32-Pakistan Trade Liberalization Sectoral Study On Chemical Sector

PAKISTAN INSTITUTE OF TRADE AND DEVELOPMENT
COMPARATIVE ANALYSIS OF PAKISTAN AND INDIA CHEMICAL INDUSTRY

Sectoral Analysis for Pakistan-India Trade Normalization
Working Paper Series

Draft Report
By:
Sohail A. Paracha
August, 2012
Acknowledgment
I would like to express my gratitude to Dr. Adil Miankhel, Director Research for his
cooperation, guidance; technical support and expertise help me all along writing this report. I
would also like to thank my colleagues who have communicated their insights and contributed
directly or indirectly to this paper. I also appreciate Mr. Badar ud Din Tanweer, Survey
Coordinator for their support in compilation of data and report formatting.
Table of Contents
1.
Introduction ............................................................................................................................. 6
2.
Classification of Chemical Industry: ....................................................................................... 9
3.
Trend analysis of chemical Industry ...................................................................................... 12
4.
Pakistan-India Bilateral trade of Chemical Industry ............................................................. 14

a)
Pakistan Export to India: .................................................................................................... 14
b) Pakistan Imports from India.................................................................................................. 15

c) Pakistans Negative List of Chemicals for India: ................................................................. 16
d) Indias Sensitive List of Chemicals for Pakistan under SAFTA: ......................................... 17
4.1
Organic Chemicals (HS 29) ........................................................................................... 18
a) Pakistan Exports to India: ..................................................................................................... 18

b) Consumption & Production of Organic chemicals by Pakistan ........................................... 19
c)
Pakistan Imports from India: ............................................................................................. 20
d) Indian Import Policy Conditions & Requirements for Organic Chemicals .......................... 21
4.2
Inorganic chemicals (HS-28) ......................................................................................... 22
a) Pakistans exports to India: ................................................................................................... 22

b) Consumption & Production of Inorganic Chemicals in Pakistan: ........................................ 23
c) Pakistan Imports of inorganic Chemicals from India: .......................................................... 25
d) Consumption & Production of inorganic Chemicals in India: ............................................. 26
e) Indian Import Policy Conditions & Requirements for Inorganic Chemicals ........................ 26
4.3
Fertilizers (HS-31).......................................................................................................... 28
a) Pakistan Imports from India .................................................................................................. 28

b) Consumption & Productionin Pakistan:................................................................................ 29
c)
Indian policy/subsidy on fertilizers:................................................................................... 29
d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals....................... 30

3
4.4
Tanning or dyeing extracts (HS-32) ............................................................................... 30
a) Pakistan export to India ......................................................................................................... 31

b) Production & Consumptions in Pakistan: ............................................................................. 31
c) Pakistan Imports from India .................................................................................................. 32
d) Indian Import Policy Conditions & Requirements for Tanning & Dyeing Chemicals ........ 33
4.5
Essential Oils and Resinoids/ perfume, cosmetic or toiletries (HS-33) ......................... 33
a) Pakistans Imports from India ............................................................................................... 34

b) Indian Import Policy Conditions & Requirements for Essential Oils & resinoids Chemicals35
4.6
Soaps/Detergents (HS-34) .............................................................................................. 35
a) Pakistan Exports to India: ..................................................................................................... 35

b) Pakistans Imports from India ............................................................................................... 36
c) Indian Import Policy Conditions & Requirements for Soaps/ Detergents Chemicals .......... 36
4.7
Albuminoidal substances (HS-35) ................................................................................. 37
a) Pakistan Exports to India ...................................................................................................... 37

c) Indian Import Policy Conditions & Requirements for Albuminoidal Chemicals ................. 38
4.8
Explosives Chemicals (HS-36) ...................................................................................... 39
a) Indian Import Policy Conditions & Requirements for Explosives Chemicals ..................... 39
4.9
Photographic chemicals: (HS-37) .................................................................................. 39
a) Indian Import Policy Conditions & Requirements for Photographic Chemicals .................. 40
4.10
Miscellaneous Chemicals: (HS-38)............................................................................... 40
a) Pakistan Export to India ........................................................................................................ 40

c) Indian Import Policy Conditions & Requirements for Miscellaneous Chemicals ................ 42
4
6.
Policies and Procedure for Chemical Industry ...................................................................... 43

6.1
7.
Indian National Chemical Policy Initiatives .................................................................. 43
Trade defense laws/Regulations for Chemicals Industry ...................................................... 45

7.1
Indian Regulations & Documentation Requirement in Chemical Sector: ..................... 45
(a)
Indian NTBs on Pakistani chemicals ............................................................................. 46
(b)
NTBs Product-Wise: ...................................................................................................... 46
8.
Revealed Comparative Advantages (RCA) in Chemical Sector ........................................... 47
9.
SWOT Analysis of Pakistans Chemical Sector: .................................................................. 49
10. Conclussion ........................................................................................................................... 53

11. Recomendations..................................................................................................................... 54
12
Annexture
55
1.
Introduction
The global chemical industry forms the fabric of the modern world. It converts basic raw
materials into more than 70,000 different products, not only for industry, but also for all the
consumer goods that people rely on in their daily life. Apart from this the chemical sector
contributes in several other fields like agriculture, pharmaceuticals, textile, power, environment,
communications, transport, infrastructure, housing, as well as covers thousands of commercial
products like paper, paint, plastic products, soap/detergents, perfumes/fragrances, varnishes,
pharmaceutical, dyes etc. In order to emphasize the importance of the chemical industry in
meeting the key challenges for the future, the United Nations Organization proclaimed 2011 as
the International Year of Chemistry. The chemical industry for their outputs/inputs of products
(Export/Import) is predominantly based on the availability of feedstock of basic chemicals in that
country. To address environmental concerns chemical companies are increasingly working
towards reducing energy intensity of their operations, minimizing effluent discharge and
pollution, increasing the share of recyclable products in their portfolio and diversifying their raw
material base to include feedstock. Over the last 10 years, the share of Asia in global chemical
sales has increased by about 14%1.
In India and Pakistan the chemical industry is one of the oldest, which involved the production of
basic chemical products to cater for the domestic needs. With the liberalization in 1990s,
Pakistans basic chemical industry was exposed to international competition, reduced roles of
government, insulation of high tariffs, import substitution policies, regulations, trade defense
laws, intellectual property rights, patents, etc as well as gradual shifting of industry from
production of basic chemicals to petrochemicals, pharmaceuticals, specialty chemicals,
construction chemicals, dyestuffs, paints and agrochemicals etc. Over the years, some traditional
sectors have developed, however the Chemical Industry in Pakistan is still at a very nascent
stage. In early 50s, Pakistan Industrial Development Council (PIDC) was setup by the
Government, for industrialization of the country. As a result a large chemical estate comprising
Pak American Fertilizers, Maple Leaf Cement, Antibiotics (Penicillin) and Pak Dyes &
Global Chemical Outlook 2011 (UNEP)
Chemicals was established at Iskanderabad (DaudKhel), district Mianwali. This estate played an
important role and served as a nucleus for chemical industry in Pakistan.
In 1960s, another chemical complex was set up in private sector at Kala Shah Kaku, Lahore.
Chemical factories also started emerging at Karachi due to the investment friendly policies
which gave confidence to the investors. In early 1970s, private industries were nationalized with
the result that the fast growing chemical sector started to decline. The growth of chemical sector
could never pickup. The imports of chemicals are on increase in value and volume terms. In
order to identify the key challenges and problems face by the chemical industry of Pakistan at
domestic level as well as in trade with India. This study is focused around the following
objectives, scope, limitations and methodologies.
Objectives of the Study
1.
Identification of Pakistans export potential, for the chemical sector, in India.
2.
Identification of Indias export potential, for the chemical sector, in Pakistan.
3.
Identification of segments of chemical industry which are not competitive vis a vis India.
4.
Identify the comparative tariffs of Pakistan and India for the particular product range.
5.
Identification of NTBs that need to be addressed to facilitate exports, of the specific

sector, to India.
6.
Have trade defense laws been used in this sector.
Scope and Methodology

