A Presentation on impact of Globalization on Chemical Industry

Objectives of the Study
Objectives of the Study The overall objective of this study is to examine the impact of globalization on the

manufacturing sector.
will enable the country benefit maximally from the current globalization trend in the world economy. In order to achieve this main objective, we intend to do the following.  analyze the challenges, opportunities and risks of globalization and their implications for sustainable development in Nigeria;

examine the impact of globalization on the manufacturing sector of the economy .
discuss socio-economic policy issues and reforms needed for the country to maximize the benefits and minimize the risk associated with globalization.

However. . sector modernization of existing technology through foreign collaborations could further enhance growth. with the domestic chemical industry enjoying protection in the form of differential import duties on raw materials and finished chemical products. 12th largest in production. Until 1991.INTRODUCTION TO chemicals industry • Over the last eighteen years the Indian chemicals industry has moved from manufacturing principle chemicals in a highly regulated market to being a mature industry in a liberalized economy. is growing at an average rate of 12. Chemical manufacturing was largely controlled by licensing regulations.5%. • The Indian chemical industry.


ALUKO. In this sense. “at the world stage” or “global arena”. consumpt ion.A. These imply visibility. It is the process of change towards global economic integration and a world economy characterized by liberation of trade . object. “being present world wide”. Aina (1996) proceeded to review theliteratur e and suggested that globalization connotes a presence. value(s). AKINOLA AND SOLA FATOKUN • immediacy. and rapid diffusion of advanced technologies and consumption patterns”. or • practices is globalized if either through commerce. institutions. or availability.DEFINED GLOBALIZATION A S international integration of markets for goods. therefore. Abubakar (2001) argued • that an issue. the process of “making global”. politics and the • information technology it is visible or considered • relevant in global centres.O.120 M. Again. • production. • globalization entails universalization whereby the .O. G. services and capital.


Globalization is the process by which businesses create value by leveraging their resources and capabilities across borders. . and includes the co-ordination of cross-border manufacturing and marketing strategies.

. It gave a fillip for better access to the developed markets.Positive impacts of Globalization • varied opportunities for the developing countries • . • The technology transfer promised better productivity • thus improved standard of living.

the process of globalization in the Indian economy had been guarded by trade. volatility in financial market spurt open and there were worsening in the environmental situation. Economic integration by 'globalization' enabled the cross country free flow of information. political and economic. capital. social. Till the nineties. Another negative aspect of globalization was that a majority of third world countries stayed away from the entire limelight. More or less the economic integration happened through four channels - .cultural. goods. Due to this. investment and financial barriers. The pace of globalization did not start that smoothly. technologies. the liberalization process took time to hasten up. This cross border integration had different dimensions .Negative impacts of Globalization • Globalization has also thrown open varied challenges such as inequality across and within different nations. services. finance and people. ideas.

As explained by Mr. (Personal Communication.Strategies • Effects of Globalisation on Chemical Industry The chemical industry has been traditionally been developed in protected environment. Akzo Noble and BASF has made the Industry more competitive. 2008). The Indian Chemical manufacturers were not globally competitive and hence they struggled to deliver quality as the import quality chemicals (KPMG. Another challenge Indian Industry faced is the environmental regulations forced by the policy makers due to the International pressure (Gopalkrishnan R. • Entry of Foreign Players like Dow Chemicals. 2004). Larsen & Toubro Ltd. . Shah. P..N. The globalisation posed several challenges to the Indian Chemical Industry. January 15. 2009) the foreign players use the world-class technology which gives both.. GM. Cost effective as well as better quality products.

2009) stressed upon the point that Indian Chemical Industry faces the challenge of dumping which is also a result of Globalisation. the smaller players were affected adversely.Contd… • The import duty has been reduced after opening the economy. Especially. . Shukla (Personal Communication. R. • Prof. This hinted Government of India to take up initiatives such as Cluster Development approach for the Development in India (Sachitanand. The earlier years of 21st Century saw closing of many small scale players in India. This has made Indian producers suffer. 2009). This has made the import cheaper and local producers less competitive. This also resulted into shift of focus towards export markets for the Industry. January 16.N.

it needs to focus on cost reduction tactics. The entrance of foreign players has witnessed technological advancement in the industry for the larger players. . The growing numbers of expiring patents have increased the importance of Research and Development.• The chemical industry is facing some challenges as well as new business opportunities. The globalisation has increased India’s foreign trade and also forayed new avenues in Pharmaceutical industry. • The smaller players have suffered due to lack of funds and hence collaborative strategies such as Cluster Development is required. • While basic chemicals segment is facing a declining demand. The growing competition from China and implementation of REACH agreement are the challenges faced by the industry.

The advantages of manufacturing high class chemical products in India are as follows •Friendly Government of India policies •Low cost labor •Low and world class infrastructure •Strong technical education •Large number of science and engineering graduates •Quality output •Highly skilled workforce •Usage of innovative process •Good client relationships •labor cost .

•Huge scope for innovation •Expansion of existing relationships •Huge demand in overseas markets •Availability of more technical work force •Increased number and quality of training facilities •Large and very fast growing Indian petrochemical market •Huge trained talent pool •Competitive .

Weaknesses of Indian chemical industry • Insufficient basic infrastructure for the chemical industry • High feedstock cost in comparison to Middle East countries • Prevalence and use of old and outdated technology • Synthetic fiber industry is unorganized and operates in small clusters .

Opportunities of Indian chemical industry •Huge demand for polymer and synthetic fiber •Great opportunity for product development •Low consumption of polymer in comparison to global consumption rate •Ever increasing size of domestic markets .

Threats to Indian chemical industry • Stiff competition from other regional players like. china and the Middle East countries • Stiff rational pricing pressures • Environmental hazards concerns • Low market recognition • Relocation of manufacturing sites to region with abundance of feedstock .

inorganic chemicals and fertilizers •The Indian states of Gujarat. West Bengal and Andhra Pradesh have the largest concentration of chemical and petrochemical units . Maharashtra.Notable points of Indian chemical industry - •It share stands at 2% of world market •Annual rate of growth of the Indian chemical industry is 10% •Its business is worth US$ 30 billion •Profit incurred is around 14% •Wide variety of products •Basic components are petrochemicals.

Globalization often results in a melding of functions foreign & domestic product forms & .CONCLUSION Lastly it can be concluded that Globalization has both positive and negative impact on the chemical industry.