32-Pakistan Trade Liberalization Sectoral Study On Chemical Sector PDF

PAKISTAN INSTITUTE OF TRADE AND DEVELOPMENT
COMPARATIVE ANALYSIS OF PAKISTAN AND INDIA CHEMICAL INDUSTRY
Sectoral Analysis for Pakistan-India Trade Normalization
Working Paper Series
Draft Report
By:
Sohail A. Paracha
August, 2012
Acknowledgment
I would like to express my gratitude to Dr. Adil Miankhel, Director Research for his
cooperation, guidance; technical support and expertise help me all along writing this report. I
would also like to thank my colleagues who have communicated their insights and contributed
directly or indirectly to this paper. I also appreciate Mr. Badar ud Din Tanweer, Survey
Coordinator for their support in compilation of data and report formatting.
2
Table of Contents
1. Introduction ............................................................................................................................. 6
2. Classification of Chemical Industry: ....................................................................................... 9
3. Trend analysis of chemical Industry ...................................................................................... 12
4. Pakistan-India Bilateral trade of Chemical Industry ............................................................. 14
a) Pakistan Export to India: .................................................................................................... 14
b) Pakistan Imports from India.................................................................................................. 15
c) Pakistan‟s Negative List of Chemicals for India: ................................................................. 16
d) India‟s Sensitive List of Chemicals for Pakistan under SAFTA: ......................................... 17
4.1 Organic Chemicals (HS 29) ........................................................................................... 18
a) Pakistan Exports to India: ..................................................................................................... 18
b) Consumption & Production of Organic chemicals by Pakistan ........................................... 19
c) Pakistan Imports from India: ............................................................................................. 20
d) Indian Import Policy Conditions & Requirements for Organic Chemicals .......................... 21
4.2 Inorganic chemicals (HS-28) ......................................................................................... 22
a) Pakistan‟s exports to India: ................................................................................................... 22
b) Consumption & Production of Inorganic Chemicals in Pakistan: ........................................ 23
c) Pakistan Imports of inorganic Chemicals from India: .......................................................... 25
d) Consumption & Production of inorganic Chemicals in India: ............................................. 26
e) Indian Import Policy Conditions & Requirements for Inorganic Chemicals ........................ 26
4.3 Fertilizers (HS-31).......................................................................................................... 28
a) Pakistan Imports from India .................................................................................................. 28
b) Consumption & Productionin Pakistan:................................................................................ 29
c) Indian policy/subsidy on fertilizers:................................................................................... 29
d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals....................... 30

3
4.4 Tanning or dyeing extracts (HS-32) ............................................................................... 30
a) Pakistan export to India ......................................................................................................... 31
b) Production & Consumptions in Pakistan: ............................................................................. 31
c) Pakistan Imports from India .................................................................................................. 32
d) Indian Import Policy Conditions & Requirements for Tanning & Dyeing Chemicals ........ 33
4.5 Essential Oils and Resinoids/ perfume, cosmetic or toiletries (HS-33) ......................... 33
a) Pakistan‟s Imports from India ............................................................................................... 34
b) Indian Import Policy Conditions & Requirements for Essential Oils & resinoids Chemicals35
4.6 Soaps/Detergents (HS-34) .............................................................................................. 35
a) Pakistan Exports to India: ..................................................................................................... 35
b) Pakistan‟s Imports from India ............................................................................................... 36
c) Indian Import Policy Conditions & Requirements for Soaps/ Detergents Chemicals .......... 36
4.7 Albuminoidal substances (HS-35) ................................................................................. 37
a) Pakistan Exports to India ...................................................................................................... 37
c) Indian Import Policy Conditions & Requirements for Albuminoidal Chemicals ................. 38
4.8 Explosives Chemicals (HS-36) ...................................................................................... 39
a) Indian Import Policy Conditions & Requirements for Explosives Chemicals ..................... 39
4.9 Photographic chemicals: (HS-37) .................................................................................. 39
a) Indian Import Policy Conditions & Requirements for Photographic Chemicals .................. 40
4.10 Miscellaneous Chemicals: (HS-38)............................................................................... 40
a) Pakistan Export to India ........................................................................................................ 40
c) Indian Import Policy Conditions & Requirements for Miscellaneous Chemicals ................ 42
4
6. Policies and Procedure for Chemical Industry ...................................................................... 43
6.1 Indian National Chemical Policy Initiatives .................................................................. 43
7. Trade defense laws/Regulations for Chemicals Industry ...................................................... 45

7.1 Indian Regulations & Documentation Requirement in Chemical Sector: ..................... 45
(a) Indian NTBs on Pakistani chemicals ............................................................................. 46
(b) NTBs Product-Wise: ...................................................................................................... 46
8. Revealed Comparative Advantages (RCA) in Chemical Sector ........................................... 47

9. SWOT Analysis of Pakistan‟s Chemical Sector: .................................................................. 49
10. Conclussion ........................................................................................................................... 53
11. Recomendations..................................................................................................................... 54
12 Annexture 55
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1. Introduction
The global chemical industry forms the fabric of the modern world. It converts basic raw
materials into more than 70,000 different products, not only for industry, but also for all the
consumer goods that people rely on in their daily life. Apart from this the chemical sector
contributes in several other fields like agriculture, pharmaceuticals, textile, power, environment,
communications, transport, infrastructure, housing, as well as covers thousands of commercial
products like paper, paint, plastic products, soap/detergents, perfumes/fragrances, varnishes,
pharmaceutical, dyes etc. In order to emphasize the importance of the chemical industry in
meeting the key challenges for the future, the United Nations Organization proclaimed 2011 as
the „International Year of Chemistry‟. The chemical industry for their outputs/inputs of products
(Export/Import) is predominantly based on the availability of feedstock of basic chemicals in that
country. To address environmental concerns chemical companies are increasingly working
towards reducing energy intensity of their operations, minimizing effluent discharge and
pollution, increasing the share of recyclable products in their portfolio and diversifying their raw
material base to include feedstock. Over the last 10 years, the share of Asia in global chemical
sales has increased by about 14%1.
In India and Pakistan the chemical industry is one of the oldest, which involved the production of
basic chemical products to cater for the domestic needs. With the liberalization in 1990s,
Pakistan‟s basic chemical industry was exposed to international competition, reduced roles of
government, insulation of high tariffs, import substitution policies, regulations, trade defense
laws, intellectual property rights, patents, etc as well as gradual shifting of industry from
production of basic chemicals to petrochemicals, pharmaceuticals, specialty chemicals,
construction chemicals, dyestuffs, paints and agrochemicals etc. Over the years, some traditional
sectors have developed, however the Chemical Industry in Pakistan is still at a very nascent
stage. In early 50‟s, Pakistan Industrial Development Council (PIDC) was setup by the
Government, for industrialization of the country. As a result a large chemical estate comprising
Pak American Fertilizers, Maple Leaf Cement, Antibiotics (Penicillin) and Pak Dyes &
1
Global Chemical Outlook 2011 (UNEP)
6
Chemicals was established at Iskanderabad (DaudKhel), district Mianwali. This estate played an
important role and served as a nucleus for chemical industry in Pakistan.
In 1960‟s, another chemical complex was set up in private sector at Kala Shah Kaku, Lahore.
Chemical factories also started emerging at Karachi due to the investment friendly policies
which gave confidence to the investors. In early 1970‟s, private industries were nationalized with
the result that the fast growing chemical sector started to decline. The growth of chemical sector
could never pickup. The imports of chemicals are on increase in value and volume terms. In
order to identify the key challenges and problems face by the chemical industry of Pakistan at
domestic level as well as in trade with India. This study is focused around the following
objectives, scope, limitations and methodologies.
Objectives of the Study
1. Identification of Pakistan‟s export potential, for the chemical sector, in India.
2. Identification of India‟s export potential, for the chemical sector, in Pakistan.
3. Identification of segments of chemical industry which are not competitive vis a vis India.
4. Identify the comparative tariffs of Pakistan and India for the particular product range.
5. Identification of NTBs that need to be addressed to facilitate exports, of the specific

sector, to India.
6. Have trade defense laws been used in this sector.
Scope and Methodology
This working paper was initiated in the wake of normalization of Pakistan-India trade ties
dialogue which was held on March 2012. Due to unavailability of latest trade statistics, the scope
of this report is limited to Pakistan-India trade based on the 2010 statistics. The chemical
industries in this paper are categorize on the basis of HS classification identified by State Bank
of Pakistan (SBP), which includes, organic chemical, inorganic chemicals, fertilizers, tanning or
dyeing extracts, essential oils and resinoids, Soaps, Albuminoidal substances, Explosives
chemicals, Photographic Chemicals and Miscellaneous chemicals.
7
The methodology adopted in this report is based on descriptive statistics obtained from
secondary sources. In addition, comparative analysis has also been done on the chemical sectors
of Pakistan and India. The competitiveness of the sectors have also been determined by using
revealed comparative advantage (RCA) criteria based on trade statistics for the year 2010.
This report is based primarily on desk research. Due to time, resource and budgetary constraints
interaction with stakeholders was not possible. The structure of the report is as follows;
This chemical report deals with the market size of chemical sector in India and Pakistan, the
major players of chemical production, government policies for the sector and other demand and
supply side issues. The information provided in section II of this report was based on secondary
sources. The section III of the report deals with trade analysis contains the pattern of Pakistan‟s
chemical sector exports and imports to world, destination markets and product composition.
Whereas in section IV, similar analysis is carried out for India‟s chemical sector trade pattern
with the world and a detailed analysis of bilateral trade between Pakistan and India is conducted
for the chemical sector. The same section of the report also encompasses the status of products
covered in the chemical sector, whether it was in the positive list (now eliminated), if it is
currently on the negative list or sensitive list, its liberalization status under SAFTA, MFN tariffs
and preferential tariffs (if any). Similarly this section also deals with the identification of
Pakistan‟s and India‟s comparative position with respect to chemical products. This analysis is
done at the HS 6 digit level using Revealed Comparative Advantage Index. All calculations are
based on Trade Map data.
The section V explains the Indian national chemical policies initiative and procedures, Section
VI deals with Indian regulations and documentation requirements on imports of chemical
products, Indian NTBs on Pakistani chemical sector etc. whereas section VII reports revealed
comparative advantage (RCA) of both countries in chemical sectors. While VIII highlights the
SWOT analysis of chemical sector. The last two sections explain a comprehensive conclusion
and recommendations for the future of Pakistan‟s chemical sector exports growth and
development.
8
2. Classification of Chemical Industry:
For marketing purpose the chemical industry is divided into following main categories globally.
2.1 Basic Chemical’s: This category is also known as “commodity chemicals” which is
further subdivided into (i) Polymers: Includes basic chemicals like Polyethylene (PE), Polyvinyl
Chloride (PVC), Polypropylene (PP), Polystyrene (PS), ethylene, polyester, nylon, acrylics etc.
(ii) Bulk Petrochemicals & intermediates: Basically produced from Liquid Petroleum Gases
(LPGs), natural gas and naphtha it includes chemicals like benzene, toluene, xylenes, methanol,
vinyl chloride monomer (VCM), styrene, butadiene and ethylene oxide etc. These
petrochemicals are used in the manufacturing of polymers, specialty chemicals and other
organic chemicals. (iii) Other derivatives & Basic Industrial: Chemicals included in this sub-
category are surfactants, dyes, pigments, resins, carbon black, explosives synthetic rubber and
rubber products etc. (iv) Inorganic Chemicals: Inorganic chemicals include, salt, chlorine,
caustic soda, soda ash, acids (such as nitric, phosphoric and sulfuric), titanium dioxide and
hydrogen peroxide. It also includes fertilizers, phosphates, potash and ammonia chemicals.
2.2 Life science Chemicals: include differentiated chemical and biological substances,
pharmaceuticals, diagnostics, animal health products, vitamins and crop protection chemicals.
2.3 Specialty Chemicals: Products include electronic chemicals, industrial gases, adhesives
and sealants, as well as coatings, industrial and institutional cleaning chemicals, and catalysts.
2.4 Consumer Products: include direct product sales of chemicals such as soaps, detergents,
and cosmetics.
9
The chemical industry in Pakistan and India is classified as follows:
Classification of Chemical Industry in

Classification of Chemical Industry in Pakistan
India
A. In Pakistan, the industry has been classified Chemical Industry in India has been classified
into two sectors according to Chemical on the basis of chemical sub-segments.
Industry Development-Vision 2030,
1. Primary Sector Chemical Industry: It is 1. Basic Chemicals: also known as
the classification of primary sector Industry “commodity chemicals” includes
based on the conversion of natural organic chemicals, inorganic
resources (ores) into primary products. chemicals, bulk petrochemicals, other
In Pakistan this industry is well established, chemical intermediates, plastic resins,
having large scale units, highly manmade fibers, dyes & pigments and
sophisticated, capital intensive and printing inks etc.
technologically advanced. In Pakistan the
following industries were considered as 2. Special Chemicals: also known as
primary chemical Industry for production “performance chemicals” and are
of primary chemicals. derived from basic chemicals. The
(a) Petroleum Refinery and petrochemical chemicals included in this category
Industry involved in the production of are paint, adhesives, oilfield
petroleum intermediates, olefins chemicals, flavors, fragrances, rubber
(ethylene, propylene, butylenes) and processing additives, paper additives,
BTX (benzene, toluene, xylene) all of industrial cleaners and fine chemicals.
which form the basis for the Sealants, coatings, catalysts are also
development of monomers, polymers included in this category.
and plastic industries
(b) Natural gas for the production of 3. Agriculture Chemicals: These are
ammonia, methanol, fertilizers and classified as crop protection chemicals
associated products. such as pesticides etc.
(c) Mineral based industries consisting of
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cement, limestone, gypsum, sand and 4. Whereas drugs, pharmaceutical and
salt fertilizers industries are considered
(d) Smelting and refining of ferrous and separately as independent sector in
non-ferrous metals India.
(e) Agriculture and Farming Industries
producing cotton, oils and fats, sugar,
agricultural wastes (bio-mass) and raw
materials for a large number of
downstream industries.
2. Secondary Sector Chemical Industry:
The principal objective of Secondary sector
industries is to use Primary industries
products in further manufacturing,
processing, blending, fabricating plants for
petrochemical intermediates, polymers,
plastics, steel, non-ferrous metals,
mineral‟s, agricultural and miscellaneous
products. These industries use medium- to
high-sophisticated technology, and range
from light to medium categories.
For the competitiveness analysis of chemical Industry, we classified the industry on the basis of
HS classification categorized by state bank of Pakistan (SBP), which includes, organic chemical,
inorganic chemicals, fertilizers, tanning or dyeing extracts, essential oils and resinoids, Soaps,
Albuminoidal substances, Explosives chemicals, Photographic Chemicals and Miscellaneous
chemicals classified chapter-wise ranging from HS-28, 29, 31, 32, 33, 34, 35, 36, 37 and 38.
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3. Global Trend Analysis of Chemical Industry
The global chemical industry, estimated at US$ 2.5 trillion2, is one of the fastest growing sectors
of the manufacturing industry. Despite the challenges of escalating crude oil prices and
demanding international environmental protection standards now adopted globally, the chemicals
industry has still grown at Table: 1
a rate higher than the
Ranking Country 2010 %
overall-manufacturing
Shares
segment.
0 World 945.7
The top ten major 1 United States of 108.5 11%
producers of chemicals America
are USA, Germany, 2 Germany 90.8 10%
China, Belgium, Japan, 3 China 70.5 7%
France, Netherlands, 4 Belgium 56.3 6%
United Kingdom, Ireland 5 Japan 53.3 6%
and Republic of Korea. 6 France 51.8 5%
India is ranked 18th major 7 Netherlands 46.7 5%
exporter of chemicals, 8 United Kingdom 38.5 4%
while Pakistan ranked is 9 Ireland 38.1 4%
93rd in global exports of 10 Republic of Korea 26.7 3%
chemicals. However, US 18 India 16.2 1.7%
consumes approximately 93 Pakistan 0.2 0.02%
one-fifth of the global Source: Trade Map (US $ billions)
chemical consumption Chemicals included: (HS) 28,29,31,32,33,34,35,36,37 & 38
whereas Europe is the largest consumer with approx. half the consumption. The US is the largest
consumer of commodity chemicals whereas Asia Pacific is the largest consumer of
agrochemicals and fertilizers. As per calculations based on 2010 data of ITC, the organic
chemical industry is the largest segment contributing about 39% of total global chemical trade,
whereas miscellaneous chemical products contribute approximately 16%, inorganic chemical
2
STPF 2009-12
12
contribute about 12%, essential oils & resinoid contribute about 9%, Tanning or dyeing extracts
contribute about 7% and agrochemicals (fertilizers) about 6% of the total global chemical
industrial output. Commodity chemicals like soap/detergents contribute about 5%, albuminoids
and photographic chemicals contribute 2% each in the chemicals market.
3.1 Trend Analysis of Pakistan’s Chemical Sector