This working paper was initiated in the wake of normalization of Pakistan-India trade ties
dialogue which was held on March 2012. Due to unavailability of latest trade statistics, the scope
of this report is limited to Pakistan-India trade based on the 2010 statistics. The chemical
industries in this paper are categorize on the basis of HS classification identified by State Bank
of Pakistan (SBP), which includes, organic chemical, inorganic chemicals, fertilizers, tanning or
dyeing extracts, essential oils and resinoids, Soaps, Albuminoidal substances, Explosives
chemicals, Photographic Chemicals and Miscellaneous chemicals.
7
The methodology adopted in this report is based on descriptive statistics obtained from
secondary sources. In addition, comparative analysis has also been done on the chemical sectors
of Pakistan and India. The competitiveness of the sectors have also been determined by using
revealed comparative advantage (RCA) criteria based on trade statistics for the year 2010.
This report is based primarily on desk research. Due to time, resource and budgetary constraints
interaction with stakeholders was not possible. The structure of the report is as follows;
This chemical report deals with the market size of chemical sector in India and Pakistan, the
major players of chemical production, government policies for the sector and other demand and
supply side issues. The information provided in section II of this report was based on secondary
sources. The section III of the report deals with trade analysis contains the pattern of Pakistans
chemical sector exports and imports to world, destination markets and product composition.
Whereas in section IV, similar analysis is carried out for Indias chemical sector trade pattern
with the world and a detailed analysis of bilateral trade between Pakistan and India is conducted
for the chemical sector. The same section of the report also encompasses the status of products
covered in the chemical sector, whether it was in the positive list (now eliminated), if it is
currently on the negative list or sensitive list, its liberalization status under SAFTA, MFN tariffs
and preferential tariffs (if any). Similarly this section also deals with the identification of
Pakistans and Indias comparative position with respect to chemical products. This analysis is
done at the HS 6 digit level using Revealed Comparative Advantage Index. All calculations are
based on Trade Map data.
The section V explains the Indian national chemical policies initiative and procedures, Section
VI deals with Indian regulations and documentation requirements on imports of chemical
products, Indian NTBs on Pakistani chemical sector etc. whereas section VII reports revealed
comparative advantage (RCA) of both countries in chemical sectors. While VIII highlights the
SWOT analysis of chemical sector. The last two sections explain a comprehensive conclusion
and recommendations for the future of Pakistans chemical sector exports growth and
development.
2.
Classification of Chemical Industry:
For marketing purpose the chemical industry is divided into following main categories globally.
2.1
Basic Chemicals: This category is also known as commodity chemicals which is
further subdivided into (i) Polymers: Includes basic chemicals like Polyethylene (PE), Polyvinyl
Chloride (PVC), Polypropylene (PP), Polystyrene (PS), ethylene, polyester, nylon, acrylics etc.
(ii) Bulk Petrochemicals & intermediates: Basically produced from Liquid Petroleum Gases
(LPGs), natural gas and naphtha it includes chemicals like benzene, toluene, xylenes, methanol,
vinyl chloride monomer (VCM), styrene, butadiene and ethylene oxide etc. These
petrochemicals are used in the manufacturing of polymers, specialty chemicals and other
organic chemicals. (iii) Other derivatives & Basic Industrial: Chemicals included in this subcategory are surfactants, dyes, pigments, resins, carbon black, explosives synthetic rubber and
rubber products etc. (iv) Inorganic Chemicals: Inorganic chemicals include, salt, chlorine,
caustic soda, soda ash, acids (such as nitric, phosphoric and sulfuric), titanium dioxide and
hydrogen peroxide. It also includes fertilizers, phosphates, potash and ammonia chemicals.
2.2
Life science Chemicals: include differentiated chemical and biological substances,
pharmaceuticals, diagnostics, animal health products, vitamins and crop protection chemicals.
2.3
Specialty Chemicals: Products include electronic chemicals, industrial gases, adhesives
and sealants, as well as coatings, industrial and institutional cleaning chemicals, and catalysts.
2.4
Consumer Products: include direct product sales of chemicals such as soaps, detergents,
and cosmetics.
The chemical industry in Pakistan and India is classified as follows:
Classification of Chemical Industry in Pakistan

A.
Classification of Chemical Industry in

India
In Pakistan, the industry has been classified Chemical Industry in India has been classified
into two sectors according to Chemical on the basis of chemical sub-segments.
Industry Development-Vision 2030,
1. Primary Sector Chemical Industry: It is
1. Basic Chemicals: also known as
the classification of primary sector Industry
commodity
based
organic
on
the
conversion
of
natural
chemicals
chemicals,
includes
inorganic
resources (ores) into primary products.
chemicals, bulk petrochemicals, other
In Pakistan this industry is well established,
chemical intermediates, plastic resins,
having
manmade fibers, dyes & pigments and
large
sophisticated,
scale
capital
units,
highly
intensive
and
printing inks etc.
technologically advanced. In Pakistan the

following industries were considered as
2. Special Chemicals: also known as
primary chemical Industry for production
performance chemicals and are
of primary chemicals.
derived from basic chemicals. The
(a) Petroleum Refinery and petrochemical
chemicals included in this category
Industry involved in the production of
are
petroleum
olefins
chemicals, flavors, fragrances, rubber
(ethylene, propylene, butylenes) and
processing additives, paper additives,
BTX (benzene, toluene, xylene) all of
industrial cleaners and fine chemicals.
which
Sealants, coatings, catalysts are also
form
intermediates,
the
basis
for
the
development of monomers, polymers
paint,
adhesives,
oilfield
included in this category.
and plastic industries

(b) Natural gas for the production of
3. Agriculture Chemicals: These are
ammonia, methanol, fertilizers and
classified as crop protection chemicals
associated products.
such as pesticides etc.
(c) Mineral based industries consisting of

10
cement, limestone, gypsum, sand and

salt
4. Whereas drugs, pharmaceutical and

fertilizers industries are considered
(d) Smelting and refining of ferrous and

non-ferrous metals
separately as independent sector in

India.
(e) Agriculture and Farming Industries

producing cotton, oils and fats, sugar,
agricultural wastes (bio-mass) and raw
materials for a large number of
downstream industries.
2. Secondary Sector Chemical Industry:
The principal objective of Secondary sector
industries is to use Primary industries
products
in
further
manufacturing,
processing, blending, fabricating plants for

petrochemical
plastics,
intermediates,
steel,
non-ferrous
polymers,
metals,
minerals, agricultural and miscellaneous

products. These industries use medium- to
high-sophisticated technology, and range
from light to medium categories.
For the competitiveness analysis of chemical Industry, we classified the industry on the basis of
HS classification categorized by state bank of Pakistan (SBP), which includes, organic chemical,
inorganic chemicals, fertilizers, tanning or dyeing extracts, essential oils and resinoids, Soaps,
Albuminoidal substances, Explosives chemicals, Photographic Chemicals and Miscellaneous
chemicals classified chapter-wise ranging from HS-28, 29, 31, 32, 33, 34, 35, 36, 37 and 38.
11
3.
Global Trend Analysis of Chemical Industry
The global chemical industry, estimated at US$ 2.5 trillion2, is one of the fastest growing sectors
of the manufacturing industry. Despite the challenges of escalating crude oil prices and
demanding international environmental protection standards now adopted globally, the chemicals
industry has still grown at
a rate higher than the
Table: 1
Ranking Country
2010
overall-manufacturing
segment.
The
top
ten
major
%
Shares
World
945.7
United States of
108.5
11%
America
producers of chemicals
Germany,
Germany
90.8
10%
China, Belgium, Japan,
China
70.5
7%
France,
Netherlands,
Belgium
56.3
6%
United Kingdom, Ireland
Japan
53.3
6%
and Republic of Korea.
France
51.8
5%
India is ranked 18th major
Netherlands
46.7
5%
exporter
chemicals,
United Kingdom
38.5
4%
while Pakistan ranked is
Ireland
38.1
4%
93rd in global exports of
10
Republic of Korea
26.7
3%
chemicals. However, US
18
India
16.2
1.7%
consumes approximately
93
Pakistan
0.2
0.02%
are
USA,
of
one-fifth of the global
Source: Trade Map (US $ billions)
chemical
Chemicals included: (HS) 28,29,31,32,33,34,35,36,37 & 38
consumption
whereas Europe is the largest consumer with approx. half the consumption. The US is the largest
consumer of commodity chemicals whereas Asia Pacific is the largest consumer of
agrochemicals and fertilizers. As per calculations based on 2010 data of ITC, the organic
chemical industry is the largest segment contributing about 39% of total global chemical trade,
whereas miscellaneous chemical products contribute approximately 16%, inorganic chemical
2
STPF 2009-12
12
contribute about 12%, essential oils & resinoid contribute about 9%, Tanning or dyeing extracts
contribute about 7% and agrochemicals (fertilizers) about 6% of the total global chemical
industrial output. Commodity chemicals like soap/detergents contribute about 5%, albuminoids
and photographic chemicals contribute 2% each in the chemicals market.
3.1
Trend Analysis of Pakistans Chemical Sector
Pakistan export chemical and chemical related products of worth US$ 0.17 billion and its
imports of chemicals are also increasing both in terms of value and volume reaching US$ 3.9
billion in 2010, having a deficit of about US$ 2.83 billion. Due to high demands, Pakistan's
chemical industry has gained much significance in attracting a foreign direct investment of US$
253 million3 over the last five years. Currently, more than 20 well developed and 400 chemical
manufacturing units4 are operating in Pakistan and many of them are specialized in the
production of key chemicals with the steady progress and development of this industry. The
rapidly changing economic scenario has reinforced the chemical sector local manufacturers to
engage in import substitution by acquiring latest technologies and diversifying their product
range to surpass the petroleum & chemical exports of US$ 0.17 billion in 2010.
Figure # 1
Source: Trade Map
3
4
BOI
Chemical & Dyes Merchants
13
3.2
Trend Analysis of Indian Chemical Industry:
According to Indian chemical policy 2012, the chemical industry accounts for approximately 7%
of GDP of India and the share of industry in national exports is around 11%. Although the
growing Indian chemical sector is currently estimated to be worth $16 billion, nevertheless, the
spread of the chemical industries has been uneven across different parts of the country giving
rise to regional imbalances. Indian chemical sector ranks 18th in the world and 3rd in the Asia. It
is also one of the largest industrial sectors in the Indian economy and an important employment
generator. The Indian Chemical Industry comprises both small and large-scale units. Presently,
there are about 40,000 chemical manufacturing units located in the country out of which about
80% are covered in the small scale sector. This sector provides employment to about 3.3 million
people. Indian chemical industry exports dyes, pesticides and specialty chemicals to the
developed world and to the developing countries which form about 2% share in the global
market and contributes significantly to the foreign exchange basket of the country. In India 51%
chemicals are produced in Gujarat, 8% in Maharashtra, 8% in Uttar Pradesh, 6% in Tamil-Nadu,
4% in Punjab and 23% in other states5.
4.
Pakistan-India Bilateral trade of Chemical Industry
a)
Pakistan Export to India:
Pakistan exports only 36 tariff lines at HS-6 digit level of chemicals to India of worth US$
39.72 million, which accounts about 39% of Pakistans total export of chemicals to world in
2010 (Table 4.1).These 36 tariff lines of chemicals, comprise of 14 tariff lines of organic
chemicals, eight tariff lines of inorganic chemicals, five tariff lines of miscellaneous chemicals,
four tariff lines of tanning of dyeing extracts, four tariff lines of soaps and one tariff line each of
essential oils/resinoids, explosive chemicals and albuminoidal substances. Pakistans exports of
these 36 tariff lines of chemical, accounts 1.3% of Indias total imports of chemicals from world
in 2010, at an average applied tariff of 7.5% in 2010.
Ministry of Chemicals, India
14
Table: 4.1
Pakistan Export of Chemicals to India in 2010 (value: US Millions)
Chapter
Product Label
No. of
Average of
Pakistan's
Pakistan's
India's
Indicative
Product
Tariff
exports to
exports to
imports
potential
Line
Applied by
world
India
from
trade
India on
world
Pakistan
%
28
In-Organic Chemicals
6.95
16.42
11.36
188.22
5.07
29
Organic Chemicals
14
6.47
40.82
25.74
2053.58
14.90
32
Tanning & Dyeing Chemicals
8.13
8.27
0.04
104.58
8.23
33
Essential oils and resinoids
10.00
1.11
0.02
4.54
1.09
34
Soap, organic surface-active
10.00
0.40
0.02
35.60
0.38
35
Albuminoidal substances
15.40
8.47
0.35
5.58
5.22
36
Matches Chemicals
10.00
20.33
0.38
0.00
0.00
38
Miscellaneous chemical products
7.50
13.29
1.81
595.23
11.47
36
7.58
109.11
39.72
2987.33
46.35
Grand Total
Source: Trade Map

