INDIAN CHEMICAL INDUSTRY Director General Indian Chemical Council GLIMPSE OF INDIAN CHEMICAL INDUSTRY By D. P. Misra Director General Indian Chemical Council September 2008

Indian Chemical Industry - Overview 12th largest in the world and 3rd largest in Asia Indian Chemical Industry (incl. pharma)= $50 bn in 2006 – 10.8% CAGR 2002 to 2006 Market is expected to grow to $75.8 bn - 13.6% CAGR by 2011 Evolved from being a basic chemical producer to also offering specialty and fine chemical products

Indian Chemical Industry –Segmentation Industry divided into 3 segments Basic chemicals, specialty & fine chemicals and knowledge chemicals. Basic chemicals 57% Specialty & Fine Chemicals & Knowledge Chemicals is 43% API’s for Pharma co-formulations for Pharma Dyes and pigment paints and inks Adhesives Flavors & fragrances Agrochemicals Source: IBEF/KPMG Report October 2007

Indian Segmental Market Growth (Value wise) All values in US$ Billion CAGR: 16.2% CAGR: 30.1% CAGR: 8.5% CAGR: 16.3% Total Market – US$ 35 billion as on March’05 Source: Our estimation

Export – Import Scenario Indian Chemical industry As on March’ 05 All values in US$ Billion Source: http://www.chemicals.nic.in

Indian Fine Chemicals Industry Represents 43% of total Indian Chemical Industry – market size USD $17.2 bn Forecasted to grow at CAGR of 15%, double the growth of Global Fine Chemicals Industry Exports of Fine Chemicals (excld. pharma) forecasted to grow USD$ 4bn in 2007 to USD$ 13 bn in 2013 Per Capita consumption in India is still well below world average Source: Indian Chemical Manufacturers Association

Indian Pharmaceutical Industry Overview India is among the fastest growing pharmaceutical markets in the world The domestic pharmaceutical market recorded sales of US$ 7.3 billion in 2006, grew by 17.5% over the previous year* Indian pharmaceutical Industry is 8th in terms of volume & 13th in terms of value – due to lower drug prices Pharmaceutical Market

Exports, the core of Indian Pharmaceuticals Total export revenues (2005-06)……………………….. $ 5.2 billion Bulk drugs (APIs) ………………………………………..…….$ 2.8 billion (54 %) Finished drug formulations (FDFs) …………………………$ 2.4 billion (46 %) Revenues from FDF exports expected to reach $ 9.5 billion and surpass those from APIs ($ 8.7 billion) by 2010-11 and also exceed those of the domestic market

DMF Filings – Top Ten countries Source: FDA / CDER; Crisil Research

INDIAN INORGANIC INDUSTRY TOTAL – $2.5 Bn

INDIAN CHLOR ALKALI - 2006

SODA ASH GROWTH SCENARIO CAGR – EXPECTED APPROX – 5%

Alcohol-based Chemicals – Existing capacities in India

INDIAN PETROCHEMICAL INDUSTRY AT A GLANCE Commodity Polymers (PE, PP, PVC, PS) Capacity TPA 4,215,000 Synthetic Fibre (PSF, PFY, Nylon, Acrylic) 2,069,000 Elastomers 145,000 Surfactants 409,000

CAPACITIES OF COMMODITY POLYMERS CAPACITIES OF SYNTHETIC FIBRE

CAPACITIES OF ELASTOMERS CAPACITIES OF SURFACTANTS

PER CAPITA CONSUMPTION India (Kg) World Average (kg) Plastics 3.8 19.7 Synthetic Fibres 1.7 3.9 Surfactants 0.4 3.5 Elastomers 0.2 2.1