Pakistan export chemical and chemical related products of worth US$ 0.17 billion and its
imports of chemicals are also increasing both in terms of value and volume reaching US$ 3.9
billion in 2010, having a deficit of about US$ 2.83 billion. Due to high demands, Pakistan's
chemical industry has gained much significance in attracting a foreign direct investment of US$
253 million3 over the last five years. Currently, more than 20 well developed and 400 chemical
manufacturing units4 are operating in Pakistan and many of them are specialized in the
production of key chemicals with the steady progress and development of this industry. The
rapidly changing economic scenario has reinforced the chemical sector local manufacturers to
engage in import substitution by acquiring latest technologies and diversifying their product
range to surpass the petroleum & chemical exports of US$ 0.17 billion in 2010.
Figure # 1
Source: Trade Map
3
BOI
4
Chemical & Dyes Merchants
13
3.2 Trend Analysis of Indian Chemical Industry:
According to Indian chemical policy 2012, the chemical industry accounts for approximately 7%
of GDP of India and the share of industry in national exports is around 11%. Although the
growing Indian chemical sector is currently estimated to be worth $16 billion, nevertheless, the
spread of the chemical industries has been uneven across different parts of the country giving
rise to regional imbalances. Indian chemical sector ranks 18th in the world and 3rd in the Asia. It
is also one of the largest industrial sectors in the Indian economy and an important employment
generator. The Indian Chemical Industry comprises both small and large-scale units. Presently,
there are about 40,000 chemical manufacturing units located in the country out of which about
80% are covered in the small scale sector. This sector provides employment to about 3.3 million
people. Indian chemical industry exports dyes, pesticides and specialty chemicals to the
developed world and to the developing countries which form about 2% share in the global
market and contributes significantly to the foreign exchange basket of the country. In India 51%
chemicals are produced in Gujarat, 8% in Maharashtra, 8% in Uttar Pradesh, 6% in Tamil-Nadu,
4% in Punjab and 23% in other states5.
4. Pakistan-India Bilateral trade of Chemical Industry
a) Pakistan Export to India:

Pakistan exports only 36 tariff lines at HS-6 digit level of chemicals to India of worth US$
39.72 million, which accounts about 39% of Pakistan‟s total export of chemicals to world in
2010 (Table 4.1).These 36 tariff lines of chemicals, comprise of 14 tariff lines of organic
chemicals, eight tariff lines of inorganic chemicals, five tariff lines of miscellaneous chemicals,
four tariff lines of tanning of dyeing extracts, four tariff lines of soaps and one tariff line each of
essential oils/resinoids, explosive chemicals and albuminoidal substances. Pakistan‟s exports of
these 36 tariff lines of chemical, accounts 1.3% of India‟s total imports of chemicals from world
in 2010, at an average applied tariff of 7.5% in 2010.
5
Ministry of Chemicals, India
14
Table: 4.1
Pakistan Export of Chemicals to India in 2010 (value: US Millions)
Chapter Product Label No. of Average of Pakistan's Pakistan's India's Indicative
Product Tariff exports to exports to imports potential
Line Applied by world India from trade
India on world
Pakistan
%
28 In-Organic Chemicals 8 6.95 16.42 11.36 188.22 5.07
29 Organic Chemicals 14 6.47 40.82 25.74 2053.58 14.90
32 Tanning & Dyeing Chemicals 4 8.13 8.27 0.04 104.58 8.23
33 Essential oils and resinoids 1 10.00 1.11 0.02 4.54 1.09
34 Soap, organic surface-active 2 10.00 0.40 0.02 35.60 0.38
35 Albuminoidal substances 1 15.40 8.47 0.35 5.58 5.22
36 Matches Chemicals 1 10.00 20.33 0.38 0.00 0.00
38 Miscellaneous chemical products 5 7.50 13.29 1.81 595.23 11.47
Grand Total 36 7.58 109.11 39.72 2987.33 46.35
Source: Trade Map
b) Pakistan Imports from India

However, on the other hand, India exports about 325 tariff lines of chemicals to Pakistan of
worth US$ 379 million
constituting an export share of
about 3% of Indian global export
of chemicals. India exports 48
tariff lines of organic chemicals,
180 tariff lines of inorganic
chemicals, seven tariff lines of
fertilizers, 28 tariff lines of
tanning, dyes pigments, 11 tariff
lines of toiletries, ten tariff lines
of soap chemicals, six tariff lines
Figure # 2
Source: Trade Map
15
of albuminoidal chemicals, five tariff lines of photographic chemicals and 30 tariff lines of
miscellaneous chemicals. The detailed analysis and comparison of chemicals are given below.
Table: 4.2
Pakistan Imports of Chemicals from India 2010 US Millions
Average of
Tariff Pakistan's Pakistan's
No. of India's
Applied by imports imports Indicative
Chapter Product Label Tariff exports
Pakistan from from potential
Lines to world
on India world India
%
28 In-organic Chemicals 48 5.3 87.45 8.90 1668.13 55.53
29 Organic Chemicals 181 6.3 1298.77 260.67 7044.84 688.85
31 Fertilizers 7 0.7 25.92 1.15 28.38 13.33
32 Tanning & Dyeing Chemicals 28 12.1 240.13 41.97 1475.75 175.99
33 Essential oils and resinoids 11 12.6 52.87 3.24 595.43 48.94
34 Soap, organic surface-active 10 14.5 121.22 11.83 188.11 87.39
35 Albuminoidal substances 6 10.8 29.58 0.37 95.12 29.21
37 Photographic Chemicals 5 5.0 12.90 0.15 33.96 3.58
38 Miscellaneous chemical products 30 9.2 517.16 50.93 1472.18 397.94
Grand Total 326 7.3 2386.00 379.20 12601.90 1500.76
Source: Trade Map
c) Pakistan’s Negative List of Chemicals for India:

Out of a total of 1209 items of negative list, Pakistan has included 65 tariff lines of chemicals in
the negative list items, which is banned to be imported from India till 31st December 2012.
However, the average custom duty on these 65 banned chemical items is about 19.4% for the
year 2012.
Out of negative list of 65 chemicals tariff lines, around 8 tariff lines are from inorganic
chemicals, 31 tariff lines from organic chemicals, 8 tariff lines from Tanning & dyeing
Chemicals, 4 tariff lines from essential oils & resinoid chemicals, 3 tariff lines from
Soaps/organic surface active chemicals, 4 tariff lines from albuminoidal chemicals/substances, 2
tariff lines from photographic chemicals and 38 tariff lines are from miscellaneous chemicals.
16
The detailed description of 65 tariff lines of chemicals, which Pakistan have banned to be
imported from India, is given in Annexure I.
Table 4.3
Pakistan’s Inclusion of Chemicals in Negative list for India in 2012
Chapter Chemical Sector No of Tariff Lines in Average Custom Duty
Negative list applied by Pakistan
CD%
28 Inorganic Chemicals 8 19.28
29 Organic Chemicals 31 18.21
32 Tanning & Dyeing Chemicals 8 15
33 Essential Oils & Resinoids Chemicals 4 35
34 Soaps, organic surface-actives agents 3 31.6
35 Albuminoidal Substances 4 20
37 Photographic Chemicals 2 17.5
38 Miscellaneous Chemicals 5 12
Grand Total 65 19.5
Source: Ministry of Industries Pakistan
d) India’s Sensitive List of Chemicals for Pakistan under SAFTA:

India has placed around 31 tariff lines of chemicals in sensitive list under SAFTA for non LCDs
countries. The details of these chemicals are given below.
Table: 4.4
India’s Inclusion of Chemicals in SAFTA sensitive list for Non-LDCs
Chapter Chemical Sector No of Tariff Lines in Average Custom Duty
Sensitive list applied by India
CD%
28 Inorganic Chemicals 1 8
32 Tanning & Dyeing Chemicals 8 8
33 Essential Oils & Resinoids Chemicals 15 11.6
34 Soaps, organic surface-actives agents 2 8
35 Albuminoidal Substances 2 10
36 Ristricted/Explosive Chemicals 1 10
38 Miscellaneous Chemicals 2 12
Grand Total 31 9.6
Source: Indian Ministry of Commerce
17
4.1 Organic Chemicals (HS 29)
Figure # 3
a) Pakistan Exports to India: Source: Trade Map
Out of Pakistan‟s total exports of

chemical of worth US$ 39.72
million to India, Pakistan exports
only 14 tariff lines at HS-6 digit
level of organic chemicals to India
amounting to US$ 25.7 million
having an export share of about
61.4% of Pakistan‟s global export
of organic chemicals and 0.15% of
Pakistan total exports to world.
Pakistan fulfils only 0.27% of
Indian global demand of organic chemicals, facing an average MFN tariff of about 10% on all
organic chemicals.
The major tariff lines items under organic chemicals category exported/supplied by Pakistan
includes ethylene dichloride (HS 290315), which amounts to US$ 12 million. It fulfills 10% of
Indian global demand (import) of the said chemical and faces SAFTA preferential tariff of about
6.8%. The second major tariff line exported by Pakistan is Terephthalic acid and its salts (HS
291376) of amount US$ 10.8 million. It fulfills 2% of Indian global imports of Terepthalic acid,
and faces SAFTA preferential rate of about 8%. Another major tariff line is Phthalic anhydride
(HS 291735) amounting US$ 1.5 million and fulfills 1% Indian global imports of Phathalic
anhydride and faces SAFTA preferential rate of about 8%.in Indian market. The other eleven
organic chemicals, which are supplied by Pakistan includes Acrylonitrile, Dioctyl
orthophthalates, Ethylene glycol, Heterocyclic compounds, Imines, nucleic acids and antibodies,
that collectively amounts to US$ 1.08 million and faces SAFTA average preferential rate of
about 8%.
Pakistan has sufficient export capacity for Pure Terephathalic Acid (PTA) and Poly Vinyl
Chloride (PVC). Pakistan has an unexplored export potential of about US$ 31.97 million in
18
organic chemicals such as Terephthalic acid and its salts, Dioctyl orthopthalates and 1, 2-
dichloroethane (ethylene dichloride) etc chemicals in Indian market.
b) Consumption & Production of Organic chemicals by Pakistan: Pakistan‟s organic chemical

industry could not flourish due to unavailability of basic building blocks such as Ethylene,
Propylene, Butylenes & BTX (Benzene, Toluene, Xylene). As these products were used for the
production of most of the organic chemicals that are employed as a raw material for a number of
chemical sub-sectors such as; Pharmaceuticals, pesticides, dyes & pigments, Soaps &
Detergents, Paints & Varnishes, synthetic Fiber, plastics & Resins, rubber Tyres & Tubes,
Textiles Auxiliaries and Essential Oils & Perfumes.
These petrochemical building blocks can be derived from a Petrochemical complex, which
generally consist of a Naphtha Cracker, whereas naphtha is a product of oil refineries and
currently its production in the country is around 1,000, 000 Mn. Ton per annum6 which is being
exported. The investors have remained shied away from the production of Naphtha cracker due
to the reasons like highly cost intensive project, sophisticated technology involved, export
market limitations, insufficient current tariff spread.
In chemical industry feedstock is the main source for the growth and development of chemical
sector in any country. However, there are some alternate sources available in Pakistan having an
edge over India like natural gas availability; Thar coal reserves and import of cheap natural gas
from Iran, to produce basic petrochemical building blocks (Naphtha cracker) from; gasification
of coal , dehydrogenation of associated gases and cracking of natural gas. This opportunity
surely opens the gateway for the development of Petrochemical industry in Pakistan, which will
support the local chemical & allied products industries in meeting their raw materials
requirements and to save the valuable foreign exchange. The example of this development is
obvious in synthetic fibres, soaps & detergent, dyes & pigments, Paints & Varnishes, while
amongst intermediates Pakistan has sufficient capacity for Pure Terephathalic Acid (PTA) and
6
Chemical Development Vision 2030
19
Poly Vinyl Chloride (PVC). However, the imports of chemicals and allied industries stood
around 20%, which is significant for a small economy of Pakistan.
c) Pakistan Imports from India: Figure # 5

Source: Trade Map
India exports about 181 tariff lines or
products of organic chemicals to
Pakistan valuing US $ 0.26 billion.
About 15% of Pakistan‟s imports of
organic chemicals are directed from
India, facing MFN tariff ranging from
0% on Meth-acrylic acid esters to 25%
on penicillin etc. The major products
of organic chemicals, which India
exports to Pakistan includes P-Xylene
of worth US $ 127 million, O-Xylene amounting US $ 20.5 million, Nucleic acids of worth US $
13 million, heterocyclic compounds of worth US $ 34 million, amino-alcohols of worth US$ 4.9
million, erythromycin of worth US$ 4.7 million and antibiotics of worth US$ 4.74 million
exported to Pakistan by India in 2010. All these products are facing average MFN rates of about
6.35% and SAFTA preferential rates of about 5%.
The P-xylene only accounts 49% of Pakistan‟s total import of organic chemicals from India,
facing MFN duty and SAFTA preferential rate of about 5%, followed by O-xylene accounts
7.9% of Pakistan‟s total imports of organic chemical from India facing MFN & SAFTA
Preferential rate of about 5% duty, Nucleic Acid accounts 5.2% of Pakistan‟s total imports of
organic chemical from India facing MFN 11.6% duty (SAFTA preferential rate of about 5%).
The other major products of organic chemicals exported by India to Pakistan includes, cyclic
amides, sulphonamides, glycol, organo-sulphur compounds, amino acids, insulin, Vitamin E,
aromatic compounds, acyclic ethers etc. It faces SAFTA preferential duty of about 5% in 2010.
The data analysis revealed that India has a lot of potential to export organic chemical of worth
US$ 798 million to Pakistan, facing an average applied tariff rate of about 6.0%. Whereas the
major items/products of organic chemical in which India has potential in Pakistani market
20
includes P-xylene, Antibiotics, Nucleic acids, ethanediol, methanol, heterocyclic compounds,
nitrile compounds, amino acids etc. Annexure III briefly explains the Indian potential of organic
chemicals market position in Pakistan as well as applied MFN & SAFTA preferential rates on
these products.
d) Indian Import Policy Conditions & Requirements for Organic Chemicals

