The Chemical Industry constitutes about 14% of India’s industrial production and 10% of the total exports from the country. A substantial proportion of these exports go to USA, Europe and other developed nations.  

The chemical Industry which includes basic chemicals and its products, petrochemicals, fertilizers, paints, gases and pharmaceuticals etc., plays an important role in the overall economic development of our economy. Chemical Industry is an important constituent of the Indian economy. The Chemical Industry produces a wide spectrum of products, which include Pharmaceuticals, Dyes, Man-made Fibers, Plastics, Pesticides, Fertilizers, Cosmetics and Toiletries, Paint, Auxiliary Chemicals and wide range of Organic and Inorganic compounds for applications ranging from automobiles, textile industry, engineering industry, construction chemicals and food additives to veterinary and health care products. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India’s GDP. The total investment in Indian Chemical Sector is approx. US$ 60 billion and total employment generated is about 1 million. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 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. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. In Chemical Sector, 100% FDI is permissible. Manufacture of most chemical products inter-alia covering organic / inorganic, dyestuffs & Pesticides is delicensed. The entrepreneurs need to submit only IEM with the Department of Industrial Policy & Promotion provided no locational angle is applicable. Only the following items are covered in the compulsory licensing list because of their hazardous nature. 

The Indian chemical industry comprises both small and large scale units. The fiscal concessions granted to the small scale sector in mid- eighties led to the establishment of a large number of units in this sector. Currently the Indian chemical industry is in the midst of a major restructuring and consolidation faces. India produces a large number of fine and specialty chemicals, which have very specific uses and are essential for increasing industrial production. These find wide usage as food additives and pigments, polymer additives, anti-oxidants in the rubber industry etc.

In the chemical sector, 100% FDI is permissible. Manufacture of most chemical products, inter alias, organic and inorganic, dyestuffs & pesticides is delicensed. The entrepreneurs need to submit only the IEMs with the department of industrial policy and promotion, provided no location restriction is application. The compound annual growth rate in production of basic chemicals during first four years of the 10th plan is 6.4% as against consumption which increased annually at rate of 19.79% to 20.34% respectively. Maximum imports have taken place in respect of Alkali chemicals (3.80%), followed by dyes & dyestuffs (26.44%). Similarly there has been a growth in exports of organic chemicals (32.88%) followed by inorganic chemicals of the order of about 31.88% over a period of last 4 years.