molasses, their uses too have been extensively covered.

The production sugarcane is cyclical in nature. Hence the sugar production is also cyclical as it depends on the sugarcane production in the country. The report provides extensive information on the production of sugarcane, sugar and other sweeteners in the country in the recent years along with trends and analysis. This also includes a discussion about existing capacities in the country, trends in capacity additions, imports and production of by-products of sugar (molasses and cogeneration of power).

The report features a detailed demand analysis discussing the actual demand for sugar and other sweeteners, gur and khandari and their per capita consumption in India. This includes a trend analysis in demand in various regions of the country. The role of exports in the sugar industry has also been discussed.

The report gives an exhaustive cost analysis along with the pricing practices. Dual Pricing System is adopted in the Indian sugar industry, which includes sugar price in Public distribution system and the free sale sugar price. An analysis has been provided on the relationship between Indian and international sugar prices.

As the industry is a fragmented one, even leading players do not control more than 4 percent market in India. However, the situation is changing and players offlate are striving to increase their market share either by acquiring smaller mills or by going for green field capacity additions. 


Another notable trend is the shift from Gur and Khandsari to sugar in the rural areas. This should further increase the per capita consumption of sugar in India (currently around 15.6 kg). Besides the Indian urban market is slowly moving towards branded sugar. The potential in this segment seems to be very high. 

Dairy Industry

The dairy industry plays an important role in the socio-economic development of India. The dairy industry in India is instrumental in providing cheap nutritional food to the vast population of India and also generates huge employment opportunities for people in rural places.

The Department of Animal Husbandry, Dairying, and Fisheries, which falls under the central Ministry of Agriculture, is responsible for all the matters relating to dairy development in the country. This department provides advice to the state governments and Union Territories in formulating programmes and policies for dairy development. It also looks after all the matters relating to production and preservation of livestock farms (cattle and sheep). To keep focus on the dairy industry a premier institution known as the National Dairy Development Board was established. This institution is a statutory body that was established in 1987. The main aim to set up the board was to accelerate the pace of dairy development in the country and attract new investments.

India is a wonderland for investors looking for investment opportunities in the dairy industry. The dairy industry holds great potential for investment in India and promises high returns to the investors.

The reasons why the industry has huge potential for attracting new foreign investment are:

1. There is a basic raw material need for the dairy industry; that is, milk is available in abundance.

2. India has a plentiful supply of technically skilled laborers.

3. There is an easy availability of technological infrastructure.

4. India has all the key elements required for a free market system.

There are different sectors within the dairy industry that promise great business investment opportunities:

• Biotechnology:

1. The Indian cattle yield less milk as compared to their foreign counterparts. The Indian cattle breeders are on the lookout for ways to improve their milk yield through cross-breeding. Thus, there is a huge potential available for foreign investors to invest in dairy cattle breeding of high-quality buffaloes with hybrid cows.

2. There is also great scope for investment in different dairy cultures, including dairy biologics, enzymes, probiotics, and other coloring materials for food processing.

3. Producing biopreservative ingredients based on dairy fermentation, such as pediococcin, aciophilin, bulgarican, and Nisin contained in dairy powder, also promise great investment opportunity.

• Dairy/Food Processing Equipment:

Great potential lies for foreign investment for manufacturing and marketing of cost-effective, top-quality food processing machinery.

• Food Packaging Instruments:

There is a tremendous investment opportunity for foreign investors in the manufacturing of both machinery and packaging materials that aid the development of brand loyalty and gives a clear edge in the marketing of dairy products.

• Retailing:

Retailing of dairy products also promises great investment opportunities for standardization and upgrading dairy products in the main metropolitan cities.

• Manufacture of Ingredients:

Several ingredients are involved in the making of different dairy products like ghee, condensed milk, and cheese. Manufacturing of ingredients for these products offers a great potential for foreign investment in India.

• Finished Products:

There is a great scope for investment in the manufacturing of finished dairy products such as cheese sauce and cheese powders.

• Technically Advanced Manufacturing Units:

There is a great opportunity for foreign investors to invest in establishing manufacturing units for dairy products. The investors can build world-class manufacturing units and let them for hire. Building manufacturing units supports specialized dairy-related activities, such as cheese slicing, cheese packaging, butter printing, and dicing lines, which hold greater potential over other activities.