The four major organic compounds included include methanol, acetic acid, formaldehyde,
phenol and acetaldehyde. They constitute around 60% of total organic chemical produced in
India and are protected by external competition by Indian government. In Indian Custom Policy,
Government of India continues to provide duty protection to domestic manufacturers of organic
chemicals. For example in case of phenol, the MFN custom duty of 7.5 % was maintained,
whereas excise duty was reduced from 16% to 8%. Government also levied anti-dumping duty
on import of phenol from countries such as USA, South-Korea and Taiwan.
In Indian Import policy, the following five major import regulations were applied on the import
of 57 tariff lines of organic chemicals. India has imposed restriction on the import of about 25
tariff lines of organic chemicals. One tariff line of organic chemical is subject to imposition of
SPS regulation (BIS certification). Import of 5 tariff lines permitted subject to registration and
other requirements as administered by Drug Controller General of India under the provisions of
Drugs and Cosmetics Act. Similarly, import of 25 tariff lines of organic chemicals were
subjected to actual users against a license from a country which is a party to the “Montreal
Protocol on Substances that Deplete the Ozone Layer”.
No. Indian Import Policy Regulations for organic chemicals No. of

TL
I Import is permitted by actual users against a license from a country which is a 25
party to the “Montreal Protocol on Substances that Deplete the Ozone Layer”.
List of countries which are parties to the Montreal Protocol will be notified by
Director General
II Imports are permitted subject to Registration and other requirements as 5
administered by Drug Controller General of India under the provisions of
21
Drugs and Cosmetics Act
III BIS (only required for Hexane, food grade) 1
IV SPS Requirement 1
V Restricted 25
Grand Total 57
The above Indian import policy regulations depict Indian high protection of its domestic organic
chemical industry.
4.2 Inorganic chemicals (HS-28)

Pakistan made a considerable progress in the production of basic inorganic chemicals such as
Soda Ash, Caustic Soda, Sulphuric Acid & Chlorine. In Pakistan, sufficient production capacity
of these chemicals is available, not only to cater the needs of the local industry but surplus
production is being exported around the world. In Pakistan the import of inorganic chemical
products are negligible.
a) Pakistan’s exports to India:

Pakistan exports only 8 tariff lines of
inorganic chemicals to India of value US$
11.35 million. It accounts for about 38% of
Pakistan global exports of inorganic
chemicals. About 82.58% of Pakistan‟s
total export of inorganic chemical
comprised of only one product that is
Disodium carbonate, whereas the remainder
14.98% constitutes of hydrogen peroxide,
1.4% constitutes of Ammonium chloride Figure # 6
Source: Trade Map
and 0.6% constitutes of sodium bicarbonate
in 2010. All of these 8 tariff lines face an Indian average MFN duty of about 10% and average
SAFTA preferential duty of about 5%.
22
India fulfills about 0.4% of its global import of inorganic chemical from Pakistan. The basic
inorganic chemical products that were exported by Pakistan to India includes, disodium
carbonate of value US$ 9.3 million, (fulfills 11.2% of Indian global imports) faces MFN tariff of
about 10% and SFTA preferential rate of about 6.5% in Indian market. Pakistan exports
hydrogen peroxide of value US$ 1.7 million to India (fulfills 20.08% of Indian global imports),
faces SAFTA preferential rate of about 6.5%.
Similarly, Pakistan exported ammonium chloride of value US$ 159 thousands to India (fulfills
5.3% of Indian global imports), faces 6.5% SAFTA preferential rate. Export of sodium
bicarbonate of value US$ 67 thousands (fulfills 1.5% of Indian global import) faces SAFTA
preferential rates of 6.5% duty. Whereas exports of caustic soda (solid) amounts to US$ 31
thousands (fulfills 0.6% of Indian global import) faces 6.5% SAFTA preferential duty. Whereas
Pakistan exports sodium sulphate and calcium hypochlorite of value US$ 20 thousand to India.
Pakistan has an unexplored export potential of about US$ 11.8 million worth of inorganic
products to India. The potential exportable inorganic chemicals products which can made inroads
into India can be disodium carbonate, hydrochloric acid, calcium chloride, silicates of sodium,
hydrogen peroxide and sodium bicarbonate. Whereas in zinc oxide Pakistan have an unexplored
export potential of about US$ 547 thousands to Indian market in 2010, is placed in SAFTA
sensitive list for Non-LDCs by India. For details regarding bilateral trade potential and applied
MFN & SAFTA preferential rates please see Annexure IV
b) Consumption & Production of Inorganic Chemicals in Pakistan7: The key inorganic

chemicals or Chlor-Alkali industry produces three main chemicals like (1) Caustic soda (2) Soda
Ash (3) Chlorine.
Caustic Soda: Presently, there are four plants with production capacity around 435,000 MTPY
of Caustic Soda. Local consumption of the caustic soda was increased with a compound annual
growth rate of 7%. Electricity is a major cost component in the manufacturing of caustic soda,
account for about 60% of overall cost of production. Existing energy (Electricity & Natural gas)
crises have badly impacted the local production. Alone textile sector of Pakistan consumes 43%
7
Chemical Development Vision 2030
23
of caustic soda. Whereas 19% of caustic soda. Is consume in the manufacturing of soap &
detergent.
Local demand of caustic soda declined because of decline in exports of textile sector, after
recession in the international market. It is expected that in future conditions will improve and
demand will grow at a rate of 7%. Demand of caustic soda is expected to expand to 350,000
MTPY in the next 5 years.
Soda Ash: In Pakistan there are two soda ash plants having production capacity of 470,000
metric tons per year. Both plants producing soda ash are located in the Salt Range area. In 2010,
the local market production of soda ash in the country is about 365,000 million tons. About 43%
of soda ash production mainly consumed in the production of glass & silicate industry, 28% of
soda ash consumed in the production of textiles, 7 % soda ash used in the manufacturing of
detergents & soap, 9% soda ash used in the production of baking powder and 11% in paper
production. As mentioned earlier Pakistan‟s existing production capacity of soda ash is about
470,000 MTPY while local market demand is about 364,000 and therefore has enough surplus
capacity of 106,000 million tons to export in regional and international market.
Sodium Ash: At present, Akzonobel Pakistan and Olympia chemicals have a combined capacity
of about 40,000 MTPY to produce sodium bicarbonate. Sindh Alkalis Karachi has a capacity of
10,000 MTPY but the plant is not operating since 2000. Sodium Bicarbonate is used in drugs
manufacturing, bakery & food products and beverages. Besides local production imports were
also made in the recent years but are on the decline. Collective share of local manufacturers in
the local market was about 79% and share of import was 21%.
Pakistan exports inorganic chemicals of worth US$ 29 thousands to world and the major export
destination of Pakistan‟s inorganic chemicals are India, UAE, Canada, Bangladesh, Sri-Lanka,
Afghanistan and Singapore etc.
24
c) Pakistan Imports of inorganic Chemicals from India:
On the other hand, from the statistical
analysis it is analyzed that India exports
48 tariff lines (HS-6 digit level) of
inorganic chemicals to Pakistan of value
US$ 8.9 million, which fulfills 2.1% of
Pakistan‟s global demand of inorganic
chemicals.
India exports only 0.4% of its global
export of inorganic chemicals to
Pakistan, faces MFN applied tariffs
ranging from 0~20% and SAFTA
Figure # 7
preferential rates of about 5%. Source: Trade Map
About 28% of Pakistan total imports of inorganic chemical from India constitute of Aluminum
hydroxide, 21% constitutes Dithionites and sulphoxylates of sodium, 19% constitutes of
Dithionites and sulphoxylates of metals nes, 7% of Argon and 4% zinc peroxide etc.
In 2010, the major inorganic chemical, which India exports to Pakistan includes aluminum
hydroxide of value US$ 2.5 million, (fulfills 69.9% of Pakistan import demand of aluminum
hydroxide), faces SAFTA preferential duty of about 5%. Followed by Dithionites &
sulphoxylates of sodium of value US$ 1.8 million,(fulfills 18.9% of Pakistan‟s import demand)
faces SAFTA & MFN tariff of about 5% and Dithionites and sulphoxylates of metals nes of
value US$ 1.6 million, (fulfills 31.7% Pakistan‟s import demand) faces MFN duty of about 5%.
The other chemicals, which India has exported to Pakistan includes, argon, zinc oxide, chlorides,
calcium phosphates, nitric acids, sodium sulphates, iodides, ammonium chloride, aluminum
oxides, sulphates, chlorides, silicates, magnesium peroxide, sodium dichromate, calcium
carbonate etc, which collectively amounts to US$ 2.9 million.
Whereas the products in which India has an unexplored export potential of in-organic chemicals
in Pakistani market are of sulphates of metal of worth US $ 9.9 million, titanium oxide of worth
25
US$ 9 million, dithionite of sodium of worth US $ 7.8 million, phosphoric acid of worth US$ 7
million, Disodium carbonate of worth US $ 4.4 million, sodium dichromate of worth US $3.2
million and other chemical includes, iron oxide, carbonates of metal, dicalcium phosphates,
calcium carbonate, aluminum oxide, Iodine, sodium sulphites, caustic potash etc. India exports
inorganic chemical of worth US$ 2.3 billion to the world and major destination of Indian
inorganic chemical exports are Iran, Ukraine, Bahrain, China, UAE, Indonesia, USA, Japan, Sri-
Lanka, Germany, Saudi Arabia, Bangladesh, Belgium and Vietnam etc. For detailed bilateral
trade potential, MFN duty and SAFTA preferential rates see Annexure V
d) Consumption & Production of inorganic Chemicals in India:

In India caustic soda demand has increased from 1.86 Mn.ton in 2005 to 2.5 Mn.ton in 2010.
Whereas production of caustic soda has increased from 1.81 Mn ton in 2005 to 2.25 Mn ton in
2010 and capacity by 2.1 Mn ton and currently imports 370.2 (`000 tones) of caustic soda from
abroad. Chlorine: Consumption in India has increased from 1.9 Mn ton in 2005 to 2.7 Mn tons
in 2010, whereas production is 611 thousand tons.
Soda Ash (Sodium Carbonate), mainly produced from salt, the domestic demand of soda ash in
India has increased from 2.16 Mn tons in 2005 to 2.51 Mn T in 2010. Currently India exports
about 253 thousand tons of soda ash, whereas its imports are about 600 thousand tons in 2010.
This could be a big opportunity for Pakistan to capture this market. Pakistan exports soda ash of
value US$ 13.1 million to world, whereas the top three export destination of Pakistan‟s Soda Ash
are India (US4 9.3 million), Bangladesh (US$ 1.6 million), South Africa (US$ 1.1 million). The
other major destination where Pakistan exports soda ash includes UAE, Sri-Lanka, Indonesia,
Afghanistan and Somalia. India imports Soda Ash of worth US$ 83 million from world. The
countries from which India imports Soda Ash are Ukraine of worth US$ 16 million, Kenya (US$
15 million), Bulgaria (US$ 12 million), China (US$ 8 million), Turkey (US$ 7 million) and
Pakistan ranked at 6th position from where India imports Soda ash.
e) Indian Import Policy Conditions & Requirements for Inorganic Chemicals

According to Indian import policy regulation about 14 tariff lines of inorganic chemicals in India
are restricted to import. Whereas 14 tariff lines of inorganic chemicals are permitted subject to
26
section 14(1)(ii) of the Atomic Energy Act, 1962 and Rules. Similarly import of two tariff lines
i.e. Import of Boric Acid for non-insecticidal purposes will be subject to an import permit issued
by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture.
Whereas import of thorium nitrate is subject to section 14(1)(ii) of the Atomic Energy Act, 1962
and Rules there under. Similarly, import of carbon black is subject to permitted freely provided
Cost, Insurance and Freight (CIF) value is Indian Rs. 80,000/- PMT and above. Import of items,
priced below Indian Rs. 80,000/- PMT shall be restricted.
Indian Import policy Regulations for Inorganic chemicals On No of Tariff Lines

I Import is subject to section 14(1)(ii) of the Atomic Energy Act, 1962 and 10
Rules there under
II Import of Boric Acid for non-insecticidal purposes will be subject to an 2
import permit issued by the Central Insecticide Board & Registration
Committee under the Ministry of Agriculture
III Import of thorium nitrate is subject to section 14(1)(ii) of the Atomic 1
Energy Act, 1962 and Rules there under
IV Import permitted freely provided CIF value is Rs. 80,000/- PMT and 1
above. Import of items, priced below Rs. 80,000/- PMT shall be
restricted.
V Restricted 14
Grand Total 28
27
4.3 Fertilizers (HS-31) Figure # 8
Source: Trade Map
Being an agricultural based country,
Pakistan mainly imports fertilizers
from abroad of value US$ 649
thousand in 2010. Pakistan Imports
fertilizers particularly from top five
countries such as China of worth
US$ 140 thousands, followed by
Saudi Arabia (US$ 123 thousands)
USA (US$ 52 thousands), Tunisia
(US$ 45 thousands) and Russia
(US$ 43 thousands) to fulfill its
domestic needs or consumption. In
order to facilitate the agriculture sector government has imposed 0% duty on 23 tariff lines or
products of fertilizer category. Pakistan does not export a single tariff line of fertilizer to the
world.
a) Pakistan Imports from India

In 2010, Pakistan imported 7 tariff lines/products of fertilizer from India of value US$ 1.15
million, which faces MFN 0% duty. Whereas average applied SAFTA preferential rates applied
by Pakistan on fertilizers is about 5% for Non- LDCs. The major items supplied by India to
Pakistan were fertilizers nes of value US $ 407 thousands, nitrogenous fertilizer of value US $
325 thousands, phosphorous/potash fertilizers of value US$ 204 thousands and sodium nitrate of
US $ 111 thousands in 2010.
The other products under this category imported by Pakistan from India include ammonium
nitrate, animal fertilizer and potassium chloride collectively of value US $ 107 thousands. India
has an opportunity to capture US$ 13 million worth of fertilizers market of Pakistan at 0% duty.
For further details regarding fertilizer trade potential, MFN duty and SAFTA preferential rates
see Annexure VI
28
b) Consumption & Production8in Pakistan: Fertilizer sector is the second largest consumer of
gas after power sector. Due to gas shortages the domestic fertilizer industry witnessed positive
trend in production during the year 2010-11. The production in nutrient terms has increased from
3082 thousand tons during 2009-10 to 3143 thousand tons during 2010-11 showing an increase
of 2.0 percent. Nitrogen production was 2708 thousand tons during 2010-11 and recorded an
increase of 1.4 percent (86.2 percent share in total production), phosphate 424 thousand tons
(13.5 percent share in total nutrient production), which increased by 5.2 percent. Potash blends
production was 11 thousand tons and was high by 10.0 percent over previous year (0.3 percent
share in total nutrient production). Engro Chemical has installed a new urea plant with annual
capacity of 1300 thousand tones, which will become operative in March, 2011 but is again
closed on account of gas shortage and as soon as the gas supplies become smooth, it will start
production. This will reduce the quantum of total fertilizer imports of the country, especially of
nitrogenous (urea) one. Pakistan needs an addition of 100 -150 thousand tons per annum in the
production capacity of Urea and Di-Ammonium Phosphate (DAP) to meet its fertilizer
requirements for crop sector up to 2025 and for this purpose an integrated large scale fertilizer
complex (Urea, DAP, NPK) following a modular approach within an industrial park concept
should be the main thrust of national fertilizer strategy. To attract the investment in fertilizer
sector, the government has extended the implementation of latest fertilizer policy of 2001 till
30th June, 20129.
c) Indian policy/subsidy on fertilizers:
India has introduced nutrient based subsidy scheme (NBS) which was in effect from
April 2010 to encourage balanced fertilizer consumptions in India. As per policy the
subsidy on complex fertilizer would be calculated based on the nutrients level and not on
the product level. Through this regulation government has changed the subsidy from
constant farm gate prices to constant subsidy. Producer now have the freedom to charge
retail prices but the result has not been encouraging. Urea has been kept out of this
policy, but its maximum retail price was increased by 10%.
8
Economic Survey of Pakistan 2010-11
9
Economic Survey of Pakistan 2010-11
29
In order to discourage import of fertilizer, India initiated new Urea Investment Policy
2010 by revamping existing unit through green field projects at Institutional placement
Program India (IPP) linked prices.
d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals

Pakistan‟s exports of fertilizers to India are subject to following regulations; export of Urea (HS-
31021000) is allowed though state trading corporation (STC), Minerals and Metal Trading
Corporation India (MMTC) and Indian Potash Limited subject to Foreign Trade Policy and is
under the control of state trading enterprise. Whereas according to Indian Import policy animal
dung and other animal excreta is restricted to be imported in Indian.
No. Indian Import Policy Regulations No. of Tariff Lines

I Import allowed through STC, MMTC and Indian Potash Limited 1
subject to Para 2.11 of Foreign Trade Policy
II Restricted 2
III State Trading Enterprise 1
Grand Total 4
Source: Ministry of Commerce India
4.4 Tanning or dyeing extracts (HS-32)

Most of the raw materials and
intermediates for dyes & pigments,
paints & varnishes, pesticides and
plastics & plasticizers are being
imported by Pakistan. These raw
materials and intermediates mainly
belong to or derived from
petrochemicals, which have no base in
Pakistan. Pakistan imports tanning or
dyeing chemicals of worth US$ 316
thousands from world. Pakistan imports
Figure # 9
Source: Trade Map
30
tanning or dyeing chemicals mainly from China of worth US$ 91 thousands, followed by India
(US$ 41 thousands), Germany (US$ 32 thousands), Korea (US$ 30 thousands), Switzerland
(US$ 12 thousands) and Italy (US$ 10 thousands) etc.10
a) Pakistan export to India

Pakistan exports only 4 tariff lines at HS-6 digit level of tanning or dyeing chemicals of value
US$ 40 thousands to India in 2010. The products supplied by Pakistan to India includes synthetic
organic products, reactive dyes, paints and varnishes based on polyesters facing an average
applied MFN tariff of about 10% and average applied SAFTA preferential rates of about 8%.
The products such as reactive dyes, synthetic organic pigment and inorganic coloring matter, in
which Pakistan have an unexplored potential of about US$ 7 million were placed in sensitive list
by India under SAFTA arrangement. For detail trade potential in dyes chemicals, MFN rates
and SAFTA rates please see Annexure VII
Pakistan export about US$ 28.4 million worth‟s of tanning & dyeing chemicals to world. The
major export destinations of Pakistan‟s tanning and dyeing chemicals are Afghanistan (US$ 18
thousands), Bangladesh (US$ 4 thousands), UAE (US$ 775 hundreds), Saudi Arabia, China and
Turkey etc. whereas its exports to India worth only US$ 40 thousand in 2010, which is about
0.1% of Pakistan‟s total export of dyes & pigments. Pakistan has an unexplored potential of
about US$ 28 million to export dyes & pigments to India, which may face an average ad-MFN
tariff of about 10%. The major items under dyes & pigment chapter in which Pakistan has
potential to Indian market includes paints & varnish of polymers/vinyl polymer, reactive dyes,
synthetic organic pigments etc.
b) Production & Consumptions in Pakistan:

Titanium Dioxide: There are two industrial grades of titanium dioxide pigment:
(i) Rutile-grade used for the manufacture of paints and plastics and
(ii) Anatase-grade used in Polyester Fiber and paper industry.
10
Trade Map
31
Pakistan has ability to establish a 10,000 MTPY facility11 to manufacture anatase grade to cater
needs of polyester fiber industry of Pakistan. Sulfuric acetone of the major raw materials is being
manufactured in Pakistan and other material Ilmenite12 can be either imported or locally
available Ilmenite can be upgraded.
Production of Basic Chromium Sulphate from Chromite (Cr2SO4): Presently the entire
demand for Basic Chromium Sulphate (BCS) used for leather tanning, is being met from imports
as well as from local production. Considerable manufacturing capacity for BCS from chromite is
presently unutilized due to the closure of two plants for various reasons. Barring small
production of BCS from chromite, at Industrial Chemicals, Karachi. The entire local production
of BCS is confined to the manufacture of BCS from imported sodium dichromate. This needs to
be discouraged as the value addition in the case of BCS to be manufactured from Chromite is far
greater than BCS produced from sodium dichromate. Moreover the foreign exchange savings are
much higher in the BCS production from Chromite as compared to BCS produced from sodium
dichromate.
c) Pakistan Imports from India

From the statistical analysis it is
explored out that India export 28
tariff lines /products under tanning
& dyeing extracts to Pakistan of
value US$ 41 million facing MFN
duty from 5~20%.
About 44% of Pakistan‟s total

imports of dyes & pigments
constitutes of reactive dyes, 14%
constitutes of acid & mordant dyes,
Figure # 10
Source: Trade Map
10% of synthetic organic pigments
etc.
11
Chemical Development vision 2030
12
Magnetic titanium oxide
32
The major lines items exported by India to Pakistan includes reactive dyes of US $ 18.52 million,
while facing an MFN tariff of about 15%, followed by acid and mordant dyes of value US$ 5.9
million, synthetic organic pigment of value US$ 3.9 million, tanning extracts of US$ 3.5 million,
synthetic organic tanning of US$ 2.7 million, basic dyes of values US$ 2.0 million and inorganic
tanning substance of value US $ 1 million. The other minor products of tanning or dyeing extract
exported by India were disperse dyes, vitamin dyes, direct dyes etc accounts US$ 5.0 million in
2010.
Currently India export about US$ 41 million of tanning & dyeing chemicals to Pakistan,
contributing 13% of Pakistan‟s global import of tanning & dyeing chemicals. Whereas India has
an un-explored potential of about US$ 216 million to export tanning & dyeing pigment to
Pakistan in 2010.
The other major products/items in which India has potential to export tanning & dyeing
chemicals to Pakistan includes synthetic organic pigments, reactive dyes, acid & mordant
chemicals, synthetic organic coloring, printing ink, direct dyes, vitamin dyes and disperse dyes
etc. See annexure VIII for detailed analysis of trade potential, MFN rates and SAFTA
preferential rates on tanning & dyeing chemicals by Pakistan.
d) Indian Import Policy Conditions & Requirements for Tanning & Dyeing Chemicals
According to Indian import policy for import of HS32019090, other for specified food color
requires Bureau of Indian Standards (BIS) certification.

I BIS (required only for specified food color) (HS-32019090, other) 1
4.5 Essential Oils and Resinoids/ perfume, cosmetic or toiletries (HS-33)

Whereas Pakistan‟s export of essential oil to world accounts US$ 10.2 million, While Pakistan
exports only one tariff line of cosmetic or toiletries i.e. Eye make-up preparations (HS-330420)
of value US$ 19 thousands to India facing an average MFN applied tariff of about 10% in 2010.
India has placed about 14 tariff lines at 6 digit level items of resinoids/perfumes/
cosmetic/toiletries in sensitive list under the SAFTA arrangement.
33
Pakistan has an unexplored export potential of about US$ 9.8 million of cosmetic toiletries to
India. The potential items, which Pakistan can export to India includes beauty or makeup
preparations, eye makeup preparations, hair preparations, perfumes, dentifrice, deodorants and
shampoos etc. Pakistan‟s top ten potential export products under essential oils chapters are
mentioned in Annexure IX. The annexure also explains that out of top ten Pakistan‟s potential
export products to India, out of which 8 tariff lines were placed in sensitive list by India.
a) Pakistan’s Imports from India

The figure 11 depicts that Pakistan imports US$ 9.05 million worth of chemical cosmetics &
toiletries from world. Whereas its imports from India worth US$ 3.23 million in 2010, which
accounts 3.6% of Pakistan‟s total imports of chemical cosmetic & toiletries. About 80% of
Pakistan‟s imports of essential oils/cosmetic & toiletries from India constitutes of mixtures of
odoriferous substance, while 11% constitutes of perfumes and toilet waters, 4% constitutes of
oils of peppermint and 2% of
essential oils. The average
MFN rates applied by Pakistan
on the essential oils/cosmetic &
toiletries is about 28%,
similarly the duty under
SAFTA is about 5% for non
LDCs.
India exports only 11 tariff lines

to Pakistan, the major products
which India export to Pakistan Figure # 11
Source: Trade Map
includes mixture of odoriferous of US$ 2.5 million, facing MFN rates of about 10% and SAFTA
rates of about 5%. Followed by perfumes of US$ 372 thousands, oil of peppermint of US$ 117
thousands and essential oil nes of US$ 57 thousands etc.
Despite of these major exports, India has a potential to export US$ 85 million of essential
oils/cosmetic/toiletries to Pakistan in 2010. The other items in which India has potential to export
in Pakistan includes mixtures of odoriferous substance, hair shampoos, odoriferous substance for
34
food/drink industry, deodorants, perfumes, powder and skin care substances etc. For further
details regarding Indian potential export of essential oils to Pakistan, as well as applied MFN
rates and SAFTA rates by Pakistan on these products see Annexure X.
b) Indian Import Policy Conditions & Requirements for Essential Oils & resinoids Chemicals
If we analyze the import regulations of India, almost 48 tariff lines of essential oils, resinoids,
cosmetic and toiletries are subject to be exported to India by fulfilling conditions of Drugs and
Cosmetic Acts & Rules of India, whereas import of one tariff line is subject to provision of
convention of international trade in endangered species of wild fauna and flora (CITES) i.e. agar
oil is restricted to be imported to India.
No. Indian Import Policy Regulations No. Of Tariff Lines

I Restricted 1
II Import will be subject to the provisions of Convention of 1
International Trade in Endangered Species of Wild Fauna &
Flora (CITES).
III Drugs & Cosmetics Acts & Rules 48
Total 50
4.6 Soaps/Detergents (HS-34)
a) Pakistan Exports to India:

In 2010, Pakistan export about US$ 14.85 million worth of soaps and detergents to world,
whereas in Soap and Detergents Pakistan exports only two tariff lines of value US$ 21 thousands
to India, which includes anionic surface-active agents of US$ 7 thousand worth and Non-ionic
surface active agents of US$ 14 thousands worth to India, facing an applied MFN tariff of about
10%, whereas under SAFTA the applied duty on this product is about 8%. India has placed only
two tariff lines at 6 digit level of Soap/Detergents in sensitive list under SAFTA arrangement.
Pakistan has a potential of about US$ 14 million to export soap & detergents to India which
includes major items such as soap & organic surface agents, toilet soaps, washing & cleaning
surface-active preparations, soaps, polishers etc. For further details please see Annexure XI.
35
b) Pakistan’s Imports from India
On the other hand Pakistan imports only 10 tariff lines of US$ 11.85 million worth of soaps and
detergents from India. About 84.8% of Pakistan‟s imports of soaps/ detergents from India
constitutes of anionic surface agents, 11.2% of non-ionic surface active agents, 1.3% of organic
surface active agents, 1.2% of artificial waxes, 1.1% of lubes for textile/leather and 0.4% of other
soap/detergents. All these products faces an average applied MFN rate of about 18.4%, whereas
under SAFTA, these product lines faces average duty of about 5%.
India fulfills about 25% of

Pakistan‟s global demand of
anionic surface active agents (US$
10 million), whereas fulfils about
5.1% of Pakistan‟s global demand
of non-ionic surface active agents
(US$ 1.3 million) and about 6.8%
of Pakistan‟s global demand of
organic surface active agents is
fulfilled by India. Figure # 12
Source: Trade Map
India has an unexplored export
potential of about US$ 119.6 million worth of soaps/detergents products to Pakistan. The
products in which India has potential are anionic surface agents, non-ionic surface active agents,
washing & cleaning agents, lubricating preparations, toilet soaps, soaps etc. For details please
see annexure XII.
c) Indian Import Policy Conditions & Requirements for Soaps/ Detergents Chemicals
India has restricted imports of two tariff lines of soap/detergents; whereas on another two tariff
lines imports were subjected in terms of Rotterdam convention on Prior Informed Consent (PIC)
procedure for hazardous chemicals and pesticides; while imports of six tariff lines are subject to
fulfill Drugs & Cosmetics Acts & Rules of India.
36
No. Indian Import Regulations No. of Tariff Lines
I Restricted 2
II Import is restricted in terms of Interim PIC Procedure of Rotterdam 2
Convention on Prior Informed Consent procedure for hazardous
chemicals and pesticides
III Drugs & Cosmetics Acts & Rules 6
Total 10
4.7 Albuminoidal substances (HS-35)
a) Pakistan Exports to India

Under Albuminoidal substance Pakistan exports only one tariff line i.e. gelatin and gelatin
derivatives of value US$ 354 thousands to India facing an applied MFN tariff of about 30%,
whereas under SAFTA the duty imposed by on this products is about 11.6%.
Pakistan has an unexplored export potential of about US$ 6.0 million in products like gelatin,
glues, Dextrin‟s, starches, enzymes, and adhesives of rubber or plastic. India has placed two
tariff lines of Albuminoidal substance
(HS-35) under the sensitive list under
SAFTA for Pakistan. The details
about Pakistan potential export to
India and the duty faced by these
products in Indian markets is given in
Annexure XIII.

On the other hand Pakistan‟s imports
only seven tariff lines of
albuminoidal chemicals/substances
Figure # 13
from India of US$ 371 thousands, Source: Trade Map
which accounts about 1.1% of Pakistan‟s global import of albuminoidal substance in 2010. The
37
average applied MFN duty by Pakistan on these albuminoidal substances is about 12%, while the
average applied SAFTA preferential duties by Pakistan on these similar products are about 5%.
About 60% of Indian export of albuminoidal exports to Pakistan constitutes of enzymes, 16%
constitutes of adhesive based on rubbers, 12% constitutes of about Dextrin‟s, 5% constitutes of
glues, 5% constitutes of peptones substances and 2% constitutes of concentrates etc. India export
enzymes of US$ 222 thousands of worth to Pakistan, fulfils about 1% of Pakistan‟s global
demand of enzymes, similarly India fulfils about 20% of Pakistan‟s global demand of adhesive
of rubbers or plastics of worth US$ 59 thousands etc.
Whereas India has an unexplored export potential of albuminoidal chemicals of worth US$ 34
million to Pakistan and the major products in which India has potential to export includes
enzymes, adhesive or rubbers or plastics, Dextrin‟s, gelatin, glues, casein, peptones and egg
albumin to Pakistan. For detailed potential and applied MFN as well as SAFTA duties please see
Annexure XIV.
c) Indian Import Policy Conditions & Requirements for Albuminoidal Chemicals

Export of some albuminoidal chemicals to India has to face the following restrictions according
to the regulation of Indian import policy. About 3 tariff lines India has imposed health protocol,
whereas import of four tariff lines of albuminoidal substances are prohibited, four tariff lines
imports are banned (not permitted to be imported). However imports of four tariff lines are
subjected to wild life protection Act 1972 and CITES and 1 tariff line require (Protection) Act,
1972 and Conventional on International Trade in Endangered Species (CITES), where BIS
required only for food grade.