b) Pakistan Imports from India
However, on the other hand, India exports about 325 tariff lines of chemicals to Pakistan of
worth
US$
379
million
constituting an export share of

about 3% of Indian global export
of chemicals. India exports 48
tariff lines of organic chemicals,
180 tariff lines of inorganic
chemicals, seven tariff lines of
fertilizers, 28 tariff lines of
tanning, dyes pigments, 11 tariff
lines of toiletries, ten tariff lines
of soap chemicals, six tariff lines
Figure # 2
Source: Trade Map
15
of albuminoidal chemicals, five tariff lines of photographic chemicals and 30 tariff lines of
miscellaneous chemicals. The detailed analysis and comparison of chemicals are given below.
Table: 4.2
Pakistan Imports of Chemicals from India 2010 US Millions
Average of
No. of
Chapter
Product Label
Tariff
Lines
Tariff
Pakistan's
Pakistan's
Applied by
imports
imports
Pakistan
from
from
on India
world
India
India's
exports
to world
Indicative
potential
%
28
In-organic Chemicals
48
5.3
87.45
8.90
1668.13
55.53
29
Organic Chemicals
181
6.3
1298.77
260.67
7044.84
688.85
31
Fertilizers
0.7
25.92
1.15
28.38
13.33
32
28
12.1
240.13
41.97
1475.75
175.99
33
Essential oils and resinoids
11
12.6
52.87
3.24
595.43
48.94
34
Soap, organic surface-active
10
14.5
121.22
11.83
188.11
87.39
35
Albuminoidal substances
10.8
29.58
0.37
95.12
29.21
37
Photographic Chemicals
5.0
12.90
0.15
33.96
3.58
38
Miscellaneous chemical products
30
9.2
517.16
50.93
1472.18
397.94
326
7.3
2386.00
379.20
12601.90
1500.76
Grand Total
Source: Trade Map

c) Pakistans Negative List of Chemicals for India:
Out of a total of 1209 items of negative list, Pakistan has included 65 tariff lines of chemicals in
the negative list items, which is banned to be imported from India till 31st December 2012.
However, the average custom duty on these 65 banned chemical items is about 19.4% for the
year 2012.
Out of negative list of 65 chemicals tariff lines, around 8 tariff lines are from inorganic
chemicals, 31 tariff lines from organic chemicals, 8 tariff lines from Tanning & dyeing
Chemicals, 4 tariff lines from essential oils & resinoid chemicals, 3 tariff lines from
Soaps/organic surface active chemicals, 4 tariff lines from albuminoidal chemicals/substances, 2
tariff lines from photographic chemicals and 38 tariff lines are from miscellaneous chemicals.
16
The detailed description of 65 tariff lines of chemicals, which Pakistan have banned to be
imported from India, is given in Annexure I.
Table 4.3
Pakistans Inclusion of Chemicals in Negative list for India in 2012
Chapter
Chemical Sector
No of Tariff Lines in
Average Custom Duty
Negative list
applied by Pakistan
CD%
28
Inorganic Chemicals
19.28
29
Organic Chemicals
31
18.21
32
15
33
Essential Oils & Resinoids Chemicals
35
34
Soaps, organic surface-actives agents
31.6
35
Albuminoidal Substances
20
37
17.5
38
Miscellaneous Chemicals
12
65
19.5
Grand Total
Source: Ministry of Industries Pakistan

d) Indias Sensitive List of Chemicals for Pakistan under SAFTA:
India has placed around 31 tariff lines of chemicals in sensitive list under SAFTA for non LCDs
countries. The details of these chemicals are given below.
Table: 4.4
Indias Inclusion of Chemicals in SAFTA sensitive list for Non-LDCs
Chapter
Chemical Sector
No of Tariff Lines in
Average Custom Duty
Sensitive list
applied by India
CD%
28
Inorganic Chemicals
32
33
Essential Oils & Resinoids Chemicals
15
11.6
34
Soaps, organic surface-actives agents
35
Albuminoidal Substances
10
36
Ristricted/Explosive Chemicals
10
38
Miscellaneous Chemicals
12
31
9.6
Grand Total
Source: Indian Ministry of Commerce

17
4.1
Organic Chemicals (HS 29)
a) Pakistan Exports to India:
Figure # 3
Source: Trade Map
Out of Pakistans total exports of

chemical of worth US$ 39.72
million to India, Pakistan exports
only 14 tariff lines at HS-6 digit
level of organic chemicals to India
amounting to US$ 25.7 million
having an export share of about
61.4% of Pakistans global export
of organic chemicals and 0.15% of
Pakistan total exports to world.
Pakistan fulfils only 0.27% of
Indian global demand of organic chemicals, facing an average MFN tariff of about 10% on all
organic chemicals.
The major tariff lines items under organic chemicals category exported/supplied by Pakistan
includes ethylene dichloride (HS 290315), which amounts to US$ 12 million. It fulfills 10% of
Indian global demand (import) of the said chemical and faces SAFTA preferential tariff of about
6.8%. The second major tariff line exported by Pakistan is Terephthalic acid and its salts (HS
291376) of amount US$ 10.8 million. It fulfills 2% of Indian global imports of Terepthalic acid,
and faces SAFTA preferential rate of about 8%. Another major tariff line is Phthalic anhydride
(HS 291735) amounting US$ 1.5 million and fulfills 1% Indian global imports of Phathalic
anhydride and faces SAFTA preferential rate of about 8%.in Indian market. The other eleven
organic chemicals, which are supplied by Pakistan includes Acrylonitrile, Dioctyl
orthophthalates, Ethylene glycol, Heterocyclic compounds, Imines, nucleic acids and antibodies,
that collectively amounts to US$ 1.08 million and faces SAFTA average preferential rate of
about 8%.
Pakistan has sufficient export capacity for Pure Terephathalic Acid (PTA) and Poly Vinyl
Chloride (PVC). Pakistan has an unexplored export potential of about US$ 31.97 million in
18
organic chemicals such as Terephthalic acid and its salts, Dioctyl orthopthalates and 1, 2dichloroethane (ethylene dichloride) etc chemicals in Indian market.
b) Consumption & Production of Organic chemicals by Pakistan: Pakistans organic chemical
industry could not flourish due to unavailability of basic building blocks such as Ethylene,
Propylene, Butylenes & BTX (Benzene, Toluene, Xylene). As these products were used for the
production of most of the organic chemicals that are employed as a raw material for a number of
chemical sub-sectors such as; Pharmaceuticals, pesticides, dyes & pigments, Soaps &
Detergents, Paints & Varnishes, synthetic Fiber, plastics & Resins, rubber Tyres & Tubes,
Textiles Auxiliaries and Essential Oils & Perfumes.
These petrochemical building blocks can be derived from a Petrochemical complex, which
generally consist of a Naphtha Cracker, whereas naphtha is a product of oil refineries and
currently its production in the country is around 1,000, 000 Mn. Ton per annum6 which is being
exported. The investors have remained shied away from the production of Naphtha cracker due
to the reasons like highly cost intensive project, sophisticated technology involved, export
market limitations, insufficient current tariff spread.
In chemical industry feedstock is the main source for the growth and development of chemical
sector in any country. However, there are some alternate sources available in Pakistan having an
edge over India like natural gas availability; Thar coal reserves and import of cheap natural gas
from Iran, to produce basic petrochemical building blocks (Naphtha cracker) from; gasification
of coal , dehydrogenation of associated gases and cracking of natural gas. This opportunity
surely opens the gateway for the development of Petrochemical industry in Pakistan, which will
support the local chemical & allied products industries in meeting their raw materials
requirements and to save the valuable foreign exchange. The example of this development is
obvious in synthetic fibres, soaps & detergent, dyes & pigments, Paints & Varnishes, while
amongst intermediates Pakistan has sufficient capacity for Pure Terephathalic Acid (PTA) and
Chemical Development Vision 2030
19
Poly Vinyl Chloride (PVC). However, the imports of chemicals and allied industries stood
around 20%, which is significant for a small economy of Pakistan.
c)
Pakistan Imports from India:
Figure # 5
Source: Trade Map
India exports about 181 tariff lines or