Thus, the dairy industry in India has huge investment opportunities in a variety of sectors. The investors are all set to gain profitable returns on their investment.

India is one of the fastest emerging economies today. With the government encouraging foreign Investments of India, it has become easier for foreign companies to foray into the Indian markets.

Potential for investment in the dairy industry

Some areas of Indian dairy industry can be toned up by the evocation of differentiated technologies and equipment from overseas. These include:

1. Raw milk handling: The raw milk handling needs to be elevated in terms of physicochemical and microbiological properties of the milk in a combined manner. The use of clarification and bactofugation in raw milk processing can aid better the quality of the milk products.
2. Milk processing: Better operational ratios are required to amend the yields and abridge wastage, lessen fat/protein losses during processing, control production costs, save energy and broaden shelf life. The adoption of GMP (Good Manufacturing Practices) and HACCP (Hazard Analysis Critical Control Points) would help produce milk products adapting to the international standards.
3. Packaging: Another area that can be improved is the range of packing machines for the manufacture of butter, cheese and alike. Better packaging can assist in retaining the nutritive value of products packed and thus broaden the shelf life. A cold chain distribution system is required for proper storage and transfer of dairy products.
4. Value-added products: There's vast scope for value-added products like desserts, puddings, custards, sauces, mousse, stirred yoghurt, nectars and sherbets to capture the dairy market in India.

The Indian dairy industry has aimed at better mananamegemt of the national resources to enhance milk production and upgrade milk processing involving new innovative technologies. Multinational dairy giants can also make their foray in the Indian dairy market in this challenging scenario and create a win-win situation for both.
India's Milk Product Mix 

Fluid Milk	46.0%
Ghee	27.5%
Butter	6.5%
Curd	7.0%
Khoa (Partially Dehydrated Condensed Milk)	6.5%
Milk Powders, including IMF	3.5%
Paneer & Chhana (Cottage Cheese)	2.0%
Others, including Cream, Ice Cream	1.0%

Overview of the Indian Dairy Sector

• The country is the largest milk producer all over the world, around 100 million MT
• Value of output amounted to Rs. 1179 billion (in 2004-05) (Approximately equals combined output of paddy and wheat!!)
• 1/5thof the world bovine population
• Milch animals (45% indigenous cattle, 55 % buffaloes, and 10% cross bred cows)
• Immensely low productivity, around 1000 kg/year (world average 2038 kg/year)
• Large no. of unproductive animals, low genetic potency, poor nutrition and lack of services are the main factors for the low productivity
• There are different regions – developed, average, below average (eastern states of Orissa, Bihar and NE region) in the dairy industry.

Polymer Industry

Polymers account for around 70% of petrochemicals and that is the reason that they are the most important constituent of theIndian chemical industry.

Polymers are essentially used in the manufacture of various plastic products. In the consumption of the basic petrochemical, polymers form the bulk of demand with a share of around 55%.

The share of polymers in the product mix inIndia for various crackers ranges from 60% to 90%. The segment of polymers have registered a growth of 18% while there have been an increase of 26% in the capacities CAGR.

The various byproducts of polymers are:

• Polystyrene
• PVC
• Poly propylene
• LDPE/ LLDPE
• HDPE

Polystyrene, a byproduct of polymers has a Rs 435 crore market size. Its market price was around Rs 42.5 per kg in 1999. The major companies involved in the production of polystyrene are Rajasthan Polymers, Mc Dowell & Co., and Supreme Petrochem. PVC, a polymers byproduct, is in demand in theIndian market at 554,000 tons per annum.

This segment has been growing at the rate of 15% yearly. Around 54% of PVC is used in the manufacturing of pipes and 14% is used in the production of cable sheathing. The cost of PVC was Rs. 44.95 per kg in 1999. The main companies involved in the production of PVC are IPCL and RIL.