I Health Protocol (SPS Requirement) 3
II Prohibited 4
III Not permitted to be imported 4
IV Subject to Wild Life (Protection) Act, 1972 and CITES. 4
V (Protection) Act, 1972 and CITES. BIS(required only for food grade) 1
Total 16
38
4.8 Explosives Chemicals (HS-36)
Under the explosive chemicals Pakistan exports only one tariff line i.e. matches (360500) of
value US$ 378 thousands to India, which faces an applied ad-valorem tariff of about 10%. Trade
of explosive is prohibited by both countries.
a) Indian Import Policy Conditions & Requirements for Explosives Chemicals

According to Indian import policy regulations, 19 tariff lines of explosives are restricted to be
imported. Import of explosives may be permitted to Government Departments and Public Sector
undertakings on the recommendation of the Controller of Explosives, Government of India.
Similarly 20 tariff lines of explosives are subject to prohibitions under Section 11 of Customs
Act, 1962 (India).
4.9 Photographic chemicals: (HS-37)

Pakistan imports Photographic chemicals of worth US$ 26 thousands from the world. Pakistan
imports photographic chemicals from countries such as Belgium, Japan, China, Germany and
Netherlands. India is the 11th major exporter of photographic chemicals to Pakistan.
Pakistan does not export a single tariff line of photographic chemical to India, whereas on the
other hand India exports only five tariff
lines of worth US$ 146 thousands to
Pakistan, which accounts 0.6% of
Pakistan‟s global imports in 2010.
Pakistan imports of photographic

chemical from India comprised of
chemical preparations (41%), photo
film rolls (33%), cinematographic film
(12%), film color (9%), photographic
plates and films (5%). Figure # 14
Source: Trade Map
India export sensitized emulsion
preparations of worth US$ 60 thousands, fulfils about 8% of Pakistan‟s global demand of the
said products, followed by chemical preparations of US$ 49 thousands, which fulfills 2% of
39
Pakistan‟s global demand of chemical preparations. Similarly India fulfils about 20% of Pakistan
global demand of photo paper and about 4% of demand of cinematograph film in 2010. The
average applied MFN duties imposed by Pakistan on Photographic chemicals are about
5.2%.However, Pakistan‟s SFATA preferential duty on photographic chemicals is about 5% for
non-LDCs (India).
Through indicative potential analysis, India has an unexplored export potential of value US$ 5
million of photographic chemical to Pakistan in 2010. The major lines items in which India has
potential to export to Pakistan includes chemical preparations used for photographic chemical,
photographic film, photo films, photo plates, cinematographic film and sensitized emulsions etc.
For further details regarding India‟s export potential of photographic chemicals to Pakistan along
with face duties is given in annexure XV.
a) Indian Import Policy Conditions & Requirements for Photographic Chemicals

According to Indian import regulations about 24 tariff lines of cinematograph films and other
films shall be governed by the provisions of Public notice no. 64/1997-2002 dated 29.01.2002.
No. Indian Import Policy Regulation No of Tariff Lines

I Import of cinematograph films and other films shall be governed 24
by the provisions of Public notice no. 64/1997-2002 dated
29.01.2002
Source: Indian Ministry of commerce
4.10 Miscellaneous Chemicals: (HS-38)
a) Pakistan Export to India

Under miscellaneous chemicals Pakistan exported 5 tariff lines at HS 6 digit level of value US$
1.81 million facing an applied ad-valorem tariff of about 7% in 2010. The major items of
miscellaneous chemicals exported by Pakistan to India include, insecticides of value US $ 1.5
million, which fulfills 4.2 % Indian global demands.
40
The other major chemical
products exported by Pakistan to
India includes chemicals nes of
value US$ 141 thousands,
finishing agents of value US$ 65
thousands and mineral ceramics
of value US $ 33 million in 2010.
The average applied MFN duties
imposed by India on these
Figure # 15
products were about 12%, Source: Trade Map
however Indian average applied SAFTA preferential duties on the same product lines are about
8.4%. For further details regarding Pakistan‟s potential export of miscellaneous chemicals to
India along with average applied MFN duties and SAFTA duties are given in Annexure XVI.
About 86.6% of Pakistan‟s total export of miscellaneous chemicals to India constitutes of

Insecticides, 7.8% constitutes of Chemicals for allied industry, 3.6% constitutes of finishing
agents, 1.7% constitutes of activated natural mineral products and 0.2% constitutes of additives
for ceramics etc.
Pakistan has an unexplored export potential of about US$ 14 million of miscellaneous chemicals
to India in 2010. The major items in which Pakistan has potential of export to India include
chemical for allied industry, insecticides, finishing agents used in textile industry, herbicides,
finishing agents or dye for leather industry, additives for ceramics etc.

Pakistan imports only 30 tariff lines of miscellaneous chemicals from India of value US$ 50
million, which accounts about 9.2% of Pakistan total imports of miscellaneous chemicals in
2010. The major items of miscellaneous chemicals, which Pakistan imports from India includes
mixed alkyl benzenes (28%), herbicides (24%), chemical for allied industry (18%), Insecticides
(17%), sorbitol (4%) and finishing agents (3%). The average applied MFN duties imposed by
Pakistan on these miscellaneous chemicals is about 8.1%, whereas average applied SAFTA
preferential duties are about 5% for non-LDCs (India).
41
India‟s exports only 2% of its global
export of miscellaneous chemicals to
Pakistan. Pakistan fulfils about 30% of
its global demand of mixed alkyl
benzenes (worth US$ 14.4 million),
21% of herbicides (worth US$ 12.1
million) and 28% of chemical for allied
industry (worth US$9 million etc) from
India.
Figure # 16
Source: Trade Map
India has an unexplored export
potential of about US$ 41 million worth of miscellaneous chemical export to Pakistan. These
chemical faces average applied ad-valorem tariff of about 9.9%. The major lines items in which
India has potential in Pakistani market includes, chemical for allied industries, insecticides,
herbicides, mixed alkyl-benzenes, lubricating oil additives, industrial fats/acids, laboratory
reagents, finishing agents and anti-oxidants preparations etc. For further details regarding
India’s export potential of miscellaneous chemicals to Pakistan and duties MFN as well as
SAFTA were described in Annexure XVII.
c) Indian Import Policy Conditions & Requirements for Miscellaneous Chemicals

Import of 11 tariff lines of miscellaneous chemicals are prohibited in India. While import of 33
tariff lines is allowed only if registered and not prohibited for import under Insecticides Act,
1968 and formulations thereof.
Import of mixture of alkyl derivatives of acyclic hydrocarbons is restricted in terms of Interim of

Rotterdam Convention on Prior Informed Consent (PIC) procedure for hazardous chemicals and
pesticides. Whereas another three tariff lines of alcohol which is directly potable or can be used
for making potable alcohol is however, not permitted to be imported by India.
42
I Restricted 11
II If registered and not prohibited for import under Insecticides Act, 33
1968 and formulations thereof
III Import is restricted in terms of Interim PIC Procedure of 1
Rotterdam Convention on Prior Informed Consent procedure for
hazardous chemicals and pesticides
IV Subject to conditions as specified in public notice issue in this 3
behalf
V The import of any alcohol which is directly potable or can be used 3
for making potable alcohol is however, not permitted
Total 51
6. Policies and Procedure for Chemical Industry
6.1 Indian National Chemical Policy Initiatives13

In mid 1980s India has granted, fiscal concessions to small scale chemical sector for the
establishment of a large number of units in the Small Scale Industries (SSI) sector. Envisaging
chemical sector as a key driver of economic growth, employment opportunity and development,
India has initiated/formulated a National chemical Policy 2012 to facilitate its chemical industry.
The thrust of this policy is to underscore the imperative that sustained adoption of technology
up-gradation would offer viable options in overcoming developmental challenges across multiple
sectors.
In Indian National Chemical Policy (NCP-2012) India has focused on nine aims and objective in
the formulation of Indian chemical policy. First, to attract & increase investment by facilitating
industry with capacity additions, ensuring availability of feedstock, and quality infrastructure.
Second, increase the domestic demand and per capita consumption of chemicals by creating a
conducive environment, for serving domestic demand through production as well as leveraging
13
Ministry of Chemicals India
43
the significant export potential in segments like pharmaceuticals, agrochemicals, dyestuffs &
specialty chemicals. Third, in the policy India has initiated adaptation of cluster approach in
chemical sector to encourage and for development of ancillary industries around them. Fourth,
facilitate the industry with latest technologies, up-gradation of existing technology and
substitution of the outdated technology. Fifth, promote R&D focusing green technologies. Sixth,
promote skill development of human resource engaged in the chemical industry. Seventh,
establishment of Chemical Standard Development Organization (CSDO) for the growth,
development, high quality and competitive chemical sector to meet international standards/norms
and their enforcement; Eighth, set up of National Chemical Center (NCC) for the promotion of
an integrated and holistic growth & development in the chemical industry and ninth, put in place
robust framework for a disaster resistant and resilient chemical sector in India.
Investment Policy; In the chemical sector, 100% FDI is permissible under automatic route and
entrepreneurs need to submit only IEM (Industrial entrepreneurs Memorandum) with the
Department of Industrial Policy & Promotion to set up chemical manufacturing unit in the
country.
Licensing Policy; In India manufacture of most chemical products inter-alia covering

organic/inorganic chemicals, dyestuffs and pesticides is de-licensed. However, India has
imposed compulsory import licensing policy on certain chemicals because of their hazardous
nature is as follows; Hydrocyanic acid & its derivatives, Phosgene & its derivatives and
Isocynates & di-isocynates of hydrocarbons.
Custom duty; The basic customs duty on most chemical feed-stocks is 2.5% in India.
Import Duty; Import duty on most of the chemical products is at 7.5% ad valorem in India.
Excise Duty; In general, the central excise duty rate for chemical sector is about 10% in India.
Although the chemical industry has been witnessing the customs duty reduction regime during
the last decade, yet the incidence of taxes, viz. central excise and value added tax (VAT)
continues to be relatively higher as compared to many Asian countries.
44
7. Trade defense laws/Regulations for Chemicals Industry
The global chemical sector is one of the sectors which faces significant challenges domestically
and internationally such as Non-Tariff Measures (NTMs), Non-Tariff Barriers (NTBS),
antidumping, and subsidies etc. In addition to above mentioned trade defense measures, the
global chemical industry faces further challenges like lack of finances in research &
development, lack of eco-friendly technologies/systems, legal bindings to international
conventions, green peace protocol, accreditation to certifications, patent registration, laboratory
accreditations, maintaining quality/standards, licensing, proper product handling, safety
measures, labeling, etc were used as defensive measures by certain countries to protect their
domestic industry on the grounds of above protocols.
7.1 Indian Regulations & Documentation Requirement in Chemical Sector14:

As discussed earlier, chapter-wise specific regulation imposed by India on the import of
chemicals such as quantitative restrictions and import of chemicals under the obligation of
international convention; India has also enforced the following regulations & documentation
requirement for the import, exports and investment in chemical sector.
Advance authorization application from industry for import of raw material against the
export of petrochemical items.
Applications for import of items covered under restricted list of import.
Approval from the petrochemical industrial for the issuance of import certificate for
chemicals, plant & machinery etc.
Issuance of consent certificate for import/export of chemicals covered under Rotterdam

Convention
Issuance of complete application along with end-use certificate for import/export of

Chemicals, Organisms, Materials, Equipment and Technologies SCOMET Items
14
Ministry of Chemicals & Petrochemicals India
45
Copy of earlier approval from Central Insecticides Board CIB & Registration Committee
for export of pesticides and application request from petrochemical industry for issue of
End User Certificate.
End-use Certificate for Non-Insecticidal application in respect of chemical industry for

chemicals appended to the Insecticides Act
India has imposed quantitative restrictions on the import of chemicals for few chemicals
which are covered under the obligations as per International Conventions.
The detail regulations and documentation requirement is mentioned in Annexure XVIII.
(a) Indian NTBs on Pakistani chemicals15

The strong demand for certain Pakistani chemicals, particularly soda ash in Indian market
also became a victim of protective trade barriers of Indian authorities looking for excuse
to discourage imports from Pakistan. The Indian authorities have recently announced to
impose anti-dumping duty on imports of soda ash from Pakistan.
The Indian authorities are also delaying the renewal of certification by Bureau of Indian
Standards (BIS) for import of cement from Pakistan.
India has imposed an anti-dumping duty of up to USD 38.79 per ton on certain chemicals
such as soda ash, used mainly in detergents, imported from seven places including China,
EU, Pakistan and the US, to protect domestic players against cheaper imports16.
(b) NTBs Product-Wise:

Likewise Pakistan didn‟t impose any NTBs on chemical originating from India, whereas
many countries filed NTBs against products originating from India. The products on which
NTBs filed against Indian chemicals by other countries includes requisition of registration
15
http://www.defence.pk/forums/economy-development/86527-india-blocks-chemicals-import-
pakistan.html#ixzz22NJfFrIM
16
http://www.eximguru.com/Export-Import-News/News/News.aspx?Id=9980&Tag=anti-dumping-
duty&GridInfo=anti+dumping+duty+Export+Import+News01_Latest+Export+Import+News09
46
certification, a permission for importation, REACH certification (registration/testing &
certification), immigration issues and Non harmonized maximum residue limit (MRL) imposed
by EU, attestation of documents required by UAE which is costly /time consuming, prior
approval required by Korea, compulsory certification i.e. (a) Certificate of acceptance of foreign
certification by Derzh Standard or (b) Conformance certificate required, ISO 9000 standards
adopted by Derzh Standard on production systems and foreign certification recognition only to
the extent of international treaty are obligations of Ukraine and a fixed commission of 5% of the
value of the total import on Indian chemicals imposed by Syria.
For detailed chemical NTBs files on India Products, originated from India by multiple countries
see annexure XIX;
8. Revealed Comparative Advantages (RCA) in Chemical Sector