India - 3rd largest polymer consumer globally, by 2010. . . Polymers : India Vs World Global Rank in Polymer Consumption Rank Country 1988 Country 2000 Country 2010 2010/ (MMT) (MMT) (MMT) 2000 1 USA 16.6 USA 27.3 USA 38.9 3.6% 2 Japan 6.4 China 14.4 China 31.3 8.1% 3 Germany 4.3 Japan 9.1 India 12.5 14.0% 4 China 3.7 Germany 6.4 Japan 11.5 2.3% 5 Italy 3.1 S. Korea 4.7 Germany 9.4 3.9% 6 CIS 2.4 Italy 4.7 S. Korea 7.4 4.8% 7 France 2.4 France 4.1 Italy 6.8 3.8% 8 UK 2.2 UK 3.5 Brazil 6.7 7.0% 9 Taiwan 1.9 India 3.4 CIS 6.2 9.1% 10 S. Korea 1.8 Brazil 3.4 France 6.1 4.1% 16 India 1.6 Taiwan 3.3 UK 5.2 4.0% Source CPMA India - 3rd largest polymer consumer globally, by 2010. . .

Agrochemical Industry Global Agrochemical market in 2005 was $33,576 mn (Source:Agrochemicals-Executive Review, Agronova 2006) India is 4th largest producer of Ag Chem after USA, Japan and China. India is the second largest producer of pesticides in Asia. India exports pesticides for approx.Rs.2500 crores (US$.532 billion). Total Ag Chem market in India =Rs.4500 crores (US$ 1 billion).

India – Growth in Polymers Growth triggers Strong Economy High GDP growth Favorable Demography Growing Middle Class Rising Disposable Income Policy thrust Export through SEZ Agriculture Infrastructure Retail Revolution Indian polymer consumption has grown to 6 million in 60 years. It will add up another 6 Million in next five years. Packaging will grow from 3.0 Million to 6.2 Million, Infrastructure from 0.9 Million to 2.5 Million, Agriculture from 0.2-1.0 Million, Others will grow from 1.3-2.8 Million ton per annum 12.5 MMT By FY12

CARG Projected (2006-07 to 2011-12) % Sub-group report on Petrochemicals

Projected Demand Capacity Additions Kilo tons Capacity Demand Deficit/ Surplus Average / Unit Size No of Plants required Ethylene 2005/06 2513 2715 202 2006/07 3909 1386 1000 1 2011/12 3463 8647 5184 5 All Polymers 4265 4600 -335 200 2 5338 1073 400 3 7175 11193 - 4018 10 Source: Based on Information from Dept. of Petrochemicals, MOC&F

Concept of PCPIR Specifically delineated investment region/s Area of around 250 sq. kms Covers manufacturing facilities & associated services & infrastructure Includes SEZ/s, Free Trade & Warehousing Zones, Industrial Parks, EOU units, or Growth Centres duly notified, and existing industrial clusters. Refineries/feedstock companies as anchor tenants Developer/co-developer to build & develop internal infrastructure External linkages to be provided by Central Govt & by concerned State Govt.

Contd…. Users to pay for use of infrastructure except when supported through budgetary resources. Developer would develop/ build / design/ maintain/ operate part or whole of infrastructure/facilities in PCPIR. Selection of developer through transparent process. Developer - benefit of tax holiday under Section 80(I)(A) of IT Act Eligibility for location - any chemical industry / supporting service in area of manufacturing, stocking, trading including logistic and utilities Dispute resolution through arbitration.

Likely PCPIR Locations Project proposals received for:- Dahej in Gujarat, Mangalore in Karnataka, Visakhapatnam in Andhra Pradesh and Haldia in West Bengal have been identified Paradeep in Orissa Cuddalore in Tamilnadu

Investors in PCPIR Could Look Forward to World class infrastructure Highly skilled manpower Co-existence with value chain Easier approach to Gulf, Asia & Africa Fast growing domestic demand Potential for downstream petrochemical projects Large unsatiated & growing market In case of commodity polymers India’s per capita consumption is 4 .8 kg compared to world average of 25 kg Similarly in case of synthetic fibre India’s per capita consumption is 1.8 kg compared to 3.5 kg for the world

An Invitation Indian Chemical Industry specially petrochemicals, speciality, pharma / biotech experiencing significant growth possibility Time to collaborate between India and US both in manufacturing and trade Invitation to US companies to invest in India and experience growing market with huge untapped potential

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