Introduction 

The chemicals, polymers and minerals manufacturing industry is a diverse and dynamic sector that produces a wide range of products for various applications. The industry includes the production of basic chemicals, such as acids, bases, salts, gases, and organic compounds; specialty chemicals, such as paints, coatings, adhesives, fertilizers, pesticides, and pharmaceuticals; polymers, such as plastics, rubber, and fibers; and minerals, such as cement, lime, glass, ceramics, and metals. The industry is driven by the demand from downstream sectors, such as agriculture, construction, automotive, textile, packaging, and healthcare. 

The industry is also a major contributor to the economy, employment, and innovation of the country. According to the Ministry of Chemicals and Fertilizers, the industry accounted for 3.4% of the GDP, 12.5% of the industrial output, and 14% of the total employment in the manufacturing sector in 2019-20. The industry also invested 2.7% of the GDP in research and development, and registered 2,608 patents in 2018-19. 

Market Potential 

Global Market 

The global market for chemicals, polymers and minerals manufacturing industry is expected to grow at a compound annual growth rate (CAGR) of 5.4% from 2020 to 2027, reaching a value of USD 7.1 trillion by 2027, according to a report by Grand View Research. The growth is attributed to the increasing demand for chemicals and polymers in emerging economies, such as China, India, Brazil, and Southeast Asia, as well as the rising adoption of green and bio-based chemicals and polymers in developed markets, such as the US, Europe, and Japan. The market is also influenced by the technological innovations, environmental regulations, and trade policies in the industry. 

The global market is segmented by product type, end-use industry, and region. The product type segment includes basic chemicals, specialty chemicals, polymers, and minerals. The basic chemicals segment accounted for the largest share of 45.6% in 2019, followed by polymers with 23.7%, specialty chemicals with 21.5%, and minerals with 9.2%. The end-use industry segment includes agriculture, construction, automotive, textile, packaging, healthcare, and others. The agriculture segment accounted for the largest share of 25.4% in 2019, followed by construction with 20.3%, automotive with 15.6%, textile with 10.2%, packaging with 9.8%, healthcare with 8.9%, and others with 9.8%. The region segment includes North America, Europe, Asia Pacific, Latin America, and Middle East and Africa. The Asia Pacific region accounted for the largest share of 48.7% in 2019, followed by North America with 18.4%, Europe with 17.6%, Latin America with 7.8%, and Middle East and Africa with 7.5%. 

Indian Market 

The Indian market for chemicals, polymers and minerals manufacturing industry is one of the fastest growing in the world, with a CAGR of 9.3% from 2016 to 2026, reaching a value of USD 304 billion by 2026, according to a report by FICCI. The growth is driven by the increasing domestic consumption, exports, and investments in the industry. The industry contributes to 16% of the manufacturing GDP and 10% of the total exports of India. The industry is also expected to create 20 million direct and indirect jobs by 2025. 

The Indian market is segmented by product type, end-use industry, and region. The product type segment includes basic chemicals, specialty chemicals, polymers, and minerals. The basic chemicals segment accounted for the largest share of 57% in 2019, followed by polymers with 22%, specialty chemicals with 19%, and minerals with 2%. The end-use industry segment includes agriculture, construction, automotive, textile, packaging, healthcare, and others. The agriculture segment accounted for the largest share of 26% in 2019, followed by construction with 21%, automotive with 16%, textile with 11%, packaging with 10%, healthcare with 9%, and others with 7%. The region segment includes North, South, East, West, and Central. The West region accounted for the largest share of 40% in 2019, followed by South with 25%, North with 20%, East with 10%, and Central with 5%. 

Andhra Pradesh and Telangana Market 

The Andhra Pradesh and Telangana market for chemicals, polymers and minerals manufacturing industry is also witnessing a robust growth, owing to the availability of natural resources, skilled manpower, infrastructure, and favorable policies in the region. The two states account for 10% of the total chemicals and petrochemicals production and 8% of the total minerals production in India. The industry employs 3.5 lakh people and generates a revenue of INR 50,000 crore in the region. The industry is also expected to attract INR 1.5 lakh crore of investments by 2025. 

The Andhra Pradesh and Telangana market is segmented by product type, end-use industry, and region. The product type segment includes basic chemicals, specialty chemicals, polymers, and minerals. The basic chemicals segment accounted for the largest share of 55% in 2019, followed by polymers with 23%, specialty chemicals with 20%, and minerals with 2%. The end-use industry segment includes agriculture, construction, automotive, textile, packaging, healthcare, and others. The agriculture segment accounted for the largest share of 27% in 2019, followed by construction with 22%, automotive with 17%, textile with 12%, packaging with 11%, healthcare with 8%, and others with 3%. The region segment includes Andhra Pradesh and Telangana. The Andhra Pradesh region accounted for the larger share of 60% in 2019, followed by Telangana with 40%. 

