Bulk

mainly concentrated in the west coast especially Gujarat, due to proximity to raw materials
and ports, majority of the demand comes from the end-use industries
located in the eastern and the southern regions of the country leading to
distribution-related hurdles.

high transportation cost and

raises the overall production cost, thereby making the imports cheaper
compared to domestic purchase.

adequate facilities at ports and railway terminals and poor pipeline connectivity, domestic
manufacturers will continue facing difficulty in procuring raw materials at a cost competitive with
the global peers.
Organic – 7.8%
imports grew at a rate of 8.7%
domestic production is largely attributed to the large volume imports taking place from countries
like China, resulting in low utilization rates of ~ 60%
InOrganic – 3.6%
imports grew at a rate of 12.5%

Raw material and energy costs form the largest cost component of basic chemical
manufacture.

Agro
Budgetary support: Agri credit by govt
Off Patent Molecules
Increase in demand for food grains
Growth of horticulture
Incidence of pest attacks
Changing climatic conditions
Limited farmland availability
Increasing awareness:
agrochemicals industry largely consumes crude oil-linked raw materials which are the second and
third derivatives of crude, chlorine, yellow phosphorus and bromine etc.

India exports about 50% of its production hence exports is a key revenue component.

R&D expenditure of major agrochemicals companies today hovers in the 7–10 percent range higher
than major commodity, diversified, and specialty chemicals companies.4
Longer product development cycles and escalating costs:
Most of this R&D cost is spent on crop protection, product safety testing, and registration,
The average lead time to develop a new crop protection product has increased from 8.3 years in
1995 to 11.3 years in the 2010–14 period.

In agrochemicals, for instance, the focus is largely on branding and distribution.

Pesticides industry in India has witnessed a trend of increasing exports. This is due to its competence
in low-cost manufacturing, low-cost manpower. Seasonal domestic demand, domestic overcapacity
and better price realization in the overseas market has also led to this trend
Indian players have a low focus on R&D and instead focus on
manufacturing generic or licensed products
Speciality

It is a product knowledge driven industry with raw material cost component much lower than that of
the basic chemical industry.
the specialty chemicals industry is differentiated from bulk chemicals by extensive R&D and innovation
high product differentiation and value addition endowed with
typically, smaller production units with high flexibility in product mix and low capital investment.

specialty chemicals are driven by extensive product R&D and innovation

The International
Property Rights Index ranked India 55 out of 130 countries compared
to China which ranked at 59. In legal terms, India ranked 71 against
China at 77.
where it leverages its low cost of production and quality talent pool.
industry employs highly complex manufacturing process that often involves handling of toxic and
hazardous chemicals. The process being energy intensive, the importance of safety, security and
environmental protection cannot be underestimated
In the specialty chemicals space the focus is mostly on technological prowess, R&D
skills, employee skills, and strength of patents.

Petro

Indian petrochemical sector is highly dependent on exports (~40%), making it strongly correlated
with the global markets.

The prices of crude oil products have witnessed significant volatility, thereby making petrochemicals
prices highly volatile
Given the capital intensive nature of the petrochemical plant and tariff barriers, new entrants and
small and medium size companies are prohibited from easily entering into the market.
But there is a global competition due to low raw material prices.
Since, ethane& shale gas based petrochemical products are cheaper than petrochemical products in
India; domestic producers are expected to witness margins pressure.