Dun & Bradstreet, through its publication 'Indian Chemical Industry' under the D&B 'Sectoral Round Table Conferences' series, aims to highlight the growth and performance of the chemical industry over the past few years. Over the years, the chemical industry has contributed significantly towards India's economic as well as industrial growth.

The publication has uncovered the following insightful trends, which would be of particular interest

• Inorganic chemicals have the largest share of overall chemical production in India, followed by organic chemicals; in FY09 inorganic chemicals accounted for 80% and organic chemicals accounted for 18% of the total production (7.67 million metric tonnes) of chemicals in the country.
• In terms of installed capacity, organic chemicals is the second-largest segment next to inorganic chemicals. During FY08 the total installed capacity of the organic chemical industry was around 1.94 MMT.

• Exports of inorganic chemicals have reached Rs 6.02 bn for a nine month period of FY09 (Apr-Dec 09) surpassing the total exports of FY08 (Rs 5.99 bn). This growth is impressive, given the overall global economic slowdown and the depreciation of the rupee vis-à-vis the US dollar.
• In value terms, exports of organic chemicals from India grew at a CAGR of 23% between FY03-FY08. Even though the ongoing slowdown in global markets is expected to have an impact on exports, the rupee depreciation has made exports more competitive. The value of imports of organic chemicals, on the other hand, grew at a CAGR of 25% during FY03 to FY08; with China being the biggest source of imports for India during this period.
• India is the second-largest producer of nitrogenous fertiliser (as on FY07) and is the third-largest producer of phosphatic fertiliser (as on FY07) in the world. However, the industry has been facing shortages of key raw materials such as phosphoric rock and sulphuric acid for the phosphatic fertilisers. Likewise, natural gas, a key nitrogenous fertiliser, is not readily available to manufacturers of urea and raw materials for potassic fertilisers have to be imported entirely.
• The government's intention to move to a nutrient-based subsidy of fertilisers not only bodes well for the industry but also promotes balanced use of fertiliser. The nutrient-based pricing and subsidy is expected to enable transparent linking in prices and subsidy to the composition of a product, which will give fertiliser manufacturers more flexibility to come up with a wide range of products as required by different soil conditions and different crops.
• The government's intention to gradually move to a system where subsidy is directly transferred to farmers is seen as a good move by the sector, as the domestic industry has long suffered from underrecovery of cost and delay in disbursement of subsidy.
• India is one of the most dynamic generic pesticide manufacturers in the world, with most Indian technical manufacturers focussing on off-patent pesticides. The pesticide industry in India is self-sufficient as it resorts to imports for meeting only 4% of domestic consumption. Currently, bio-pesticide is evolving as a result of growing awareness among farmers and policymakers towards ecologically-sustainable methods of pest management.

Kaushal Sampat
Chief Operating Officer
Dun & Bradstreet India