Government Subsidies and Incentives 

Government of India 

The Government of India provides various subsidies and incentives to the chemicals, polymers and minerals manufacturing industry, such as: 

• Tax exemptions and deductions for research and development, capital expenditure, and exports. For example, the industry can claim a deduction of 150% of the expenditure on research and development under Section 35(2AB) of the Income Tax Act, a deduction of 100% of the profits for 10 years for the units in SEZs under Section 10AA of the Income Tax Act, and a rebate of 3% of the export value under the Merchandise Exports from India Scheme (MEIS). 
• Reduced customs and excise duties for raw materials, intermediates, and finished products. For example, the industry can avail a concessional duty of 5% for the import of specified goods for the manufacture of excisable goods under the Customs Tariff Act, a concessional duty of 6% for the manufacture of specified goods for the domestic market under the Central Excise Tariff Act, and a zero duty for the export of goods under the Export Promotion Capital Goods (EPCG) Scheme. 
• Financial assistance and credit guarantee for micro, small, and medium enterprises (MSMEs). For example, the industry can avail a subsidy of 15% of the cost of plant and machinery for the establishment of new units and modernization of existing units under the Credit Linked Capital Subsidy Scheme (CLCSS), a subsidy of 25% of the cost of plant and machinery for the establishment of agro and rural industries under the Prime Minister’s Employment Generation Programme (PMEGP), and a guarantee cover of up to 75% of the credit amount for the loans up to INR 200 lakh under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). 
• Special economic zones (SEZs), industrial parks, and clusters for the development of the industry. For example, the industry can benefit from the infrastructure, facilities, and incentives available in the SEZs, such as the Dahej SEZ, the Mangalore SEZ, and the Paradip SEZ, the industrial parks, such as the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR), the Chemicals and Petrochemicals Investment Region (CPIR), and the Plastic Parks Scheme, and the clusters, such as the Ankleshwar-Bharuch Cluster, the Vapi-Silvassa Cluster, and the Hyderabad Cluster. 
• Policy support and regulatory reforms for the promotion of green and bio-based chemicals and polymers. For example, the industry can avail the incentives and benefits under the National Policy on Biofuels, the National Policy on Petrochemicals, the National Chemical Policy, the National Policy on Plastic Waste Management, and the Draft National Resource Efficiency Policy. 

Government of Andhra Pradesh 

The Government of Andhra Pradesh provides additional subsidies and incentives to the chemicals, polymers and minerals manufacturing industry, such as: 

• Reimbursement of stamp duty, registration fee, land conversion fee, and VAT/CST/GST for the establishment of new units and expansion of existing units. For example, the industry can avail a reimbursement of 100% of the stamp duty, registration fee, and land conversion fee paid on the purchase or lease of land and buildings, and a reimbursement of 100% of the VAT/CST/GST paid for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of 100% of the fixed capital investment. 
• Subsidy on power tariff, interest, and transport for the eligible units. For example, the industry can avail a subsidy of INR 1.5 per unit of power consumed for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of 20% of the fixed capital investment, a subsidy of 3% on the interest paid on the term loans for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of INR 50 lakh per annum, and a subsidy of 25% of the transport cost for the export of finished goods to the ports, subject to a maximum of INR 10 lakh per annum. 
• Exemption from electricity duty and water charges for the eligible units. For example, the industry can avail an exemption from the payment of electricity duty for the first five years for the new units and for the first three years for the expansion units, and an exemption from the payment of water charges for the first three years for the new units and for the first two years for the expansion units. 
• Grant for infrastructure development, skill development, and quality certification for the eligible units. For example, the industry can avail a grant of 50% of the cost of infrastructure development, such as roads, power, water, and drainage, subject to a maximum of INR 5 crore per project, a grant of 50% of the cost of skill development, such as training, curriculum, and certification, subject to a maximum of INR 10,000 per trainee, and a grant of 50% of the cost of quality certification, such as ISO, BIS, and FSSAI, subject to a maximum of INR 2 lakh per unit. 
• Single window clearance and online approval system for the ease of doing business. For example, the industry can apply for the various approvals, clearances, and registrations required for the establishment and operation of the units through the online portal of the Andhra Pradesh Single Desk Policy, and obtain the same within 21 working days. 

