Chemicals Sector

An Expert's View about Chemicals in India

Posted on: 24 Aug 2012

The Indian chemical sector accounts for 13-14% of the total exports and 8-9% of total imports of the country.

Chemicals Sector in India The Indian Chemical Industry is relatively mature and versatile. Almost all segments, such as organic chemicals, inorganic chemicals, agrochemicals, coatings, dyes and pigments, soaps and cosmetics, pharmaceuticals, fertilisers and speciality chemicals, have a sizeable presence. Market overview Chemical industry is an important constituent of the Indian economy. As per the latest available information from industry associations, the size of the Indian Chemical Industry in the year 2010 was £69 billion, which is equivalent to about 3% of India’s GDP and employs 1 million people. The Indian chemical sector accounts for 13-14% of the total exports and 8-9% of total imports of the country. According to the Department of Chemicals (in terms of volume) the Indian chemicals industry is the 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Key opportunities Petroleum, Chemicals & Petrochemicals Investment Regions (PCPIRs). The Government of India has approved PCPIR of three potential chemical states which are Andhra Pradesh, Gujarat, West Bengal and Orissa Latest export opportunities in Chemicals sector Latest export opportunities in India Getting into the market A new entrant to the Indian market can decide on one of the following options depending on the expected volume of business, the nature of business (whether it’s a commodity or a speciality chemical), market potential and its long term strategy for the Indian market. 1. To appoint a Distributor: For many companies this is the most ideal entry option. This does not require much in the way of resources. But the selection of the right distributor is essential. For most industrial products, one exclusive indenting agent or distributor is the most common arrangement. 2. Liaison Office: A Liaison office is free to undertake market development activities but is not allowed to transact any business (read/raise invoices). Expenses of these type of offices must be met through inward remittances from the head office abroad. The Reserve Bank of India grants approval for the opening such offices. 3. Branch Office: Foreign companies engaged in manufacturing and trading activities abroad may set up a branch office to undertake buying and selling activities in India. This could include technical support and professional consultancy services but it is not allowed to undertake manufacturing activities. Permission from the Reserve Bank of India is required to set up a branch office. 4. Joint Venture/Wholly Owned Subsidiary: A foreign company can commence operations in India through incorporation of a company under the provisions of the Indian companies Act (1956). Foreign equity in such companies can be up to 100% depending on the business plan of the foreign investor and investment policies of the Government. In most cases foreign investments can be approved through the automatic approval route by the Reserve Bank of India. Some cases that do not meet the standard guidelines require specific approval from the Foreign Investment Promotion Board. Before signing any agreement, it is advisable for any foreign company to consult a lawyer. More about doing business in India Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team. Pradnesh Desai, British Deputy High Commission, Mumbai, India Tel: +91 (0)22 66502226 or email: Contact your local international trade team UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Latest events in Chemicals sector Major Events India Chem 2012 Date: 4-6 October 2012 Website address: Chemspec 2013 Date: 11-12 April 2013 Website address: Useful links More about OMIS and other UKTI services for exporters
Posted: 24 August 2012

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