products of organic chemicals to
Pakistan valuing US $ 0.26 billion.
About 15% of Pakistans imports of
organic chemicals are directed from
India, facing MFN tariff ranging from
0% on Meth-acrylic acid esters to 25%
on penicillin etc. The major products
of organic chemicals, which India
exports to Pakistan includes P-Xylene
of worth US $ 127 million, O-Xylene amounting US $ 20.5 million, Nucleic acids of worth US $
13 million, heterocyclic compounds of worth US $ 34 million, amino-alcohols of worth US$ 4.9
million, erythromycin of worth US$ 4.7 million and antibiotics of worth US$ 4.74 million
exported to Pakistan by India in 2010. All these products are facing average MFN rates of about
6.35% and SAFTA preferential rates of about 5%.
The P-xylene only accounts 49% of Pakistans total import of organic chemicals from India,
facing MFN duty and SAFTA preferential rate of about 5%, followed by O-xylene accounts
7.9% of Pakistans total imports of organic chemical from India facing MFN & SAFTA
Preferential rate of about 5% duty, Nucleic Acid accounts 5.2% of Pakistans total imports of
organic chemical from India facing MFN 11.6% duty (SAFTA preferential rate of about 5%).
The other major products of organic chemicals exported by India to Pakistan includes, cyclic
amides, sulphonamides, glycol, organo-sulphur compounds, amino acids, insulin, Vitamin E,
aromatic compounds, acyclic ethers etc. It faces SAFTA preferential duty of about 5% in 2010.
The data analysis revealed that India has a lot of potential to export organic chemical of worth
US$ 798 million to Pakistan, facing an average applied tariff rate of about 6.0%. Whereas the
major items/products of organic chemical in which India has potential in Pakistani market
20
includes P-xylene, Antibiotics, Nucleic acids, ethanediol, methanol, heterocyclic compounds,

nitrile compounds, amino acids etc. Annexure III briefly explains the Indian potential of organic
chemicals market position in Pakistan as well as applied MFN & SAFTA preferential rates on
these products.
d) Indian Import Policy Conditions & Requirements for Organic Chemicals
The four major organic compounds included include methanol, acetic acid, formaldehyde,
phenol and acetaldehyde. They constitute around 60% of total organic chemical produced in
India and are protected by external competition by Indian government. In Indian Custom Policy,
Government of India continues to provide duty protection to domestic manufacturers of organic
chemicals. For example in case of phenol, the MFN custom duty of 7.5 % was maintained,
whereas excise duty was reduced from 16% to 8%. Government also levied anti-dumping duty
on import of phenol from countries such as USA, South-Korea and Taiwan.
In Indian Import policy, the following five major import regulations were applied on the import
of 57 tariff lines of organic chemicals. India has imposed restriction on the import of about 25
tariff lines of organic chemicals. One tariff line of organic chemical is subject to imposition of
SPS regulation (BIS certification). Import of 5 tariff lines permitted subject to registration and
other requirements as administered by Drug Controller General of India under the provisions of
Drugs and Cosmetics Act. Similarly, import of 25 tariff lines of organic chemicals were
subjected to actual users against a license from a country which is a party to the Montreal
Protocol on Substances that Deplete the Ozone Layer.
No.
Indian Import Policy Regulations for organic chemicals
No. of
TL
Import is permitted by actual users against a license from a country which is a
25
party to the Montreal Protocol on Substances that Deplete the Ozone Layer.
List of countries which are parties to the Montreal Protocol will be notified by
Director General
II
Imports are permitted subject to Registration and other requirements as
administered by Drug Controller General of India under the provisions of

21
Drugs and Cosmetics Act

III
BIS (only required for Hexane, food grade)
IV
SPS Requirement
Restricted
25
Grand Total
57

The above Indian import policy regulations depict Indian high protection of its domestic organic
chemical industry.
4.2
Inorganic chemicals (HS-28)
Pakistan made a considerable progress in the production of basic inorganic chemicals such as
Soda Ash, Caustic Soda, Sulphuric Acid & Chlorine. In Pakistan, sufficient production capacity
of these chemicals is available, not only to cater the needs of the local industry but surplus
production is being exported around the world. In Pakistan the import of inorganic chemical
products are negligible.
a) Pakistans exports to India:
Pakistan exports only 8 tariff lines of
inorganic chemicals to India of value US$
11.35 million. It accounts for about 38% of
Pakistan
global
exports
of
inorganic
chemicals. About 82.58% of Pakistans

total
export
of
inorganic
chemical
comprised of only one product that is

Disodium carbonate, whereas the remainder
14.98% constitutes of hydrogen peroxide,
1.4% constitutes of Ammonium chloride
and 0.6% constitutes of sodium bicarbonate
Figure # 6
Source: Trade Map
in 2010. All of these 8 tariff lines face an Indian average MFN duty of about 10% and average
SAFTA preferential duty of about 5%.
22
India fulfills about 0.4% of its global import of inorganic chemical from Pakistan. The basic
inorganic chemical products that were exported by Pakistan to India includes, disodium
carbonate of value US$ 9.3 million, (fulfills 11.2% of Indian global imports) faces MFN tariff of
about 10% and SFTA preferential rate of about 6.5% in Indian market. Pakistan exports
hydrogen peroxide of value US$ 1.7 million to India (fulfills 20.08% of Indian global imports),
faces SAFTA preferential rate of about 6.5%.
Similarly, Pakistan exported ammonium chloride of value US$ 159 thousands to India (fulfills
5.3% of Indian global imports), faces 6.5% SAFTA preferential rate. Export of sodium
bicarbonate of value US$ 67 thousands (fulfills 1.5% of Indian global import) faces SAFTA
preferential rates of 6.5% duty. Whereas exports of caustic soda (solid) amounts to US$ 31
thousands (fulfills 0.6% of Indian global import) faces 6.5% SAFTA preferential duty. Whereas
Pakistan exports sodium sulphate and calcium hypochlorite of value US$ 20 thousand to India.
Pakistan has an unexplored export potential of about US$ 11.8 million worth of inorganic
products to India. The potential exportable inorganic chemicals products which can made inroads
into India can be disodium carbonate, hydrochloric acid, calcium chloride, silicates of sodium,
hydrogen peroxide and sodium bicarbonate. Whereas in zinc oxide Pakistan have an unexplored
export potential of about US$ 547 thousands to Indian market in 2010, is placed in SAFTA
sensitive list for Non-LDCs by India. For details regarding bilateral trade potential and applied
MFN & SAFTA preferential rates please see Annexure IV
b) Consumption & Production of Inorganic Chemicals in Pakistan7: The key inorganic
chemicals or Chlor-Alkali industry produces three main chemicals like (1) Caustic soda (2) Soda
Ash (3) Chlorine.
Caustic Soda: Presently, there are four plants with production capacity around 435,000 MTPY
of Caustic Soda. Local consumption of the caustic soda was increased with a compound annual
growth rate of 7%. Electricity is a major cost component in the manufacturing of caustic soda,
account for about 60% of overall cost of production. Existing energy (Electricity & Natural gas)
crises have badly impacted the local production. Alone textile sector of Pakistan consumes 43%
7
Chemical Development Vision 2030
23
of caustic soda. Whereas 19% of caustic soda. Is consume in the manufacturing of soap &
detergent.
Local demand of caustic soda declined because of decline in exports of textile sector, after
recession in the international market. It is expected that in future conditions will improve and
demand will grow at a rate of 7%. Demand of caustic soda is expected to expand to 350,000
MTPY in the next 5 years.
Soda Ash: In Pakistan there are two soda ash plants having production capacity of 470,000
metric tons per year. Both plants producing soda ash are located in the Salt Range area. In 2010,
the local market production of soda ash in the country is about 365,000 million tons. About 43%
of soda ash production mainly consumed in the production of glass & silicate industry, 28% of
soda ash consumed in the production of textiles, 7 % soda ash used in the manufacturing of
detergents & soap, 9% soda ash used in the production of baking powder and 11% in paper
production. As mentioned earlier Pakistans existing production capacity of soda ash is about
470,000 MTPY while local market demand is about 364,000 and therefore has enough surplus
capacity of 106,000 million tons to export in regional and international market.
Sodium Ash: At present, Akzonobel Pakistan and Olympia chemicals have a combined capacity
of about 40,000 MTPY to produce sodium bicarbonate. Sindh Alkalis Karachi has a capacity of
10,000 MTPY but the plant is not operating since 2000. Sodium Bicarbonate is used in drugs
manufacturing, bakery & food products and beverages. Besides local production imports were
also made in the recent years but are on the decline. Collective share of local manufacturers in
the local market was about 79% and share of import was 21%.
Pakistan exports inorganic chemicals of worth US$ 29 thousands to world and the major export
destination of Pakistans inorganic chemicals are India, UAE, Canada, Bangladesh, Sri-Lanka,
Afghanistan and Singapore etc.
24
c) Pakistan Imports of inorganic Chemicals from India:

