The Contribution of Chemical Industry in Indian Economy
The contribution of chemical industry in Indian economy is very significant to be ignored. This industry includes the basic chemicals and their products; fertilizers, petrochemicals, varnishes and paints, soaps, gases, toiletries and perfumes as well as pharmaceuticals. It is among the most diversified industrial sectors that cover a wide range of commercial products. The chemical industry plays a vital role in the growth of the economy in India. It makes about 3% of the Gross Domestic Product of this country.
When the contribution of chemical industry in Indian economy began
Chemical industry in India was among the earliest industries to be established in this country. As such, it contributed to both economic and industrial growth of this country since its independence in 1947. Currently, there are more than 70,000 commercial products from this industry. It is important to note that the economic reforms that were made in the 90s in India initiated major changes which affected the operations of the chemical industry in this country. However, success stories especially in the dyes and agrochemicals sections have boosted manufacturers’ confidence. These have in turn channeled more money into the manufacture of new chemicals.
Why the chemical industry has been able to contribute to the Indian economy
The reason why this industry has been able to make a significant contribution to the economy is due to the modernization efforts of the government. The Indian government has been actively involved in the promotion of growth as well as the development of the domestic industries in India through the Department of Chemicals and Petro-Chemicals. This department in the Ministry of Chemicals and Fertilizers has been active in promoting local industries since 1991. It is responsible for policy making, planning, regulation and development of this industry.
There are also several organizations in the private sector such as the Association of Chemical Manufacturers, the Pesticides Manufacturers, Formulators Association and Petrochemicals Manufacturers association which have also played a significant role in the promotion of the growth of this industry and chemicals’ exportation.
How the chemical industry contributes to the Indian economy
The contribution of the chemical industry to the Indian economy can be seen from the significant role that is played by this sector and its products.
- Currently, the chemical industry accounts for about 13 percent of the Indian Gross Domestic product.
- The Indian chemical industry generates approximately 13 percent of the total export of the country with an annual growth rate of between 10 and 12 percent.
- The inorganic chemicals that are exported from India occupy the fourth position in the world in volume terms.
- Petrochemicals and plastics sector is the fastest growing economic sector in India.
- The agro-chemical products from India, which include fertilizers and pesticides, account for about 2.5 percent of the total global market. The growth rate of the market is impressive at 10 percent.
- The petrochemical and chemical sector in this country constitutes 14 percent of the overall domestic industrial activity.
Despite investments in the chemical industry being capital intensive with relatively long gestation period, chemical and petrochemicals have a projection of 8 and 12.6 percent respectively in a 11th year plan that ranges from 2007 to 2012.
Forecast of the contribution of chemical industry in Indian economy
Indian enterprises are realizing their weaknesses and strengths. They are also gearing up to face more challenges. It is highly possible that the chemical industry in India will make more contributions to the economy in the years to come.
This is due to the following:
- India has a great export potential because of its low-cost infrastructure.
- The high capacity for value addition due to the closeness of this country to the Middle East.
- The ability to establish strategic alliances with some countries like Russia in the exportation of some chemicals like agrochemicals, pharmaceuticals and dyes.
- Availability of raw materials that are required to produce agro-based products which include castor oil.
However, despite making a significant contribution to the economy of Indian, the chemical industry faces numerous challenges. They include high fuel and raw material prices, anti-dumping activities and logistical bottlenecks.
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