Polypropylene is a very light weight polymer and that is the main reason why it is used as a substitute for various other polymers. During 1997-1998, around 11,000 tons of poly propylene was imported. Over the last 3 years, the demand for this product has increased by 38% and now stands at 595,000 tons. The price of polypropylene was Rs 47.50 per kg in 1999. It is mainly used in the manufacture of injection molding, BOPP, ropes, twines, and

InIndia, low-density polyethylene (LDPE) and linear low density polyethylene (LLDPE) are also widely used polymers. This segment of polymers is growing at the rate of 12% per year. More than 50% of LDPE/ LLDPE is used by the packaging industry and they were priced at around Rs 54.25 per kg in 1999. The companies which make LDPE/ LLDPE are Oswal, RIL, and IPCL. The second most used polymer inIndia is HDPE, with a share of 22%. The value of its domestic consumption is Rs 2, 123 crore and it is growing at the rate of 15% per year. It cost around Rs. 50 per kg in 1999. HDPE is used in the manufacturing of raffia, blow molding, injection molding, and in the paper industry as well. The companies involved in the production of HDPE are NOCIL, RIL, and IPCL.Polymers form an important constituent of theIndian petrochemical industry. So efforts must be taken by the industry and the government ofIndia, so that the production and quality of polymers remain top class.

     

                          

INDIA IS CURRENTLY THE FOURTH LARGEST ECONOMY IN the world after the U.S., China and Japan with a gross domestic product (GDP) of $2.3 trillion in 2001. The economic reform started in 1991 has drastically changed the economy, and performance of the individual sectors has improved. India has become a global force in knowledge-based sectors like software and biotechnology.

Per capita income, which was $22/head in 1980-81 and $317/head in 1990-91, shot up to S 494/head in 2000-01 after a decade of reforms.

India's manufacturing industry in particular significantly changed due to competition from overseas, abolition of draconian regulations and efforts to emerge as a globally competitive player.

The five-decade-old Indian polymer industry has shown consist growth. with growth rates of 2-3 times the GDP. Demand for polymers in the 1990s grew at a relatively high pace compared with the prior decades, encouraging new capacity additions.

The 1990s witnessed significant investment and capacity buildup in the sector in response to high demand growth for polymers and plastic products. Additions in the decade increased polymer capacity in India from 0.5 million m.t. in 1990 to 4.2 million m.t. in 2000, resulting in a shift in India's status from a net polymer importer to a country with substantial exportable surplus. Ethylene capacity has also built up substantially in the 1990s.

Petrochemical Industry

Overview:


Petrochemicals are chemicals made from petroleum (crude oil) and natural gas. The petrochemical industry of today is an indispensable part of the manufacturing and consuming sectors, churning out products which include paint, plastic, rubber, detergents, dyes, fertilizers and textiles. "Primary Petrochemicals" include olefins (ethylene, propylene and butadiene) aromatics (benzene, toluene, and xylenes); and methanol. Olefins and aromatics are the building blocks for a wide range of materials such as solvents, detergents, and adhesives. Olefins are the basis for polymers and oligomers used in plastics, resins, fibers, elastomers, lubricants, and gels. Notwithstanding the wide range of products derived from this sector, it consumes only ~5% of annual oil and gas production.

Over the past 10 years, despite the traditional dominance American and Western European players, there has been a paradigm shift from West to East, with the Middle East emerging as global production hub with natural advantages of low cost feedstock and Asia becoming a major consumption centers.

A job in the petrochemical industry offers lucrative income, employee welfare facilities and career development opportunities. Career opportunities for educated, highly skilled and motivated workers include jobs as engineers, operating technicians, lab technicians, electricians, environmental, health and safety technicians and managers and supervisors. Undoubtedly, there is a very strong emphasis on technical proficiency, efficiency and being a team player.

Performance

The global petrochemicals sector was ravaged by a huge drop in demand for its products due to the global economic slowdown in 2008-2009, exacerbated by increasing input costs with oil prices skyrocketing to $110. That said, most of the big players still made a profit, just not as big as the profits they made over the past two or three boom years. The largest global petrochemicals companies (by 2008 revenue) are BASF (Germany), Dow Chemical (USA), ExxonMobil Chemical (USA), LyondellBasell Industries (Netherlands), INEOS (UK) and Saudi Basic Industries Corporation (Saudi Arabia).

The Indian petrochemical industry has been one of India’s fastest growing domestic industries, comprising both small and large scale enterprises. Due to its linkages with various domestic manufacturing industries such as pharmaceuticals, construction, agriculture, and textiles etc it is undoubtedly an integral part of the energy value chain. In recent years, India has experienced significant industrial and economic development and as a result has become a net exporter of chemicals leveraging the tremendous growth in overseas sales of dyes, intermediates and specialty chemicals. In addition, the government’s decision to revamp eight public sector fertilizer units has helped buoy the domestic market demand. Also, the strong demand for end products such as plastics has ensured that the industry top line remained robust.

