1.

GROWING DEMAND
a. Rise in demand from end-user industries such as food processing, personal care and
home care is driving development of different segments in India’s specialty
chemicals market.

b. The domestic chemicals sector's small and medium enterprises are expected to
showcase 18-23% revenue growth in FY22, owing to an improvement in domestic
demand and higher realisation due to high prices of chemicals.

2. OPPORTUNITIES
a. India’s specialty chemicals companies are expanding their capacities to cater to
rising demand from domestic and overseas.

b. With global companies seeking to de-risk their supply chains, which are dependent
on China, the chemical sector in India has the opportunity for a significant growth.

3. POLICY SUPPORT
a. The government plans to introduce production-linked incentive (PLI) scheme to
promote domestic manufacturing of agrochemicals.

b. Under the Union Budget 2022-23 the government allocated Rs. 209 crores (US$
27.43 million) to the Department of Chemicals and Petrochemicals.

c. PLI schemes have been introduced to promote Bulk Drug Parks, with a budget of Rs.
1,629 crores (US$ 213.81 million).

d. 100% FDI is allowed under the automatic route in the chemicals sector with few
exceptions that include hazardous chemicals. FDI inflows in the chemicals sector
(other than fertilisers) reached US$ 20.41 billion between April 2000-June 2022.

e. The government has proposed several incentives for setting up a sourcing or

manufacturing platform within an Indian SEZ:
 Effective April 1, 2020, 100% Income Tax exemption on export income for SEZ units
for the first five years, 50% for the next five years thereafter and 50% of the
ploughed back export profit for next five years.
 Single window clearance for central and state-level approvals.
 Duty free import/domestic procurement of goods for development, operation and
maintenance of SEZ units.

4. INCREASING INVESTMENTS AND SPENDING

a. FDI inflows in the chemicals sector (other than fertilisers) reached US$ 20.75 billion
between April 2000-September 2022.

b. In November 2021, Indian Oil Corporation (IOCL) announced plans to invest Rs.
3,681 crore (US$ 495.22 million) to set up India’s first mega-scale maleic anhydride
unit for manufacturing high-value specialty chemicals at its Panipat Refinery in
Haryana.
Chemical Clusters

Gujarat

Maharashtra

Odisha

Tamil Nadu

Andhra Pradesh

Uttar Pradesh