On the other hand, from the statistical
analysis it is analyzed that India exports
48 tariff lines (HS-6 digit level) of
inorganic chemicals to Pakistan of value
US$ 8.9 million, which fulfills 2.1% of
Pakistans global demand of inorganic
chemicals.
India exports only 0.4% of its global
export
of
inorganic
chemicals
to
Pakistan, faces MFN applied tariffs

ranging from 0~20% and SAFTA
preferential rates of about 5%.
Figure # 7
Source: Trade Map
About 28% of Pakistan total imports of inorganic chemical from India constitute of Aluminum
hydroxide, 21% constitutes Dithionites and sulphoxylates of sodium, 19% constitutes of
Dithionites and sulphoxylates of metals nes, 7% of Argon and 4% zinc peroxide etc.
In 2010, the major inorganic chemical, which India exports to Pakistan includes aluminum
hydroxide of value US$ 2.5 million, (fulfills 69.9% of Pakistan import demand of aluminum
hydroxide), faces SAFTA preferential duty of about 5%. Followed by Dithionites &
sulphoxylates of sodium of value US$ 1.8 million,(fulfills 18.9% of Pakistans import demand)
faces SAFTA & MFN tariff of about 5% and Dithionites and sulphoxylates of metals nes of
value US$ 1.6 million, (fulfills 31.7% Pakistans import demand) faces MFN duty of about 5%.
The other chemicals, which India has exported to Pakistan includes, argon, zinc oxide, chlorides,
calcium phosphates, nitric acids, sodium sulphates, iodides, ammonium chloride, aluminum
oxides, sulphates, chlorides, silicates, magnesium peroxide, sodium dichromate, calcium
carbonate etc, which collectively amounts to US$ 2.9 million.
Whereas the products in which India has an unexplored export potential of in-organic chemicals
in Pakistani market are of sulphates of metal of worth US $ 9.9 million, titanium oxide of worth
25
US$ 9 million, dithionite of sodium of worth US $ 7.8 million, phosphoric acid of worth US$ 7
million, Disodium carbonate of worth US $ 4.4 million, sodium dichromate of worth US $3.2
million and other chemical includes, iron oxide, carbonates of metal, dicalcium phosphates,
calcium carbonate, aluminum oxide, Iodine, sodium sulphites, caustic potash etc. India exports
inorganic chemical of worth US$ 2.3 billion to the world and major destination of Indian
inorganic chemical exports are Iran, Ukraine, Bahrain, China, UAE, Indonesia, USA, Japan, SriLanka, Germany, Saudi Arabia, Bangladesh, Belgium and Vietnam etc. For detailed bilateral
trade potential, MFN duty and SAFTA preferential rates see Annexure V
d) Consumption & Production of inorganic Chemicals in India:
In India caustic soda demand has increased from 1.86 Mn.ton in 2005 to 2.5 Mn.ton in 2010.
Whereas production of caustic soda has increased from 1.81 Mn ton in 2005 to 2.25 Mn ton in
2010 and capacity by 2.1 Mn ton and currently imports 370.2 (`000 tones) of caustic soda from
abroad. Chlorine: Consumption in India has increased from 1.9 Mn ton in 2005 to 2.7 Mn tons
in 2010, whereas production is 611 thousand tons.
Soda Ash (Sodium Carbonate), mainly produced from salt, the domestic demand of soda ash in
India has increased from 2.16 Mn tons in 2005 to 2.51 Mn T in 2010. Currently India exports
about 253 thousand tons of soda ash, whereas its imports are about 600 thousand tons in 2010.
This could be a big opportunity for Pakistan to capture this market. Pakistan exports soda ash of
value US$ 13.1 million to world, whereas the top three export destination of Pakistans Soda Ash
are India (US4 9.3 million), Bangladesh (US$ 1.6 million), South Africa (US$ 1.1 million). The
other major destination where Pakistan exports soda ash includes UAE, Sri-Lanka, Indonesia,
Afghanistan and Somalia. India imports Soda Ash of worth US$ 83 million from world. The
countries from which India imports Soda Ash are Ukraine of worth US$ 16 million, Kenya (US$
15 million), Bulgaria (US$ 12 million), China (US$ 8 million), Turkey (US$ 7 million) and
Pakistan ranked at 6th position from where India imports Soda ash.
e) Indian Import Policy Conditions & Requirements for Inorganic Chemicals
According to Indian import policy regulation about 14 tariff lines of inorganic chemicals in India
are restricted to import. Whereas 14 tariff lines of inorganic chemicals are permitted subject to
26
section 14(1)(ii) of the Atomic Energy Act, 1962 and Rules. Similarly import of two tariff lines
i.e. Import of Boric Acid for non-insecticidal purposes will be subject to an import permit issued
by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture.
Whereas import of thorium nitrate is subject to section 14(1)(ii) of the Atomic Energy Act, 1962
and Rules there under. Similarly, import of carbon black is subject to permitted freely provided
Cost, Insurance and Freight (CIF) value is Indian Rs. 80,000/- PMT and above. Import of items,
priced below Indian Rs. 80,000/- PMT shall be restricted.
Indian Import policy Regulations for Inorganic chemicals

I
Import is subject to section 14(1)(ii) of the Atomic Energy Act, 1962 and
On No of Tariff Lines
10
Rules there under

II
Import of Boric Acid for non-insecticidal purposes will be subject to an
import permit issued by the Central Insecticide Board & Registration

Committee under the Ministry of Agriculture
III Import of thorium nitrate is subject to section 14(1)(ii) of the Atomic
Energy Act, 1962 and Rules there under

IV Import permitted freely provided CIF value is Rs. 80,000/- PMT and
above. Import of items, priced below Rs. 80,000/- PMT shall be

restricted.
V
Restricted
Grand Total
14
28
27
4.3
Fertilizers (HS-31)
Being an agricultural based country,
Figure # 8
Source: Trade Map
Pakistan mainly imports fertilizers