The leading players in India are Reliance Industries, Gujarat State Fertilizer and Chemicals, Tata Chemicals, Haldia Petrochemicals and Hindustan Organic chemicals. Like their global counterparts, these players too suffered a subdued 2 years. It is important for players to remain aware of the lessons learnt from this period, which acted as a rude wake-up call for all the euphoric predictors of sustained double digit growth.

The sector reeled under the pressure of escalating crude oil prices, lowered domestic and export demand, resulting in compressed bottom lines. With more balanced predictions, and the economic gloom slowly lifting, optimism is returning once again.

Future Prospects

The aggregate demand of all the key segments in the petrochemical industry is likely to regain a sharp positive trajectory over the next 12 months, with key players aiming to ramp up scale and increase recruitment. Hence, those graduates with a strong technical and/ or engineering background should remain confident of being able to find decent employment opportunities. This is not an industry suitable for the initiated, and freshers with general degrees would be best advised to seek alternate options elsewhere.

Industry Segments

The wide and diverse spectrum of products can be broken down into a number of

categories, including inorganic and organic (commodity) chemicals, drugs and

pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty

chemicals, pesticides and agrochemicals, and fertilizers.

Sructure of Indian Chemical Industry

Inorganice

Chemicals

9%

Fertilizers

20%

Polymers

7%

Synthetic

Fibers

19%

Soaps/Toilette

ries

13%

Others

4%

Organic

Chemicals

18%

Dyges

2%

Paints

Agrochemicals 4%

4%

1) Basic Inorganic and Organic Chemical Industry

The Basic inorganic chemical and organic chemical industry constitutes a major segment

of the country's economy. Important chemicals in this category are Soda Ash, Caustic

Soda, Liquid Chlorine, Calcium Carbide, Acetic Acid. Methanol, Formaldehyde, Phenol,

Acetone.

These are raw materials for industries like detergents, toothpaste, plastics, drugs,

petroleum refining, etc. 10 per cent of the Chlor-Caustic Plants use Membrane Cell

Technology, which will find higher usage, as no new capacities are allowed for the

mercury cell process

2) Drugs & Pharmaceuticals

The Indian Pharmaceutical Industry is the largest in the developing world. The industry

currently produces a wide range of bulk drugs. In fact, India is currently a world leader in

manufacture and export of basic drugs such as ethambutol and ibuprofen.

300 bulk drugs & formulation based on them are manufactured in the country. There are

10,000 manufacturing units, of which 290 units are in the large-scale sector, 45 Multi-

National Companies (MNCs) have manufacturing bases here.

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

India is emerging as one of the largest and cheapest producers of pharmaceuticals in the

world, accounting for nearly 8.5per cent of the world's drug requirements in terms of

volume, and ranks amongst the top 15 drug manufacturing countries in the world. India

being a signatory to the GATT accord, (and the TRIPs agreement therein) patent

protection will be provided under the treaty obligations.

3) Pesticides & Agrochemicals

India is currently the largest manufacturer of Pesticides in Asia, second only to Japan.

The pesticides demand from the agriculture sector is expected to go up to 97,000 tonnes

by the year 2000. More than 60 technical grade pesticide is manufactured indigenously.

Some 125 units are engaged in the manufacture of the above and over 500 units are

making pesticide formulations.

In agrochemical, we manufacture significant quantities of synthetic pyrethroids, such as

fenvalerate and cypermethrin, endosulphane, and organophosphate range of

agrochemicals, including monocrotophos. India is also a dominant producer of

isoproturon, a weedicide accounting for nearly 25 per cent of the world-wide production.

The Indian pesticide industry has advanced significantly in recent years, producing more

than 1,000 tons of pesticides annually. India is the 13th largest exporter of pesticides and

disinfectants in the world, and in terms of volume, is the 12th largest producer of

chemicals. However the average Indian consumption is very low, merely1/20th of world

average. Consumption varies depending on crop and region Cash crops like sugarcane,

tobacco etc. are the major consumers of pesticides (above 60per cent)

There are two types of producers out of them there are about 40 Technical producers

and above 500 formulators. United Phosphorus, Rallis and Excel are the major Indian

players. Multinational like Hoechst, Agrevo, Novartis, Bayer etc has significant share in

the market.