In order to study the comparative advantages in chemical sector by both countries (Pakistan &
India) a revealed comparative advantage indices was performed for the last three years at HS 6
digit level. The RCA will give us an indication of how much a country (Pakistan or India) is
exporting a given good relative to how much the world is exporting that same good. A country is
said to have a revealed comparative advantage when its share of export of a given good/product
exceeds the equivalent share of export of the world. This is captured when the numerator is
bigger than the denominator, or equivalently when the RCA is above 1, meaning that a given
country exports, proportionally to its total exports, more than the share of exports of the world in
that given product. An RCA below 1 indicates that a country does not have a revealed
comparative advantage in a given good or equivalently that the world share of that given product
is higher than that of the country under analysis. From the analysis of revealed comparative
advantage (RCA), the following results have been interpreted for both the countries based on the
export statistics of 2010 at HS 6 digit level;
Inorganic Chemicals (HS-28): In inorganic chemicals Pakistan have revealed

comparative advantage greater than 1 only in 8 tariff lines, whereas India in inorganic
chemicals have revealed comparative advantage greater than 1 in 46 tariff lines in 2010.
Pakistan have highest RCA of about 16 in Hydrogen Chloride (HCL), whereas India have
highest RCA of about 13 in Dithionites and sulphoxylates of metal.
47
Organic Chemical (HS-29): Similarly in organic chemical Pakistan have comparative
advantage greater than 1 in 6 tariff lines, whereas India have revealed comparative
advantage greater than 1 in 148 tariff lines. Pakistan has highest RCA of about 10.2 in
ethylene dichloride, whereas India have highest RCA of about 53.6 in Organic
compounds nes.
Fertilizers (HS-31): In fertilizers Pakistan and India both have revealed comparative
advantage (RCA) less than 0, which infer that both countries are not even competitive to
export fertilizer to world.
Tanning & Dyeing Chemicals (HS-32): Similarly in tanning & dyeing chemicals
Pakistan have revealed comparative advantage greater than 1 only in three tariff lines,
while India have RCA greater than 1 in 20 tariff lines. Pakistan has a highest RCA (of
about 1.7) in Pigments and preparations based on chromium compounds, whereas India
have highest RCA (of about 13.3) in Ultramarine and preparations.
Essential Oils and Resinoids (HS-33): Whereas in essential oils and resinoids Pakistan
have low revealed comparative advantage less than 1, while on the other hand India have
comparative advantage greater than 1 in 8 tariff lines. India have highest RCA (of about
23.6) in Essential oils of other mints (HS-330125).
Soap/Detergents (HS-34): In soaps and detergents Pakistan have comparative advantage

greater than 1 in only two tariff lines i.e. Soaps & organic Surface preperations
(RCA=3.7) and toilet soap (RCA=2.8). similarly on the other hand India have RCA
greater than 1 in only three tariff lines i.e. Anionic surface-active agents (RCA=2.3),
Polishes, creams & similar preparations for footwear or leather (RCA=1.3) and Organic
surface-active agents, nes (RCA=1.03)
Albuminoidal Substances (HS-35): Pakistan have revealed comparative advantage

greater than 1 in only one tariff lines i.e. Gelatin and gelatin derivs (RCA=4.1), whereas
on the other hand India have comparative advantage greater than 1 in three tariff lines i.e.
Casein (RCA=4.6), Gelatin and gelatin derivs; (RCA=2.7) and Egg albumin, dried
(RCA=2.2).
48
Explosives Chemicals (HS-36): However exports of explosive chemicals are banned in
both countries but both countries have revealed comparative advantage greater than 1
only in product that is matches export. In matches, Pakistan has RCA about 16 as
compared to India, who have RCA matches for about 13.14. The RCA results infer that
Pakistan have highest comparative advantage in match export to world than India.
Photographic Chemicals (HS-37): In photographic chemicals, the RCA analysis at HS-

6 digit level infers that Pakistan have RCA lower than 1 in all the products exported by it
under photographic to world in 2010, Whereas India have revealed comparative
advantage greater than 1 in 3 tariff lines in export of photographic chemicals i.e.
Cinematograph film (RCA=3.1), Cinematograph film, exposed & developed, of a width
of 35 mm or more (RCA=3.08), Photo film nes in rolls (RCA=1.5).
Miscellaneous Chemicals (HS-38): Similarly in Miscellaneous chemicals exports,

Pakistan have revealed comparative advantage less than 1, whereas India have
comparative advantage greater than 1 in 18 tariff lines in 2010. India have highest
revealed comparative advantage in product such as Rodenticides and other plant
protection products (RCA=15.3).
9. SWOT Analysis of Pakistan’s Chemical Sector:

Strengths:
Pakistan has only developed its basic industries, consisting of refineries, fertilizers,
cement, sugar, polyester fibers and some other petrochemical based polymer industries,
to fulfill local demand.
Pakistan have a large potential in production of basic inorganic chemicals like Soda Ash,
Caustic Soda, Sulphuric Acid & Chlorine at a low price to cater the needs of the local
industry but also surplus is being exported to India and rest of the world.
Pakistan had a high potential to produced raw organic chemicals such include Pure
Terephthalic Acid (PTA), BTX and carbon black at low rates through natural gas and
coal.
49
Abundantly available raw materials for inorganic chemicals in the country at low rates,
which can enhance Pakistan‟s competitiveness and comparativeness in production of
caustic soda, soda ash and chlorine
Weakness:
In organic chemicals investors show low interest in the production of Naphtha cracker
due to the reasons like highly cost intensive project, sophisticated technology involved,
export market limitations, insufficient current tariff spread
Pakistan has not been able to create its own capability for technological and engineering
infrastructure for the exploitation and commercialization of local or imported
technologies.
Domestic production of consumer goods is based on labour intensive, low value-added
products
In Pakistan, R&D institutions, universities and industry work in isolation and are
completely divorced from each other‟s activities.
Low capacity of world scale basic petrochemical production facilities in Pakistan.
Complexity and low level of the technology involved in the chemicals production in
Pakistan.
High level of capital outlay required for the organic and inorganic chemical production,
so that‟s why industry needs foreign investment.
Highly cost Intensive project, market size limitations vis-à-vis world scale plants, no
sophisticated technology involved and insufficient current tariff spread are also main
reason for the growth and production of organic and inorganic chemicals.
The Caustic Soda manufacturing produces chlorine as a by-product which has limited
usage in the country. Only Engro Polymers is utilizing chlorine for the manufacture of
value added products i.e. PVC.
High cost of energy, non availability of natural gas and electricity hinders the production
capacity of the chemical industry.
High freight cost to export surplus capacity of chemical products.
50
Reliance on foreign engineering and construction companies for the commercialization of
locally developed or imported technologies.
Imports of second-hand highly energy intensive plants based on antiquated technologies.
Reliance on the development of resource based, low technology, labour intensive

products for export.
High prices of basic feed stock: Basic raw materials constitute major portion of cost of
production (30% to 60%) in the chemical industry. Pakistan‟s chemical industry either
uses natural gas or crude oil as feedstock for manufacturing process. The fluctuations in
oil prices therefore affect the growth projections of the firms.
Fragmented nature of industry: The chemical industry is having a fragmented structure

with more number of units in small-scale sectors spread in various parts of the country.
The installed capacities in most of the small-scale units are smaller as compared to global
scales.
Low R&D levels: The level of R&D investments in the chemical sector is low at around
0.3% of total sales. The areas for strengthening of R&D in chemical industry include
improvements in manufacturing process for reduction in cost of production, application
development to diversify demand, and new product development.
Opportunities
Pakistan can utilize alternative resources such as natural gas availability, Thar coal
reserves and import of cheap natural gas from Iran, to produce basic petrochemical
building blocks (Naphtha cracker) from; gasification of coal, dehydrogenation of
associated gases and cracking of natural gas. This opportunity surely opens the gateway
for the development of Petrochemical industry in Pakistan, which will support the local
chemical & allied products industries in meeting their raw materials requirements and to
save the valuable foreign exchange.
51
Pakistan has surplus capacity of caustic soda available in the country, which need proper
marketing and industry to export.
While in the production of caustic soda; a large quantity of chlorine is produced as a by-
product which is used in the production of PVC pipes, if proper marketing opportunities
and handling procedure is provided, a large amount foreign exchequers can be earned by
Pakistan through this sector.
Threats:
Domestic production of chemicals hampered because of competition from other

countries, which have flooded the Pakistani market with cheap and better quality
products, especially in the fields of construction materials and household consumer
goods.
Consumption of organic chemical as a raw material for the industry in Pakistan is reached
at a sizeable level due to hike in the prices of petroleum
A high import of organic and inorganic chemical products from abroad is a threat for the
domestic chemical industry growth and production.
Dumping of Caustic Soda in the country results in the closure of the industry and loss of
foreign exchange and revenue.
52
10. CONCLUSION
It is a general perception among the political leaders and policy makers that Pakistan should grant MFN
status to India. This would provide Pakistan a political mileage but before granting this privilege,
Pakistan would need to raise more substantive issues notably Indian non-tariff barriers, subsidies and
protective tariffs particularly in the chemical sector. Pakistan has almost granting something close to de
facto MFN status to India in the recent past, considering composition of both formal and informal trade.
In conclusion, there is a much to be gained from liberalizing trade in chemical sector between India and
Pakistan but the trade in this sector is in favor of India. Pakistan export only 36 tariff lines of chemical at
HS-6 digit level to India, which accounts about US$ 39.7 million, whereas on the other hand India
exports 325 tariff lines of chemicals to Pakistan of worth US$ 379 million. For sustained and high gains
from bilateral trade liberalization in chemical sector requires free movement of goods, capital,
investment and people etc. To keep on building this momentum both countries particularly Pakistan
should negotiate for the level playing fields in the area of chemical sector where the Indian government
provides subsidies, concessions, special incentives, international obligations and non-tariff barriers to
promote and protect its industry. For example, Indian government provides duty protection to its
domestic manufacturers of organic chemicals (phenol), Nutrient based subsidy scheme for fertilizer
industry as well as import of 250 tariff lines of chemicals are permitted subject to SPS regulations, BIS
certifications and provision of international protocol (Montreal protocol), CITES and multiple Indian
cosmetic, drug acts registration and certification etc. In recent negative list, Pakistan has included only
65 tariff lines of chemicals items in banned list, while India under SAFTA has placed 31 tariffs lines in
sensitive list for Pakistan. India in order to discourage imports of chemical from Pakistan’s has imposed
BIS certification regulation on Pakistan’s cement exports and anti-dumping duty on soda ash, which are
Pakistan’s potential export to India.
Besides above restrictions, both India and Pakistan through negotiations need to tackle their restrictive
visa regime, particularly single point entry and exit of businessman, police reporting. Additionally there
requires reforms in policies of both countries in regulations of cross border trade particularly for logistic
service providers such as trucks and railways etc. These issues prohibits free trade in goods, without free
movement of people and investment runs the risk of creating trade monopolies, which would result in
suboptimal gains from the expansion of bilateral trade between both countries.
53
11. RECOMMENDATIONS
Due to absence of clear policy framework on the development of chemical sector with
any road map and benchmarks has resulted into growth, which has been haphazard and on short-
term need basis. The chemical sector has no benchmarks at this moment in terms of its total
productive capacity, sales turnover, contributes to GDP and taxes, manpower employed, value
addition benchmarks in comparison to global trends and other indicators of the sector.
Although the Engineering Development Board and the chemical industry has published
„Chemical Vision 2030‟, a chemical policy so that the chemical industry could own the vision
and play its due role in the implementation process of these policies. Based on the assumption
through desk research on chemical sector, the following recommendations have been suggested
to further strengthen the chemical sector.
i) Pakistan needs to create its own capability and achieve self-reliance in project design,
engineering and the construction management required for the commercialization of
technologies through joint ventures.
ii) There is a need to enhance and develop chemical industry capability in the production of
medium and high technology based chemicals for export, alongside to the present
industrial structure based on low technology resource based products.
iii) Government should provide suitable incentives to entrepreneurs for the development of
an export-oriented chemical industry.
iv) Industrial Policy for Chemical Sector: A comprehensive and consistent industrial
chemical vision and policy is necessary for a period of at least next 20 – 25 years e.g as is
the case of India. The consistency of this policy needs to be ensured over its life.
v) Monitoring and Implementation Mechanism: The progress on implementation of

various visions and policies needs to be monitored periodically and at the highest level in
the country and change made if parameters change.
vi) Infrastructure: The existing infrastructure at Port Qasim, EPZs, Special and other
Industrial Zones needs to be made self sufficient as far as requirement of power, gas,
54
water and other relevant offsite facilities such as, waste water treatment etc are
concerned. The government therefore, must increase spending on the infrastructure
projects. Creation of such infrastructure facilities by the government shall reduce the
project cost and enhance their viability. The prospects of setting up industrial zones along
motorway should be seriously examined.
vii) Technology Up-gradation
Develop technological base through local research and development.
Design and build strong industrial and engineering base through setting up design and
engineering institutes so that they can provide local engineering industry with the
engineering fabrication drawings.
Foreign designing and engineering firms may be asked to provide fabrication drawings of
all the plants and machinery.
A technology development fund may be created to encourage local scientists and

researchers for carrying out the R&D work.
Scientists and Researchers should be offered market based salaries.
Any restriction for obtaining foreign technology may be completely done away with.
viii) Cost of Utilities
Presently, the cheaper feed gas to the fertilizer industry is being cross subsidized by the
industrial and commercial consumers.
The development surcharge collected from gas producing fields is taken in the
consolidated government funds. This surcharge should be used to promote chemical
industry where special natural gas is the raw material.This upfront cost of providing
power, water and natural gas should be borne by the government to partially offset the
high capital cost of setting up projects in Pakistan.
55
ix) Human Resource Development: Specialized courses within the discipline of chemical
technology and chemical engineering were need to designed in consultation with the
subsectors of the Chemical Industry like pesticides, Dyes and Pigments, Paints and
Varnishes, Paper & Paper Board and Glass etc.
x) Development Fund: The government should develop a set up of a special development

fund for the Petrochemical and Chemical Industry to provide loans on easy terms.
xi) Financial Health of Existing Industrial Investors: The good financial health of
existing industrial investors is a big motivation for the potential investors. The
government should identify the sectors of the industries which are operating below
capacity utilization and offer them special incentives to operate to the 100% capacity in
order to have low cost of production.
xii) Quality Control and Environment Standards: The private sector may be encouraged
to come forward in various sectors to implement ISO standards and product
specifications by Pakistan Standards and Quality Control Authority (PS&QCA). This
shall re-enforce implementation of standards besides creating employment.
Government should encourage chemical industries to get ISO 14000 certification by

making it mandatory for all units.
xiii) Incentives for value addition of intermediate by products being exported
The Sugar Industry has big potential of value addition through conversion of molasses to
alcohol and ultimately to ethylene and Polyethylene or production of gasohol (gasoline +
20% ethanol).
Naphtha a byproduct from the refineries is presently being exported. Its value addition to
produce Petrochemicals need government‟s support and incentives.
Local caustic soda is very expensive as compared to international market because of

charging all cost of chlorine which is being wasted. Its appropriate utilization shall reduce
56
cost of caustic soda which is a raw material / intermediate raw material for a number of
industries.
xiv) Establishment of Chemical Clusters
Specialty chemicals are small projects with very high value addition. Government should
identify locations and provide all infrastructure, good residential, recreational facilities &
utility facilities to develop this area and encourage investors.
If a Petrochemical is to be based on associated gas containing ethane, Potohar appears to

be a good location. If we decide to follow the molasses route, a place in Sindh or Punjab
where large number of sugar mills are located may be ideal.
xv) Re-location of Plants
Government should need to offer incentives for the re-location of chemical plants after
thorough survey of outmoded technology / residual life.
Provincial Government‟s should need to devise a set up for special fund to develop
infrastructure for exploration and utilization of local minerals like iron ore, phosphate
rock and manganese ore etc.
Government may set up committees for revival of closed down / sick units of chemical
industry and submit recommendations.
Government should need to allocate up to 10% of natural gas for setting up of industries
where basic raw material is natural gas like petrochemical complex based on production
of ethylene / polyethylene from associated gases. Government may consider special gas
fields to dedicate for chemical industries. Gas may be priced equivalent to competing
Middle East, Gulf countries & Saudi Arabia.
A strong database of various technologies and technology providers may be developed

for Chemical Industries.
Cascading of tariff should continue for industrial growth in the country.
57
Annexure I:
Pakistan’s Negative List of Banned Chemical Items from India (2012)