Government of Telangana 

The Government of Telangana provides additional subsidies and incentives to the chemicals, polymers and minerals manufacturing industry, such as: 

• Reimbursement of stamp duty, registration fee, land conversion fee, and VAT/CST/GST for the establishment of new units and expansion of existing units. For example, the industry can avail a reimbursement of 100% of the stamp duty, registration fee, and land conversion fee paid on the purchase or lease of land and buildings, and a reimbursement of 100% of the VAT/CST/GST paid for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of 100% of the fixed capital investment. 
• Subsidy on power tariff, interest, and transport for the eligible units. For example, the industry can avail a subsidy of INR 2 per unit of power consumed for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of 20% of the fixed capital investment, a subsidy of 3% on the interest paid on the term loans for the first five years for the new units and for the first three years for the expansion units, subject to a maximum of INR 50 lakh per annum, and a subsidy of 25% of the transport cost for the export of finished goods to the ports, subject to a maximum of INR 10 lakh per annum. 
• Exemption from electricity duty and water charges for the eligible units. For example, the industry can avail an exemption from the payment of electricity duty for the first five years for the new units and for the first three years for the expansion units, and an exemption from the payment of water charges for the first three years for the new units and for the first two years for the expansion units. 
• Grant for infrastructure development, skill development, and quality certification for the eligible units. For example, the industry can avail a grant of 50% of the cost of infrastructure development, such as roads, power, water, and drainage, subject to a maximum of INR 5 crore per project, a grant of 50% of the cost of skill development, such as training, curriculum, and certification, subject to a maximum of INR 10,000 per trainee, and a grant of 50% of the cost of quality certification, such as ISO, BIS, and FSSAI, subject to a maximum of INR 2 lakh per unit. 
• Single window clearance and online approval system for the ease of doing business. For example, the industry can apply for the various approvals, clearances, and registrations required for the establishment and operation of the units through the online portal of the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS), and obtain the same within 15 working days. 

Marketing and Sales 

The marketing and sales strategy for the chemicals, polymers and minerals manufacturing industry depends on the type, quality, and application of the products. The industry can adopt the following methods to market and sell their products: 

• Direct sales to the end-users, such as farmers, builders, manufacturers, and consumers. This method involves establishing a direct contact and relationship with the potential and existing customers, and offering them the products that meet their specific needs and preferences. This method can help the industry to increase customer loyalty, satisfaction, and retention, as well as to reduce the intermediation costs and risks. However, this method also requires a high investment in marketing, distribution, and after-sales services, as well as a thorough understanding of the customer behavior and market dynamics. 
• Indirect sales through distributors, dealers, wholesalers, and retailers. This method involves selling the products to the intermediaries, who then sell them to the end-users. This method can help the industry to expand their market reach, access, and coverage, as well as to leverage the expertise, network, and reputation of the intermediaries. However, this method also involves sharing the profit margins, control, and information with the intermediaries, as well as facing the competition and challenges from the other suppliers in the market. 
• Online sales through e-commerce platforms, websites, and social media. This method involves selling the products through the internet, using various digital tools and channels, such as online marketplaces, websites, mobile apps, and social media. This method can help the industry to increase their visibility, accessibility, and convenience, as well as to reach out to the new and untapped segments of customers, such as the young, urban, and tech-savvy consumers. However, this method also requires a high investment in technology, security, and logistics, as well as a strong online presence, reputation, and engagement. 
• Export sales to the international markets, such as the US, Europe, China, and Southeast Asia. This method involves selling the products to the customers in the foreign countries, using various modes and channels, such as direct exports, indirect exports, joint ventures, and foreign direct investments. This method can help the industry to diversify their revenue sources, increase their competitiveness, and benefit from the favorable trade policies and agreements. However, this method also involves facing the legal, regulatory, cultural, and political barriers and risks in the foreign markets, as well as complying with the international standards and norms. 
• Brand promotion and awareness through advertising, exhibitions, trade fairs, and seminars. This method involves creating and communicating a positive and distinctive image and message of the products and the company, using various media and platforms, such as print, electronic, outdoor, and online media, as well as exhibitions, trade fairs, and seminars. This method can help the industry to attract and retain the attention, interest, and trust of the customers, as well as to differentiate their products from the competitors and substitutes. However, this method also requires a high investment in creativity, innovation, and quality, as well as a consistent and coherent brand identity and strategy. 

The following table shows the estimated investment required for different production scales of the chemicals, polymers and minerals manufacturing industry, based on the average cost of land, building, machinery, and working capital in India.