4) Petrochemicals

The petrochemical industry of India is less than 40 years old. Petrochemicals cover basic

chemicals like Ethylene, Propylene, Benzene and Xylene. The other major components

are the intermediates like MEG, PAN and LAB etc, Synthetic fibres like Nylon, PSF and

PFY, Polymers like LDPE/HDPE, PVC, Polyester and PET etc and Synthetic rubber

like SBR, PBR. The sector has a significant growth potential. Although the current per

capita consumption of petrochemicals products is low, the demand for the same is

growing: The major players in this field includes Reliance, Indian Petrochemicals Limited

(IPCL), National Organic Chemical Industry Ltd (NOCIL) and Gas Authority of India

Ltd (GAIL) etc.

5) Dyes & Pigments

There are about 50 units in the organised sector and about 900 units in the small scale

sector. The Installed Capacity of the organized sector is 37,000 MTA while the small

scale sector has an installed capacity of 10,000 MTA. The Market is highly fragmented.

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

About 25 large and medium players have hold over 50 per cent of the dyes and pigments

market and about 2000 players in unorganized sector contributes to the rest.

Nearly 80 per cent of the dyes manufactured is utilised by the textile industry, with the

balance going to into paints, printing inks, rubber & leather. Just like Agrochemicals, per

capita consumption of dyes too is very low (400 gms) as compared to developed

countries like USA (15 kgs). However India is a major exporter of dyes, mostly due to

ban of production of some of the dyes and intermediates in the developed countries due

to pollution

Major Players

• Paints - Asian Paints, Goodlass Nerolac, ICI, Courtalds, Jenson & Nicholson

• Dyes & Intermediates - Color Chem (Hoechst), Clariant, IDI, Atul, Mardia etc.

• Inks - Coates, Hindustan Inks, Sakata

6) Fine & Specialty Chemicals

70 per cent of the Fine Chemicals produced in India find their way into the

Pharmaceutical and Agrochemical sectors. Performance chemicals geared to customer

need are being developed locally particularly since there is growing demand for Speciality

chemicals like Sunscreens, Antioxidants, Biocides, etc.

Manufacturers of Fine Chemicals and specialities have major strengths in basic research

facilities available with CSIR laboratories such as NCL, IICT & RRls as also corporate R

& D centres. This ensures that development of process know-how; plant process design

and engineers, detailed engineering design, commissioning assistance and even

consultancy for re-engineering are available at low cost. This segment is also highly

segmented with large number of players. Major Indian players are ION Exchange,

Balmer Lawrie, Dai Ichi Karkaria. etc. The multinationals like Ciba, Hoechst, Foseco,

Nalco Chemicals, Clariant, ICI etc too have significant share in the fast growing market.

7) Fertilizers

The Indian fertilizer industry has emerged as the fourth largest producer of fertilizers in

the world after China, USA, Russia. Nitrogenous and phosphatic fertilizers are produced

indigenously, while requests for potassic fertilizers are met through imports.

India has achieved near self-sufficiency in the inputs for the production of nitrogenous

fertilizers, but for the production of phosphatic fertilizers, the country continues to rely

on imports of raw materials (rock phosphate and sulphur and for intermediates such as

phosphoric acid).

Production Trends of Major Chemicals:

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

Production of Major Chemicals During 2001-02 

Alkali Chemicals Inorganic Chemicals Organic Chemicals

Pesticides(Tech.) Dyes & Dyestuffs

The annual growth rate in production of basic chemicals during 2002-06 has been 6.4per

cent despite that fact that no major capacity additions have taken place in respect of any

of these chemical groups during this period. Inorganic, organic and alkali chemicals

however registered an annual growth of 9.8per cent, 7.3per cent and 6.0per cent

respectively during this period. Production of pesticides has tended to fluctuate from

year to year basis with 2005-06 production being at the level of 2001-02. Also there has

been a very little growth in production of major chemicals during 2005-06 production

being at the level of 2001-02. Also there has been a very little growth in production of

dyes and dyestuff (3.8per cent).

External Trade in Chemicals

Trade in chemicals to and from India in the recent years has increased substantially.

Though earlier the exports were to countries of South East Asia, Africa, this is now

changing. Indian Chemicals have markets in countries such as USA, UK, Germany,

France, Japan, etc.