Sector HS-Code Description CD%
28030010 Carbon black (rubber grade) 25
28030020 Carbon black (other than rubber grade) 25
28030090 - Other 25
Inorganic Chemicals 28070000 Sulphuric acid; oleum 10
(8 Tariff Lines) 28151100 Solid 20
28151200 In aqueous solution (soda lye or liquid soda) Rs.4000/MT
28362000 Disodium carbonate 10
28363000 -Sodium hydrogencarbonate (Sodium bicarbonate) 20
29054400 - - D-glucitol (sorbitol) 20
29054500 - - Glycerol 20
29054900 - - Other 20
29152100 - - Acetic acid 25
29153100 - - Ethyl acetate 25
29153300 - - n -Butyl acetate 25
29153600 - - Dinoseb (ISO) acetate 20
29163600 - - Binapacryl (ISO) 10
29163910 - - - Ibuprofen 20
29163990 - - - Other 10
Albuminoidal 29242910 - - - Paracetamol 25
Substances 29334990 - - - Other 5
(4 Tariff Lines) 29349910 - - - Furazolidone 25
29349990 - - - Other 5
29350040 - - - Sulphamethexazole 25
29350050 - - - Sulpha-thiazolediazine 25
29350060 - - - Sulphanilamide 25
29394100 - - Ephedrine and its salts 25
29394200 - - Pseudoephedrine (INN) and its salts 25
29394300 - - Cathine (INN) and its salts 20
29394900 - - Other 20
29396900 - - Other 10
29411000 -Penicillins and their derivatives with a penicillanic acid
58
29413000 -Tetracyclines and their derivatives; salts thereof 10
29414000 -Chloramphenicol and its derivatives salts thereof 10
29415000 -Erythromycin and its derivatives; salts thereof 10
29419010 - - - Cephalexin 20
29419040 - - - Cephradine oral 20
29419050 - - - Ingredients for pesticides 5
29419060 - - - Cefixime in bulk 15
29419090 - - - Other 10
32064910 - - - Master batches (coloured) 15
32064920 Pigments and peparations based on cadmium 15
32064930 - - - Pigments and preparations based on 15
Tanning & Dyeing
32065090 - - - Inorganic products of a kind used as luminophores 15
Chemicals
32110010 - - - For leather 10
(8 Tariff Lines)
32149010 - - - Silicon sealant 10
32149090 - - - Other 20
32151190 - - - Other 20
33030010 - - - Eau-de-cologne 35
Essential Oils &
33030020 - - - Perfumes 35
Resinoids
33030090 - - - Other 35
(4 Tariff Lines)
33061010 - - - Tooth paste 35
Soaps, organic surface- 34011100 - - For toilet use (including medicated products) 35
actives agents 34011900 - - Other 35
(3 Tariff Lines) 34029000 -Other 25
35052010 - - - Starch based glues 20
Albuminoidal
35052020 - - - Dextrin based glues 20
Substances
35052090 - - - Other 20
(4 Tariff Lines)
35061000 -Products suitable for use as glues or adhesives, put up for
Photographic Chemicals 37013030 - - - Presensitized printing plates 15
(2 Tariff Lines) 37013090 - - - Other 20
38021000 -Activated carbon 10
Miscellaneous 38029000 -Other 10
Chemicals 38061090 - - - Other 10
(5 Tariff Lines) 38099200 - - Of a kind used in the paper or like industries 15
38237000 -Industrial fatty alcohols 15
59
Annexure-II
Pakistan’s Export of Top ten Organic Chemicals Potential in Indian Market in 2010 (US$ 000)
Product Product Label Pakistan's Pakistan's India's Indicative Indian MFN India
code exports to exports to imports potential rates % SAFTA
world India from trade Preferenti
world al Tariffs
rate% for
Pakistan
Grand Total 41910 25742 9444510 15988 10 7.76
291736 Terephthalic acid and its salts 17865 10843 488171 7022 10 8
290315 ethylene dichloride 17718 12282 118315 5436 10 6.8
291735 Phthalic anhydride 1699 1533 55417 166 10 8
291732 Dioctyl orthophthalates 1657 111 1478 1367 10 8
290531 Ethylene glycol (ethanediol) 886 88 512154 798 10 8
292610 Acrylonitrile 750 750 126178 0 10 8
290339 Fluorinated, brominated ,acyclic 321 0 30089 321 10 6.8
hydrocarbon
291612 Acrylic acid esters 187 0 190165 187 10 8
291533 N-butyl acetate 102 0 31218 102 10 8
294190 Antibiotics nes 91 2 330643 89 10 8
Source: Trade Map “ Author’s Own Calculations

Annexure III
India’s Export potential of Organic Chemicals to Pakistan in 2010 (US$ 000)
Product Code Product Label Pakistan's Pakistan's India's Indicative Average Pakistan
imports imports exports potential MFN SAFTA
from from to world trade Applied by rates%
world India Potential Pakistan%
Grand Total 1721101 260666 8586928 798400 6.3
290243 P-xylene 353571 127622 426443 225949 5 5
294190 Antibiotics nes, in bulk 54702 4526 380496 50176 11.4 N/A
293499 Nucleic acids and their salts, 46303 13483 65557 32820 11.6 5
290531 Ethylene glycol (ethanediol) 234387 39 22944 22905 0 5
290511 Methanol (methyl alcohol) 27532 0 21792 21792 5
293339 Heterocyclic compds cntg pyridine 26981 6631 124051 20350 8.3 5
292690 Nitrile-function compounds, nes 50057 2909 22540 19631 5 5
60
292249 Amino-acids nes, and their esters; 20028 1763 22892 18265 5 5
292429 Cyclic amides and their derivatives, 21657 4014 31467 17643 9 N/A
291612 Acrylic acid esters 20860 0 14782 14782 5 5
293299 Heterocyclic compounds with oxygen 16473 3054 22044 13419 5 5
Source: Trade Map
Annexure IV
Pakistan’s Export Potential of In-Organic Chemical to India in 2010 (US$ 000)
Product Product Label Pakistan's Pakistan's India's Indicative Indian India
code exports to exports to imports potential MFN rates SAFTA
world India from trade Preferential
world Tariffs
rate% for
Pakistan
Grand Total 29961 11358 2834190 11831 10 6.5
283620 Disodium carbonate 13117 9379 83523 3738 10 6.5
280610 hydrochloric acid 5517 0 621 621 10 6.5
282720 Calcium chloride 2837 0 1382 1382 10 6.5
283919 Silicates of sodium 2200 0 2093 2093 10 6.5
284700 Hydrogen peroxide 2148 1701 8160 447 10 6.5
282911 Sodium chlorate 835 0 11616 835 10 6.5
281700 Zinc oxide; zinc 547 0 5633 547 10 Sensitive list
peroxide
280300 Carbon Black 382 1 78765 381 5 5
283630 sodium bicarbonate 366 67 4336 299 10 6.5
Source: Trade Map (Author’s own Calculations)
Annexure V
India’s top ten potential Inorganic chemical exports to Pakistan in 2010 (US$ 000)
Product Product Label Pakistan's Pakistan's India's Indicative Average Pakistan’s
Code imports imports exports to potential MFN SFTA
from from India world trade Applied preferential
world Potential Tariff by rates
Pakistan
Grand Total 423654 8902 2313918 108477 6.0
61
283329 Sulphates of metal nes 10049 86 37162 9963 7 5
282300 Titanium oxides 9059 0 43973 9059 5 5
283110 Dithionites and sulphoxylates of 9671 1832 15040 7839 5 5
sodium
280920 Phosphoric acid & polyphosphoric 238210 0 7328 7328 5 5
acids
281122 Silicon dioxide 5756 0 9793 5756 5 5
280300 Carbon (carbon blacks and other forms 5010 0 268746 5010 20 N/A
of carbon, nes)
283620 Disodium carbonate 4485 5 51774 4480 10 N/A
283319 Sodium sulphates nes 3303 0 5141 3303 10 5
284130 Sodium dichromate 4261 32 3266 3234 5 5
282110 Iron oxides and hydroxides 4052 35 3268 3233 7.5 5
283329 Sulphates of metal nes 10049 86 37162 9963 7 5
Source: Trade Map
Annexure VI
India’s Potential Export of Fertilizers to Pakistan in 2010 (US$ 000)
Product Product Label Pakistan's Sum of Sum of Sum of Average SAFTA
Code imports Pakistan's India's Indicative MFN preferential
from imports exports potential Applied Tariff
world from to trade by Rates
India world Potential Pakistan
to
India%
Grand Total 648402 1154 39901 24414 0 5
310590 Fertilizers nes, 13007 407 5943 5536 0 5
310210 Urea, wthr/nt in aqueous solution 239345 0 4588 4588 0 5
310530 Diammonium phosphate, in packages 313922 0 3151 3151 0 5
310420 Potassium chloride, in packages weighing 3017 25 8661 2992 0 5
310520 Fertilizers cntg nitrogen, phosphorus & 3177 204 7978 2973 0 5
potassium
310230 Ammonium nitrate, 1749 55 4289 1694 0 5
310221 Ammonium sulphate, in packages 1349 0 1726 1349 0 5
310430 Potassium sulphate, in packages 16745 0 1259 1259 0 5
310229 Ammonium sulphate/nitrate mixtures/ 935 0 465 465 0 5
62
310100 Animal or vegetable fertilizers, in packages 166 27 1249 139 5 5
310540 Monoammonium phosphate&mx 38258 0 122 122 0 5
Source: Trade Map
Annexure VII
Pakistan’s Export Potential of top ten Paints & Dyeing chemicals in 2010 (US$ 000)
code exports to exports to imports potential MFN SAFTA
world India from trade rates % Preferent
world ial Tariffs
rate% for
Pakistan
Grand Total 28400 40 920519 28227
320890 Paints & varnish based on 12927 0 51063 12927 10 8
polymers
320910 Paints& varnishes of 2919 0 7738 2919 10 8
acrylic/vinyl poly,
320416 Reactive dyes and 2701 7 22357 2694 10 Sensitive
preparations List
320810 Paints & varnishes based on 2653 1 12189 2652 10 8
polyesters,
320417 Synthetic organic pigments 2570 4 58175 2566 10 Sensitive
list
320649 Inorganic coloring matter 1011 0 40116 1011 10 Sensitive
list
320620 Pigments and preparations 607 0 813 607 10 8
321519 Printing ink, nes 572 0 66843 572 10 8
320611 Titanium pigments 425 0 200588 425 10 8
321410 Mastics; painters' fillings 372 0 18734 372 10 8
320420 Synthetic organic 342 28 11861 314 10 8
Source: Trade Map “Author’s own calculations”
63
Annexure VIII
India’s Export Potential of Tanning & Dyeing Chemicals to Pakistan in 2010 (US$ 000)
Code imports imports exports potential of MFN SAFTA
from from to world trade Tariff Preferential
world India Potential Applied Tariff
by
Pakistan
Grand Total 315993 41971 1611794 216518 12.80909
320417 Synthetic organic pigments & preparations 25186 3985 435145 21201 15 N/A
320416 Reactive dyes and preparations 56722 18520 251487 38202 15 N/A
320412 Acid and mordant dyes and preparations 11587 5925 186113 5662 15 N/A
320419 Synthetic organic colourg matter nes, 11993 195 111053 11798 5 5
321290 Pigment dspr in a n-aqueous media 2844 3 101414 2841 15 5
321519 Printing ink, nes 7724 0 58477 7724 17 N/A
320420 Synthetic organic products used as 5082 574 53911 4508 20 N/A
fluorescent brightening agents
320414 Direct dyes and preparations 2149 834 52493 1315 15 N/A
320210 Synthetic organic tanning substances 15696 2794 41762 12902 5 5
320415 Vat dyes and preparations 32266 871 37419 31395 2.5 5
320411 Disperse dyes and preparations 12853 942 31812 11911 10 N/A
Source: Trade Map (Author’s own calculation)
Annexure IX
Pakistan’s Export Potential of Essential Oils in 2010 (US$ 000)
world India from trade rates % Preferential
world Tariffs
rate% for
Pakistan
Grand Total 10227 19 307348 9873
330499 Beauty or make-up preparations 3021 0 41951 3021 10 Sensitive list
nes
330420 Eye make-up preparations 1107 19 4542 1088 10 Sensitive list
330590 Hair preparations, nes 1086 0 16258 1086 10 Sensitive list
64
330300 Perfumes and toilet waters 935 0 33941 935 10 Sensitive list
330510 Hair shampoos 680 0 8305 680 10 Sensitive list
330290 Mixtures of odoriferous subst 497 0 37236 497 10 8
330610 Dentifrices 463 0 4997 463 10 Sensitive list
330720 Personal deodorants & 435 0 35376 435 10 Sensitive list
antiperspirants
330530 Hair lacquers 408 0 73 73 10 N/A-
330113 Essential oils of lemon 407 0 2547 407 30 11.6
Source: Trade map (Author’s own Calculations)
Annexure X
India’s Export Potential of Essential oils to Pakistan in 2010 (US$ 000)
Code imports imports exports potential MFN SAFTA
from from India to trade Tariff preferential
world world Potential Applied rates
by
Pakistan
to India
Grand Total 90518 3238 900579 85915 28 5
330290 Mixtures of odoriferous subst use as raw 28447 2580 105945 25867 10 5
materials in industry
330510 Hair shampoos 20592 0 24165 20592 35 5
330210 Mixtures of odoriferous substances for the 16683 25 16519 16494 10 5
food or drink industries
330499 Beauty or make-up preparations nes; 5622 0 109494 5622 35 N/A
sunscreen or sun tan preparations
330590 Hair preparations, nes 3306 8 62026 3298 35 N/A
330720 Personal deodorants & antiperspirants 2523 0 5575 2523 35 5
330300 Perfumes and toilet waters 2056 372 80668 1684 35 5
330749 Room perfuming or deodorizing 1495 0 5505 1495 35 5
preparations
330491 Powders, skin care, 1392 0 13629 1392 35 5
330119 Essential oils of citrus fruits, nes 1351 0 5398 1351 10 5
330420 Eye make-up preparations 1626 0 1188 1188 35 5
Source: Trade Map
65
Annexure XI
Pakistan Export Potential of Soap & detergents to India in 2010 (US$ 000)
world Tariffs
rate% for
Pakistan
Grand Total 14853 21 307058 14832 10 8
340119 Soap&orgn surf prep,shapd,nes; 7377 0 8454 7377 10 Sensitive
list
340111 Toilet soap&prep,shaped; 5698 0 7771 5698 10 Sensitive
List
340220 Surface-active prep, washing & 500 0 11998 500 10 8
cleaning
340211 Anionic surface-active agents 231 7 16242 224 10 8
340120 Soap nes 216 0 12651 216 10 8
340490 Artificial and prepared waxes, nes 174 0 29156 174 10 8
340213 Non-ionic surface active agents 170 14 19354 156 10 8
340510 Polishes, creams for footwear or 159 0 2669 159 10 8
leather
340130 Organic surface-active products for 123 0 4165 123 10 8
washing the skin,
340290 Surface-active preparations, 119 0 26781 119 10 8
washing and cleaning preparations,
nes
Source: Trade Map (author‟s own calculations)
Annexure XII
India’s Export Potential of Soaps & Detergents to Pakistan in 2010 (US$ 000)
Product Code Product Label Pakistan's Pakistan's India's Indicative Average Pakistan’s
imports from imports exports potential Applied SAFTA
world from to trade MFN preferential
India world Potential rates by rates for
Pakistan India
Grand Total 155244 11825 322230 119646 18.4 5
66
340211 Anionic surface-active agents 40783 10022 84359 30761 15 N/A
340213 Non-ionic surface active agents 26130 1330 38940 24800 20 N/A
340220 Surface-active prep, washing & cleaning 12402 0 16201 12402 25 N/A
340319 Lubricating & similar prep 8133 14 8514 8119 20 5
340490 Artificial and prepared waxes, nes 7710 2 11475 7708 5 5
340290 Surface-active preparations, nes 7372 5 24757 7367 25 5
340399 Lubricating preparations & similar nes 5956 0 5368 5368 12.5 5
340111 Toilet soap & prep; papers & 5061 0 28480 5061 25 N/A
nonwovens
340120 Soap nes 3415 0 21193 3415 25 N/A
340130 Organic surface-active products & 2337 0 7995 2337 22.5 N/A
preparations for washing the skin,
340219 Organic surface-active agents, nes 2326 159 13179 2167 10 5
340391 Lub/oth prep, for treat textiles, leather, 21454 25 2061 2036 16 N/A
furskins etc
Source: Trade Map