from abroad of value US$ 649
thousand in 2010. Pakistan Imports
fertilizers particularly from top five
countries such as China of worth
US$ 140 thousands, followed by
Saudi Arabia (US$ 123 thousands)
USA (US$ 52 thousands), Tunisia
(US$ 45 thousands) and Russia
(US$ 43 thousands) to fulfill its
domestic needs or consumption. In
order to facilitate the agriculture sector government has imposed 0% duty on 23 tariff lines or
products of fertilizer category. Pakistan does not export a single tariff line of fertilizer to the
world.
a) Pakistan Imports from India
In 2010, Pakistan imported 7 tariff lines/products of fertilizer from India of value US$ 1.15
million, which faces MFN 0% duty. Whereas average applied SAFTA preferential rates applied
by Pakistan on fertilizers is about 5% for Non- LDCs. The major items supplied by India to
Pakistan were fertilizers nes of value US $ 407 thousands, nitrogenous fertilizer of value US $
325 thousands, phosphorous/potash fertilizers of value US$ 204 thousands and sodium nitrate of
US $ 111 thousands in 2010.
The other products under this category imported by Pakistan from India include ammonium
nitrate, animal fertilizer and potassium chloride collectively of value US $ 107 thousands. India
has an opportunity to capture US$ 13 million worth of fertilizers market of Pakistan at 0% duty.
For further details regarding fertilizer trade potential, MFN duty and SAFTA preferential rates
see Annexure VI
28
b) Consumption & Production8in Pakistan: Fertilizer sector is the second largest consumer of
gas after power sector. Due to gas shortages the domestic fertilizer industry witnessed positive
trend in production during the year 2010-11. The production in nutrient terms has increased from
3082 thousand tons during 2009-10 to 3143 thousand tons during 2010-11 showing an increase
of 2.0 percent. Nitrogen production was 2708 thousand tons during 2010-11 and recorded an
increase of 1.4 percent (86.2 percent share in total production), phosphate 424 thousand tons
(13.5 percent share in total nutrient production), which increased by 5.2 percent. Potash blends
production was 11 thousand tons and was high by 10.0 percent over previous year (0.3 percent
share in total nutrient production). Engro Chemical has installed a new urea plant with annual
capacity of 1300 thousand tones, which will become operative in March, 2011 but is again
closed on account of gas shortage and as soon as the gas supplies become smooth, it will start
production. This will reduce the quantum of total fertilizer imports of the country, especially of
nitrogenous (urea) one. Pakistan needs an addition of 100 -150 thousand tons per annum in the
production capacity of Urea and Di-Ammonium Phosphate (DAP) to meet its fertilizer
requirements for crop sector up to 2025 and for this purpose an integrated large scale fertilizer
complex (Urea, DAP, NPK) following a modular approach within an industrial park concept
should be the main thrust of national fertilizer strategy. To attract the investment in fertilizer
sector, the government has extended the implementation of latest fertilizer policy of 2001 till
30th June, 20129.
c)
Indian policy/subsidy on fertilizers:

India has introduced nutrient based subsidy scheme (NBS) which was in effect from
April 2010 to encourage balanced fertilizer consumptions in India. As per policy the
subsidy on complex fertilizer would be calculated based on the nutrients level and not on
the product level. Through this regulation government has changed the subsidy from
constant farm gate prices to constant subsidy. Producer now have the freedom to charge
retail prices but the result has not been encouraging. Urea has been kept out of this
policy, but its maximum retail price was increased by 10%.
8
9
Economic Survey of Pakistan 2010-11

Economic Survey of Pakistan 2010-11
29
In order to discourage import of fertilizer, India initiated new Urea Investment Policy
2010 by revamping existing unit through green field projects at Institutional placement
Program India (IPP) linked prices.
d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals
Pakistans exports of fertilizers to India are subject to following regulations; export of Urea (HS31021000) is allowed though state trading corporation (STC), Minerals and Metal Trading
Corporation India (MMTC) and Indian Potash Limited subject to Foreign Trade Policy and is
under the control of state trading enterprise. Whereas according to Indian Import policy animal
dung and other animal excreta is restricted to be imported in Indian.
No.
I
Indian Import Policy Regulations

Import allowed through STC, MMTC and Indian Potash Limited
No. of Tariff Lines

1
subject to Para 2.11 of Foreign Trade Policy

II
Restricted
III
State Trading Enterprise
Grand Total
Source: Ministry of Commerce India

4.4
Tanning or dyeing extracts (HS-32)
Most
of
the
raw
materials
and
intermediates for dyes & pigments,

paints & varnishes, pesticides and
plastics
imported
&
plasticizers
by Pakistan.
are
These
being
raw
materials and intermediates mainly

belong
to
or
derived
from
petrochemicals, which have no base in

Pakistan. Pakistan imports tanning or
dyeing chemicals of worth US$ 316
thousands from world. Pakistan imports
Figure # 9
Source: Trade Map
30
tanning or dyeing chemicals mainly from China of worth US$ 91 thousands, followed by India
(US$ 41 thousands), Germany (US$ 32 thousands), Korea (US$ 30 thousands), Switzerland
(US$ 12 thousands) and Italy (US$ 10 thousands) etc.10
a) Pakistan export to India
Pakistan exports only 4 tariff lines at HS-6 digit level of tanning or dyeing chemicals of value
US$ 40 thousands to India in 2010. The products supplied by Pakistan to India includes synthetic
organic products, reactive dyes, paints and varnishes based on polyesters facing an average
applied MFN tariff of about 10% and average applied SAFTA preferential rates of about 8%.
The products such as reactive dyes, synthetic organic pigment and inorganic coloring matter, in
which Pakistan have an unexplored potential of about US$ 7 million were placed in sensitive list
by India under SAFTA arrangement. For detail trade potential in dyes chemicals, MFN rates
and SAFTA rates please see Annexure VII
Pakistan export about US$ 28.4 million worths of tanning & dyeing chemicals to world. The
major export destinations of Pakistans tanning and dyeing chemicals are Afghanistan (US$ 18
thousands), Bangladesh (US$ 4 thousands), UAE (US$ 775 hundreds), Saudi Arabia, China and
Turkey etc. whereas its exports to India worth only US$ 40 thousand in 2010, which is about
0.1% of Pakistans total export of dyes & pigments. Pakistan has an unexplored potential of
about US$ 28 million to export dyes & pigments to India, which may face an average ad-MFN
tariff of about 10%. The major items under dyes & pigment chapter in which Pakistan has
potential to Indian market includes paints & varnish of polymers/vinyl polymer, reactive dyes,
synthetic organic pigments etc.
b) Production & Consumptions in Pakistan:
Titanium Dioxide: There are two industrial grades of titanium dioxide pigment:
(i) Rutile-grade used for the manufacture of paints and plastics and
(ii) Anatase-grade used in Polyester Fiber and paper industry.
10
Trade Map
31
Pakistan has ability to establish a 10,000 MTPY facility11 to manufacture anatase grade to cater
needs of polyester fiber industry of Pakistan. Sulfuric acetone of the major raw materials is being
manufactured in Pakistan and other material Ilmenite12 can be either imported or locally
available Ilmenite can be upgraded.
Production of Basic Chromium Sulphate from Chromite (Cr2SO4): Presently the entire
demand for Basic Chromium Sulphate (BCS) used for leather tanning, is being met from imports
as well as from local production. Considerable manufacturing capacity for BCS from chromite is
presently unutilized due to the closure of two plants for various reasons. Barring small
production of BCS from chromite, at Industrial Chemicals, Karachi. The entire local production
of BCS is confined to the manufacture of BCS from imported sodium dichromate. This needs to
be discouraged as the value addition in the case of BCS to be manufactured from Chromite is far
greater than BCS produced from sodium dichromate. Moreover the foreign exchange savings are
much higher in the BCS production from Chromite as compared to BCS produced from sodium
dichromate.
c) Pakistan Imports from India
From the statistical analysis it is
explored out that India export 28
tariff lines /products under tanning
& dyeing extracts to Pakistan of
value US$ 41 million facing MFN
duty from 5~20%.
About 44% of Pakistans total
imports
of
dyes
&
pigments
constitutes of reactive dyes, 14%

constitutes of acid & mordant dyes,
10% of synthetic organic pigments
Figure # 10
Source: Trade Map
etc.
11
12
Chemical Development vision 2030

Magnetic titanium oxide
32
The major lines items exported by India to Pakistan includes reactive dyes of US $ 18.52 million,
while facing an MFN tariff of about 15%, followed by acid and mordant dyes of value US$ 5.9
million, synthetic organic pigment of value US$ 3.9 million, tanning extracts of US$ 3.5 million,
synthetic organic tanning of US$ 2.7 million, basic dyes of values US$ 2.0 million and inorganic
tanning substance of value US $ 1 million. The other minor products of tanning or dyeing extract
exported by India were disperse dyes, vitamin dyes, direct dyes etc accounts US$ 5.0 million in
2010.
Currently India export about US$ 41 million of tanning & dyeing chemicals to Pakistan,
contributing 13% of Pakistans global import of tanning & dyeing chemicals. Whereas India has
an un-explored potential of about US$ 216 million to export tanning & dyeing pigment to
Pakistan in 2010.
The other major products/items in which India has potential to export tanning
& dyeing
chemicals to Pakistan includes synthetic organic pigments, reactive dyes, acid & mordant
chemicals, synthetic organic coloring, printing ink, direct dyes, vitamin dyes and disperse dyes
etc. See annexure VIII for detailed analysis of trade potential, MFN rates and SAFTA
preferential rates on tanning & dyeing chemicals by Pakistan.
d) Indian Import Policy Conditions & Requirements for Tanning & Dyeing Chemicals
According to Indian import policy for import of HS32019090, other for specified food color
requires Bureau of Indian Standards (BIS) certification.
No. Indian Import Policy Regulations
I
BIS (required only for specified food color) (HS-32019090, other)
No. of Tariff Lines