WTO regime has brought structural changes in external trade. There has been reduction

in tariff. However, non-tariff barriers like environmental issues, child labour, pesticide

residuals in agriculture produce etc are still used to influence imports into the developed

countries.

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

India's Growing Chemical ExporT

Chimicals Petrochemicals Drugs/Pharmaceuticals

During 2001-06, there has been an annual growth of 23per cent in exports of all

chemicals as against 21.6per cent in total exports. On the other hand, imports of all

chemicals registered a growth of 23.5 per cent against 28.1 per cent growth in total

imports of the country. During this period share of chemicals in total exports increased

from 12.9per cent in 2001-02 to 13.5per cent in 2005-06 whereas in case of imports it

declined from 9.9per cent to 8.6per cent during the said period.

It may be noted that there has been a positive trade balance in chemicals since 2001-02

and it stood at Rs 4972 crore in 2005-06 registering an annual growth of 17.6per cent

during 2001-06.

India's Chemical Import 

Chimicals Petrochemicals Drugs/Pharmaceuticals

With initiation of economic reforms in 1991, industrial policy has been liberalized and

except for few sectors, licensing has been discontinued. From August 1991 to June 2006,

66071 proposals amounting to Rs 2119427 crore have been filed. The share of chemical

sector in total proposed investment is 11.85per cent and the Basic chemicals and

petrochemicals account for 14.66per cent of the total proposed investment.

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

INVESTMENT POLICY AND INITIATIVES

1) Policy and initiatives to promote the sector:

With a special focus on modernization, the Indian government takes an active role in

promoting and advancing the domestic chemical industry. The Department of Chemicals

& Petro-Chemicals, which has been part of the Ministry of Chemicals and Fertilizers

since 1991, is responsible for policy, planning, development, and regulation of the

industry.

In the private sector, numerous organizations, including the Indian Chemical

Manufacturers Association, the Chemicals and Petrochemicals Manufacturers

Association, and the Pesticides Manufacturers and Formulators Association of India, all

work to promote the growth of the industry and the export of Indian chemicals. The

Indian Chemical Manufacturers Association, for example, represents a large number of

Indian companies that produce and export a number of chemicals that have legitimate

commercial applications, but also can be used as precursors and intermediates for

chemical weapons production.

2) Foreign Direct Investment (FDI) Policies

The procedure has been simplified for facilitating foreign direct investment. Most of the

chemical items fall under the RBI automatic approval route for FDI/NRI/OCB

investment up to 100% except the following

• Activities / items that require an industrial license

• Proposals in which the foreign collaborator has previous / existing venture/tie

up in India in the same or allied field

• All proposals relating to acquisition of shares in an existing Indian company by a

foreign/NRI investor

• All proposals falling outside notified sectoral policy/caps or under sectors in

which FDI is not permitted

For other industries, Government approval is accorded through Foreign Investment

Promotion Board (FIPB).

Corporate Catalyst India A report on Indian Chemical and Petrochemical industry

 INVESTMENT OPPORTUNITIES/ HURDLES IN THE SECTOR

Due to its low cost infrastructure, India has potential of growth in exports. According to

a report by McKinsey, India’s manufactured exports have the potential to rise from $40

bn last year to $300 bn by 2015. This defines an investment of $50 bn in chemical

industry alone.

India has the capacity for major value addition being close to Middle East. This is a

cheap and abundant source for petrochemical feedstock.

In certain categories of chemicals India does have advantage for exports (dyes,

pharmaceuticals and agrochemicals) by creating strategic alliances with countries like

Russia and CIS countries. With the know-how available in the country there is a

tremendous potential to grow and increase exports in dyestuff and agrochemical market.

Availability and abundance of raw materials for titanium dioxide and agro-based

products like castor oil offer an opportunity to generate significant value addition. This,

however, would require substituting their exports in raw form by manufacturing higher

value derivatives.

The major challenges are quest for feedstock and knowledge management. Traditionally

naphtha-based crackers have been providing feedstock to the industry. Today, they are

being replaced by new gas-based crackers. India and China will pose a stiff competition

to the Middle East due to the vibrant exports and large unexplored reserves of oil and

gas. Indian government is acting as a facilitator by setting up LNG terminals and

acquiring equity interests in overseas proven oil reserves. This will fuel rapid growth in

chemical industry. The government is also engaged in the formulation of a National

Policy on Pharmaceuticals and mega-industrial chemical estates.