Annexure XIII
Pakistan’s Export Potential of Albuminoidal Chemicals to India in 2010 (US$ 000)
world Tariffs
rate% for
Pakistan
Grand Total 9312 354 167657 6061
350300 Gelatin and gelatin derivs; 8473 354 5576 5222 30 11.6
350610 Glues/adhesives of all kinds 232 0 9489 232 10 8
350510 Dextrin‟s and other modified starches 207 0 20521 207 50 Sensitive
List
350520 Glues based on starches, 169 0 935 169 30 11.6
350790 Enzymes nes; prepared enzymes nes 127 0 41370 127 10 8
350699 Glues or adhesives, prepared nes 59 0 37418 59 10 8
350691 Adhesives based on rubber or plastics, 45 0 35727 45 10 Sensitive
list
Source: Trade Map
67
Annexure XIV
India’s Export Potential of Albuminoidal Chemicals to Pakistan in 2010 (US$ 000)
Product Code Product Label Pakistan's Pakistan's India's Indicative Average Pakistan’s
imports imports exports potential Applied SAFTA
from from to trade MFN by preferential
world India world Potential Pakistan rates for
India
Grand Total 35254 371 232699 34194 12.0 5
350790 Enzymes nes; prepared enzymes nes 16517 222 40437 16295 10 5
350691 Adhesives based on rubber or plastics, nes 8792 17 26122 8775 15 5
350510 Dextrin‟s and other modified starches 2634 46 20152 2588 15 N/A
350300 Gelatin and gelatin derivs; isinglass; 1292 0 50175 1292 10 5
350699 Glues or adhesives, prepared nes 1291 18 6692 1273 12.5 5
350610 Glues/adhesives of all kinds 1033 0 1496 1033 20 5
350190 Casein glues; caseinates 1003 0 927 927 10 5
350520 Glues based on starches, 1463 0 850 850 15 5
350110 Casein 689 0 76715 689 10 5
350400 Peptones & derivs; protein substances 296 59 1463 237 5 5
350211 Egg albumin, dried 123 0 7258 123 10 5
Source: Trade Map

Annexure XV
India’s Export Potential of Photographic Chemicals to Pakistan in 2010 (US$ 000)
Product Product Label Pakistan's Pakistan's India's Indicative Average Pakistan ‘s
Code imports imports exports potential MFN SAFTA
from from to trade Tariff preferential
world India world Potential Applied rates fro
by India
Pakistan
Grand Total 25999 146 36850 5001 5.2 5
370790 Chemical preps f photographic 2422 49 4551 2373 5 5
370110 Photographic plates & film 9421 13 910 897 5 5
370239 Photo film, nes in rolls,sensitisd, 1076 0 820 820 5 5
370130 Photo plates&film in the flat, 4733 0 249 249 12.5 N/A
370610 Cinematograph film, exposed & developed 186 7 28301 179 5
370710 Sensitisd emulsions prepard for photographic 783 60 192 132 5 5
68
370231 Color photo film 265 0 115 115 5 5
370210 Photographic film in rolls, 46 0 42 42 5 5
370400 Photo plates, film, paper, paperboard etc 41 0 59 41 5 5
370244 Film in roll, 2570 0 37 37 5 5
370320 Photographic paper, paperboard & textile 2203 0 37 37 5 5
Source: Trade Map

Annexure XVI
Pakistan’s Export Potential of top ten Miscellaneous Chemicals to India in 2010 (US $ 000)
world Tariffs
rate% for
Pakistan
Grand Total 15837 1811 2335223 14026 12 8.4
382490 Chemical/allied industry preparations/prods nes 7267 141 271954 7126 10 8

380891 Insecticides 3484 1572 255768 1912 10 10
380991 Finishing agents, use in the textile 1950 65 36353 1885 10 8
380893 Herbicides, anti-sprouting products 1130 0 62524 1130 10 10
380993 Finishing agents & dye for leather industry 589 0 33450 589 10 8
382440 Prepared additives for ceramics, mortars, 329 3 21917 326 10 8
concretes
380290 Activated natural mineral products; 255 30 9238 225 10 8
381700 Mixed alkylbenzenes & mixed 185 0 109492 185 10 8
alkylnaphthalenes
380910 amylaceous subs for textile, paper, leather 135 0 849 135 30 8
381400 Organic composite solvents & thinners, 131 0 19238 131 10 8
Source: Trade Map
69
Annexure XVII
India’s Export Potential of Miscellaneous Chemicals to Pakistan in 2010 (US$ 000)
Product Product label Pakistan's Pakistan's India's Indicative Average Pakistan’s
Code imports imports exports potential applied SAFTA
from from to world trade MFN preferential
world India Potential Tariff by rates for
Pakistan India
Grand Total 555192 50926 2069216 417522 8.1 5
382490 Chemical/allied industry preparations/ 110776 9065 103069 94004 7.9 5
380891 Insecticides 82863 8696 481040 74167 10.5 N/A
380893 Herbicides, anti-sprouting products 57181 12176 112406 45005 5 5
381700 Mixed alkylbenzenes and mixed 47897 14472 251863 33425 5 5
alkylnaphthalenes produced by the alkyla
381121 Lubricating oil additives 45286 3 26264 26261 5 5
382319 Industrial fatty acids, acid oils nes 20626 1 47038 20625 13.8 N/A
380892 Fungicides 19424 342 148886 19082 5 5
382200 Composite diagnostic or laboratory reagents 40500 278 18940 18662 20 5
380991 Finishg agents,dye carriers&oth prep,nes,for use 27484 1757 18578 16821 7.5 5
in the textile indust
381190 Prepared additives for mineral oils 10061 2 17805 10059 5 5
381230 Anti-oxidisg prep & other compound stabilizers 5195 6 49979 5189 5 5
for rubber or plastics
Source: Trade Map
Annexure :XVIII
Indian regulation and documentation requirement for chemical sector
S. No Regulations Required Documents
1 Advance Authorization Application from DGFT Prescribed Format as per Foreign

Industry for import of raw material against Trade Policy
the export of Petrochemical items.
2 Applications for import of items covered -do-
under Restricted List of Import
70
3 Project Import Certification for chemical Complete application having CA
industry certificate indicating expenditure incurred
on the project ,CE certificate about
essentiality
4 Approval of application/request from Copy of Industrial Approval (IL/IEM).ii)
Petrochemical Industry for issue of Project Details of investment made in the project
Import Certificate. (Land, Building, and Plant & Machinery)
duly certified by CA.iii) Complete list of
plant & machinery required (imported and
indigenous) required for implementation
of the project. iv) List of capital goods in
four copies with detailed technical
specifications, make, model no., quantity,
CIF value etc. duly signed by
MD/Director of the firm. v) Capacity of
plant & machinery to be imported under
Project Import duly certified by Chartered
Engineer.vi) Copy of Performa invoice,
catalogue, letter of import of plant &
machinery under Project Import.vii) Any
other relevant information related with
implementation of the project
5 Issuance of Consent Certificate for Complete application with export
import/export of chemicals covered under notification
Rotterdam Convention
6 Issuance of recommendation for Complete application along with End-use
import/export of SCOMET Items certificate by the importing country
7 Central Insecticides Board & Registration i) Copy of Industrial Approval (IL/IEM)
Committee on application/request from ii)Details of production and consumption
Petrochemical Industry for issue of End of raw material during the last three years
71
User Certificate duly
iii) Copy of earlier approval from CIB, if
available.
8 End-use Certificate for Non-Insecticidal Complete application along with CA
application in respect of chemical industry certificate on production and
for chemicals appended to the Insecticides corresponding consumption for the last 3
Act years etc.
9 Issuance of recommendation on FIPB Complete application along with copy of
proposals in respect of chemical industry Board Resolution & No Objection
Certificate from the existing partner of the
Jt. Venture etc
10 Recommendation to Department of SIA/FIPB prescribed format
Economic Affairs, Ministry of Finance on
application for Foreign Investment
Proposals in respect of petrochemical
industry
11 Issuance of recommendation for grant of Complete application
industrial license in respect of hazardous
chemicals
12 Fixation of input/output norms on export Complete application with manufacturing
of chemicals process, CA certificate on production
consumption for the last 3 years etc.
13 Recommendation for R&D laboratory Complete application
recognition
14 Recommendation to Department of SIA/FIPB prescribed format
Industrial Policy & Promotion (SIA) on
application for Foreign Technology
Collaboration
15 Recommendation to Department of FTA/CECA
Commerce on proposal for Free Trade
72
Agreements etc. in the chemical sector &
Petrochemical sectors
Source: Indian Chemical and petrochemical Ministry
Annexure XIX: NTBS filed against India
HS Industry Requirements Country NTBs
280000 Agro Certification Armenia Registration, permission for importation

chemicals
280000 Chemicals Certification Colombia Strict Registration procedures
280000 Chemicals Registration EC Registration/ testing & certification under

REACH (wef June, 2007) costs around Euro
85000 - 325000 per chemical, about 30000
chemicals covered. REACH mandates
gathering of information by manufacturers and
importers on properties of chemical substances
for safe handling and register this information
in a central database rune by European
Chemical Agency, Helsinki
280000 Chemicals Immigration Middle

East
280000 Chemicals Customs Syria Fixed commission of 5% of the value of the

total import.
280000 Chemicals Documentation UAE Attestation of documents by UAE which is

costly /time consuming
73
280000 Chemicals Regulations UAE Enquiries through middlemen wherein product
specifications are vague
280000 Chemicals Certification Korea Prior Approval required
284400 Nuclear Certification Armenia Authorization issued by the Government

material

chemicals
290000 Chemicals Certification Colombia Strict Registration procedures
290000 Chemicals Registration EC Registration/ testing & certification under

REACH (wef June, 2007) costs around Euro
85000 - 325000 per chemical, about 30000
chemicals covered. REACH mandates
gathering of information by manufacturers and
importers on properties of chemical substances
for safe handling and register this information
in a central database rune by European
Chemical Agency, Helsinki
290000 Chemicals Customs Syria Fixed commission of 5% of the value of the

total import.
290000 Chemicals Documentation UAE Attestation of documents by UAE which is

costly /time consuming
290000 Chemicals Regulations UAE Enquiries through middlemen wherein product

specifications are vague
290000 Chemicals Certification Korea Prior Approval required
330000 Cosmetics Certification Ukraine Compulsory Certification i.e. (a) Certificate of
74
& Toiletries acceptance of foreign certification by Derzh
Standard or (b) Conformance certificate by
Ukrainian agency. ISO 9000 standards adopted
by Derzh Standard on production systems.
Foreign certification recognition only to the
extent of international treaty obligations of
Ukraine.
360000 Matches Minimum Argentina If price below MIP, importer to validate

Import Price invoice from Customs in origin country and
submit full set of original documents
380000 Insecticides/ Minimum Argentina If price below MIP, importer to validate
Fungicides Import Price invoice from Customs in origin country and
submit full set of original documents
chemicals
380800 Pesticides Standards EC Non harmonized maximum residue limit

(MRL)
75

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PAKISTAN INSTITUTE OF TRADE AND DEVELOPMENT

COMPARATIVE ANALYSIS OF PAKISTAN AND INDIA CHEMICAL INDUSTRY

Sectoral Analysis for Pakistan-India Trade Normalization

Working Paper Series

b) Pakistan Imports from India.................................................................................................. 15

c) Pakistan‟s Negative List of Chemicals for India: ................................................................. 16

d) India‟s Sensitive List of Chemicals for Pakistan under SAFTA: ......................................... 17

4.1 Organic Chemicals (HS 29) ........................................................................................... 18

a) Pakistan Exports to India: ..................................................................................................... 18

b) Consumption & Production of Organic chemicals by Pakistan ........................................... 19

c) Pakistan Imports from India: ............................................................................................. 20

4.2 Inorganic chemicals (HS-28) ......................................................................................... 22

a) Pakistan‟s exports to India: ................................................................................................... 22

b) Consumption & Production of Inorganic Chemicals in Pakistan: ........................................ 23

c) Pakistan Imports of inorganic Chemicals from India: .......................................................... 25

d) Consumption & Production of inorganic Chemicals in India: ............................................. 26

4.3 Fertilizers (HS-31).......................................................................................................... 28

a) Pakistan Imports from India .................................................................................................. 28

b) Consumption & Productionin Pakistan:................................................................................ 29

c) Indian policy/subsidy on fertilizers:................................................................................... 29

d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals....................... 30

a) Pakistan export to India ......................................................................................................... 31

b) Production & Consumptions in Pakistan: ............................................................................. 31

c) Pakistan Imports from India .................................................................................................. 32

a) Pakistan‟s Imports from India ............................................................................................... 34

4.6 Soaps/Detergents (HS-34) .............................................................................................. 35

a) Pakistan Exports to India: ..................................................................................................... 35

b) Pakistan‟s Imports from India ............................................................................................... 36

4.7 Albuminoidal substances (HS-35) ................................................................................. 37

a) Pakistan Exports to India ...................................................................................................... 37

b) Pakistan‟s Imports from India ............................................................................................... 37

4.8 Explosives Chemicals (HS-36) ...................................................................................... 39

4.9 Photographic chemicals: (HS-37) .................................................................................. 39

4.10 Miscellaneous Chemicals: (HS-38)............................................................................... 40

a) Pakistan Export to India ........................................................................................................ 40

b) Pakistan‟s Imports from India ............................................................................................... 41

7. Trade defense laws/Regulations for Chemicals Industry ...................................................... 45

(a) Indian NTBs on Pakistani chemicals ............................................................................. 46

(b) NTBs Product-Wise: ...................................................................................................... 46

8. Revealed Comparative Advantages (RCA) in Chemical Sector ........................................... 47

Objectives of the Study

1. Identification of Pakistan‟s export potential, for the chemical sector, in India.

2. Identification of India‟s export potential, for the chemical sector, in Pakistan.

5. Identification of NTBs that need to be addressed to facilitate exports, of the specific

6. Have trade defense laws been used in this sector.

Scope and Methodology

Classification of Chemical Industry in

3.1 Trend Analysis of Pakistan’s Chemical Sector

4. Pakistan-India Bilateral trade of Chemical Industry

a) Pakistan Export to India:

b) Pakistan Imports from India

38 Miscellaneous chemical products 30 9.2 517.16 50.93 1472.18 397.94

Grand Total 326 7.3 2386.00 379.20 12601.90 1500.76

Source: Trade Map

c) Pakistan’s Negative List of Chemicals for India:

Source: Ministry of Industries Pakistan

d) India’s Sensitive List of Chemicals for Pakistan under SAFTA:

Out of Pakistan‟s total exports of

b) Consumption & Production of Organic chemicals by Pakistan: Pakistan‟s organic chemical

c) Pakistan Imports from India: Figure # 5

d) Indian Import Policy Conditions & Requirements for Organic Chemicals

No. Indian Import Policy Regulations for organic chemicals No. of

4.2 Inorganic chemicals (HS-28)