1

4.5
Essential Oils and Resinoids/ perfume, cosmetic or toiletries (HS-33)
Whereas Pakistans export of essential oil to world accounts US$ 10.2 million, While Pakistan
exports only one tariff line of cosmetic or toiletries i.e. Eye make-up preparations (HS-330420)
of value US$ 19 thousands to India facing an average MFN applied tariff of about 10% in 2010.
India has placed about 14 tariff lines at 6 digit level items of resinoids/perfumes/
cosmetic/toiletries in sensitive list under the SAFTA arrangement.
33
Pakistan has an unexplored export potential of about US$ 9.8 million of cosmetic toiletries to
India. The potential items, which Pakistan can export to India includes beauty or makeup
preparations, eye makeup preparations, hair preparations, perfumes, dentifrice, deodorants and
shampoos etc. Pakistans top ten potential export products under essential oils chapters are
mentioned in Annexure IX. The annexure also explains that out of top ten Pakistans potential
export products to India, out of which 8 tariff lines were placed in sensitive list by India.
a) Pakistans Imports from India
The figure 11 depicts that Pakistan imports US$ 9.05 million worth of chemical cosmetics &
toiletries from world. Whereas its imports from India worth US$ 3.23 million in 2010, which
accounts 3.6% of Pakistans total imports of chemical cosmetic & toiletries. About 80% of
Pakistans imports of essential oils/cosmetic & toiletries from India constitutes of mixtures of
odoriferous substance, while 11% constitutes of perfumes and toilet waters, 4% constitutes of
oils of peppermint and 2% of
essential
oils.
The
average
MFN rates applied by Pakistan

on the essential oils/cosmetic &
toiletries
is
about
28%,
similarly
the
duty
under
SAFTA is about 5% for non

LDCs.
India exports only 11 tariff lines
to Pakistan, the major products
which India export to Pakistan
Figure # 11
Source: Trade Map
includes mixture of odoriferous of US$ 2.5 million, facing MFN rates of about 10% and SAFTA
rates of about 5%. Followed by perfumes of US$ 372 thousands, oil of peppermint of US$ 117
thousands and essential oil nes of US$ 57 thousands etc.
Despite of these major exports, India has a potential to export US$ 85 million of essential
oils/cosmetic/toiletries to Pakistan in 2010. The other items in which India has potential to export
in Pakistan includes mixtures of odoriferous substance, hair shampoos, odoriferous substance for
34
food/drink industry, deodorants, perfumes, powder and skin care substances etc. For further
details regarding Indian potential export of essential oils to Pakistan, as well as applied MFN
rates and SAFTA rates by Pakistan on these products see Annexure X.
b) Indian Import Policy Conditions & Requirements for Essential Oils & resinoids Chemicals
If we analyze the import regulations of India, almost 48 tariff lines of essential oils, resinoids,
cosmetic and toiletries are subject to be exported to India by fulfilling conditions of Drugs and
Cosmetic Acts & Rules of India, whereas import of one tariff line is subject to provision of
convention of international trade in endangered species of wild fauna and flora (CITES) i.e. agar
oil is restricted to be imported to India.
No.
No. Of Tariff Lines
Restricted
II
Import will be subject to the provisions of Convention of
International Trade in Endangered Species of Wild Fauna &

Flora (CITES).
III
Drugs & Cosmetics Acts & Rules
48
Total
50

4.6
Soaps/Detergents (HS-34)
a) Pakistan Exports to India:

In 2010, Pakistan export about US$ 14.85 million worth of soaps and detergents to world,
whereas in Soap and Detergents Pakistan exports only two tariff lines of value US$ 21 thousands
to India, which includes anionic surface-active agents of US$ 7 thousand worth and Non-ionic
surface active agents of US$ 14 thousands worth to India, facing an applied MFN tariff of about
10%, whereas under SAFTA the applied duty on this product is about 8%. India has placed only
two tariff lines at 6 digit level of Soap/Detergents in sensitive list under SAFTA arrangement.
Pakistan has a potential of about US$ 14 million to export soap & detergents to India which
includes major items such as soap & organic surface agents, toilet soaps, washing & cleaning
surface-active preparations, soaps, polishers etc. For further details please see Annexure XI.
35
b) Pakistans Imports from India

On the other hand Pakistan imports only 10 tariff lines of US$ 11.85 million worth of soaps and
detergents from India. About 84.8% of Pakistans imports of soaps/ detergents from India
constitutes of anionic surface agents, 11.2% of non-ionic surface active agents, 1.3% of organic
surface active agents, 1.2% of artificial waxes, 1.1% of lubes for textile/leather and 0.4% of other
soap/detergents. All these products faces an average applied MFN rate of about 18.4%, whereas
under SAFTA, these product lines faces average duty of about 5%.
India
fulfills
Pakistans
about
global
25%
of
demand
of
anionic surface active agents (US$

10 million), whereas fulfils about
5.1% of Pakistans global demand
of non-ionic surface active agents
(US$ 1.3 million) and about 6.8%
of Pakistans global demand of
organic surface active agents is
fulfilled by India.
Figure # 12
Source: Trade Map
India has an unexplored export

potential of about US$ 119.6 million worth of soaps/detergents products to Pakistan. The
products in which India has potential are anionic surface agents, non-ionic surface active agents,
washing & cleaning agents, lubricating preparations, toilet soaps, soaps etc. For details please
see annexure XII.
c) Indian Import Policy Conditions & Requirements for Soaps/ Detergents Chemicals
India has restricted imports of two tariff lines of soap/detergents; whereas on another two tariff
lines imports were subjected in terms of Rotterdam convention on Prior Informed Consent (PIC)
procedure for hazardous chemicals and pesticides; while imports of six tariff lines are subject to
fulfill Drugs & Cosmetics Acts & Rules of India.
36
No.
Indian Import Regulations
No. of Tariff Lines
Restricted
II
Import is restricted in terms of Interim PIC Procedure of Rotterdam
Convention on Prior Informed Consent procedure for hazardous

chemicals and pesticides
III
Drugs & Cosmetics Acts & Rules
Total
10

4.7
Albuminoidal substances (HS-35)
a) Pakistan Exports to India

Under Albuminoidal substance Pakistan exports only one tariff line i.e. gelatin and gelatin
derivatives of value US$ 354 thousands to India facing an applied MFN tariff of about 30%,
whereas under SAFTA the duty imposed by on this products is about 11.6%.
Pakistan has an unexplored export potential of about US$ 6.0 million in products like gelatin,
glues, Dextrins, starches, enzymes, and adhesives of rubber or plastic. India has placed two
tariff lines of Albuminoidal substance
(HS-35) under the sensitive list under
SAFTA for Pakistan. The details
about Pakistan potential export to
India and the duty faced by these
products in Indian markets is given in
Annexure XIII.
On the other hand Pakistans imports
only
seven
albuminoidal
tariff
lines
of
chemicals/substances
from India of US$ 371 thousands,
Figure # 13
Source: Trade Map
which accounts about 1.1% of Pakistans global import of albuminoidal substance in 2010. The
37
average applied MFN duty by Pakistan on these albuminoidal substances is about 12%, while the
average applied SAFTA preferential duties by Pakistan on these similar products are about 5%.
About 60% of Indian export of albuminoidal exports to Pakistan constitutes of enzymes, 16%
constitutes of adhesive based on rubbers, 12% constitutes of about Dextrins, 5% constitutes of
glues, 5% constitutes of peptones substances and 2% constitutes of concentrates etc. India export
enzymes of US$ 222 thousands of worth to Pakistan, fulfils about 1% of Pakistans global
demand of enzymes, similarly India fulfils about 20% of Pakistans global demand of adhesive
of rubbers or plastics of worth US$ 59 thousands etc.
Whereas India has an unexplored export potential of albuminoidal chemicals of worth US$ 34
million to Pakistan and the major products in which India has potential to export includes
enzymes, adhesive or rubbers or plastics, Dextrins, gelatin, glues, casein, peptones and egg
albumin to Pakistan. For detailed potential and applied MFN as well as SAFTA duties please see
Annexure XIV.
c) Indian Import Policy Conditions & Requirements for Albuminoidal Chemicals
Export of some albuminoidal chemicals to India has to face the following restrictions according
to the regulation of Indian import policy. About 3 tariff lines India has imposed health protocol,
whereas import of four tariff lines of albuminoidal substances are prohibited, four tariff lines
imports are banned (not permitted to be imported). However imports of four tariff lines are
subjected to wild life protection Act 1972 and CITES and 1 tariff line require (Protection) Act,
1972 and Conventional on International Trade in Endangered Species (CITES), where BIS
required only for food grade.
No.
No. of Tariff Lines
Health Protocol (SPS Requirement)
II
Prohibited
III
Not permitted to be imported
IV
Subject to Wild Life (Protection) Act, 1972 and CITES.
(Protection) Act, 1972 and CITES. BIS(required only for food grade)
Total
16

38
4.8
Explosives Chemicals (HS-36)
Under the explosive chemicals Pakistan exports only one tariff line i.e. matches (360500) of
value US$ 378 thousands to India, which faces an applied ad-valorem tariff of about 10%. Trade
of explosive is prohibited by both countries.
a) Indian Import Policy Conditions & Requirements for Explosives Chemicals
According to Indian import policy regulations, 19 tariff lines of explosives are restricted to be
imported. Import of explosives may be permitted to Government Departments and Public Sector
undertakings on the recommendation of the Controller of Explosives, Government of India.
Similarly 20 tariff lines of explosives are subject to prohibitions under Section 11 of Customs
Act, 1962 (India).
4.9
Photographic chemicals: (HS-37)
Pakistan imports Photographic chemicals of worth US$ 26 thousands from the world. Pakistan
imports photographic chemicals from countries such as Belgium, Japan, China, Germany and
Netherlands. India is the 11th major exporter of photographic chemicals to Pakistan.
Pakistan does not export a single tariff line of photographic chemical to India, whereas on the
other hand India exports only five tariff
lines of worth US$ 146 thousands to
Pakistan, which accounts 0.6% of
Pakistans global imports in 2010.
Pakistan
imports
of
photographic
chemical from India comprised of

chemical preparations (41%), photo
film rolls (33%), cinematographic film
(12%), film color (9%), photographic
plates and films (5%).
India export
Figure # 14
Source: Trade Map
sensitized emulsion
preparations of worth US$ 60 thousands, fulfils about 8% of Pakistans global demand of the
said products, followed by chemical preparations of US$ 49 thousands, which fulfills 2% of
39
Pakistans global demand of chemical preparations. Similarly India fulfils about 20% of Pakistan
global demand of photo paper and about 4% of demand of cinematograph film in 2010. The
average applied MFN duties imposed by Pakistan on Photographic chemicals are about
5.2%.However, Pakistans SFATA preferential duty on photographic chemicals is about 5% for
non-LDCs (India).
Through indicative potential analysis, India has an unexplored export potential of value US$ 5
million of photographic chemical to Pakistan in 2010. The major lines items in which India has
potential to export to Pakistan includes chemical preparations used for photographic chemical,
photographic film, photo films, photo plates, cinematographic film and sensitized emulsions etc.
For further details regarding Indias export potential of photographic chemicals to Pakistan along
with face duties is given in annexure XV.
a) Indian Import Policy Conditions & Requirements for Photographic Chemicals
According to Indian import regulations about 24 tariff lines of cinematograph films and other
films shall be governed by the provisions of Public notice no. 64/1997-2002 dated 29.01.2002.
No.
I
Indian Import Policy Regulation

Import of cinematograph films and other films shall be governed
No of Tariff Lines
24
by the provisions of Public notice no. 64/1997-2002 dated

29.01.2002
Source: Indian Ministry of commerce
4.10
Miscellaneous Chemicals: (HS-38)
a) Pakistan Export to India

Under miscellaneous chemicals Pakistan exported 5 tariff lines at HS 6 digit level of value US$
1.81 million facing an applied ad-valorem tariff of about 7% in 2010. The major items of
miscellaneous chemicals exported by Pakistan to India include, insecticides of value US $ 1.5
million, which fulfills 4.2 % Indian global demands.
40
The
other
major
chemical
products exported by Pakistan to

India includes chemicals nes of
value
US$
141
thousands,
finishing agents of value US$ 65

thousands and mineral ceramics
of value US $ 33 million in 2010.
The average applied MFN duties
imposed
products
by
India
were
on
about
these
12%,
Figure # 15
Source: Trade Map
however Indian average applied SAFTA preferential duties on the same product lines are about
8.4%. For further details regarding Pakistans potential export of miscellaneous chemicals to
India along with average applied MFN duties and SAFTA duties are given in Annexure XVI.
About 86.6% of Pakistans total export of miscellaneous chemicals to India constitutes of
Insecticides, 7.8% constitutes of Chemicals for allied industry, 3.6% constitutes of finishing
agents, 1.7% constitutes of activated natural mineral products and 0.2% constitutes of additives
for ceramics etc.
Pakistan has an unexplored export potential of about US$ 14 million of miscellaneous chemicals
to India in 2010. The major items in which Pakistan has potential of export to India include
chemical for allied industry, insecticides, finishing agents used in textile industry, herbicides,
finishing agents or dye for leather industry, additives for ceramics etc.
Pakistan imports only 30 tariff lines of miscellaneous chemicals from India of value US$ 50
million, which accounts about 9.2% of Pakistan total imports of miscellaneous chemicals in
2010. The major items of miscellaneous chemicals, which Pakistan imports from India includes
mixed alkyl benzenes (28%), herbicides (24%), chemical for allied industry (18%), Insecticides
(17%), sorbitol (4%) and finishing agents (3%). The average applied MFN duties imposed by
Pakistan on these miscellaneous chemicals is about 8.1%, whereas average applied SAFTA
preferential duties are about 5% for non-LDCs (India).
41
Indias exports only 2% of its global

export of miscellaneous chemicals to
Pakistan. Pakistan fulfils about 30% of
its global demand of mixed alkyl
benzenes (worth US$ 14.4 million),
21% of herbicides (worth US$ 12.1
million) and 28% of chemical for allied
industry (worth US$9 million etc) from
India.
India
has
an
unexplored
export
Figure # 16
Source: Trade Map
potential of about US$ 41 million worth of miscellaneous chemical export to Pakistan. These
chemical faces average applied ad-valorem tariff of about 9.9%. The major lines items in which
India has potential in Pakistani market includes, chemical for allied industries, insecticides,
herbicides, mixed alkyl-benzenes, lubricating oil additives, industrial fats/acids, laboratory
reagents, finishing agents and anti-oxidants preparations etc. For further details regarding
Indias export potential of miscellaneous chemicals to Pakistan and duties MFN as well as
SAFTA were described in Annexure XVII.
c) Indian Import Policy Conditions & Requirements for Miscellaneous Chemicals
Import of 11 tariff lines of miscellaneous chemicals are prohibited in India. While import of 33
tariff lines is allowed only if registered and not prohibited for import under Insecticides Act,
1968 and formulations thereof.
Import of mixture of alkyl derivatives of acyclic hydrocarbons is restricted in terms of Interim of
Rotterdam Convention on Prior Informed Consent (PIC) procedure for hazardous chemicals and
pesticides. Whereas another three tariff lines of alcohol which is directly potable or can be used
for making potable alcohol is however, not permitted to be imported by India.
42
No.
No. of Tariff Lines
Restricted
11
II
If registered and not prohibited for import under Insecticides Act,
33
1968 and formulations thereof

III
Import is restricted in terms of Interim PIC Procedure of
Rotterdam Convention on Prior Informed Consent procedure for

hazardous chemicals and pesticides
IV
Subject to conditions as specified in public notice issue in this
behalf
V
The import of any alcohol which is directly potable or can be used
for making potable alcohol is however, not permitted

Total
51

6.
Policies and Procedure for Chemical Industry
6.1
Indian National Chemical Policy Initiatives13
In mid 1980s India has granted, fiscal concessions to small scale chemical sector for the
establishment of a large number of units in the Small Scale Industries (SSI) sector. Envisaging
chemical sector as a key driver of economic growth, employment opportunity and development,
India has initiated/formulated a National chemical Policy 2012 to facilitate its chemical industry.
The thrust of this policy is to underscore the imperative that sustained adoption of technology
up-gradation would offer viable options in overcoming developmental challenges across multiple
sectors.
In Indian National Chemical Policy (NCP-2012) India has focused on nine aims and objective in
the formulation of Indian chemical policy. First, to attract & increase investment by facilitating
industry with capacity additions, ensuring availability of feedstock, and quality infrastructure.
Second, increase the domestic demand and per capita consumption of chemicals by creating a
conducive environment, for serving domestic demand through production as well as leveraging
13
Ministry of Chemicals India
43
the significant export potential in segments like pharmaceuticals, agrochemicals, dyestuffs &
specialty chemicals. Third, in the policy India has initiated adaptation of cluster approach in
chemical sector to encourage and for development of ancillary industries around them. Fourth,
facilitate the industry with latest technologies, up-gradation of existing technology and
substitution of the outdated technology. Fifth, promote R&D focusing green technologies. Sixth,
promote skill development of human resource engaged in the chemical industry. Seventh,
establishment of Chemical Standard Development Organization (CSDO) for the growth,
development, high quality and competitive chemical sector to meet international standards/norms
and their enforcement; Eighth, set up of National Chemical Center (NCC) for the promotion of
an integrated and holistic growth & development in the chemical industry and ninth, put in place
robust framework for a disaster resistant and resilient chemical sector in India.
Investment Policy; In the chemical sector, 100% FDI is permissible under automatic route and
entrepreneurs need to submit only IEM (Industrial entrepreneurs Memorandum) with the
Department of Industrial Policy & Promotion to set up chemical manufacturing unit in the
country.
Licensing Policy; In India manufacture of most chemical products inter-alia covering
organic/inorganic chemicals, dyestuffs and pesticides is de-licensed. However, India has
imposed compulsory import licensing policy on certain chemicals because of their hazardous
nature is as follows; Hydrocyanic acid & its derivatives, Phosgene & its derivatives and
Isocynates & di-isocynates of hydrocarbons.
Custom duty; The basic customs duty on most chemical feed-stocks is 2.5% in India.
Import Duty; Import duty on most of the chemical products is at 7.5% ad valorem in India.
Excise Duty; In general, the central excise duty rate for chemical sector is about 10% in India.
Although the chemical industry has been witnessing the customs duty reduction regime during
the last decade, yet the incidence of taxes, viz. central excise and value added tax (VAT)
continues to be relatively higher as compared to many Asian countries.
44
7.
Trade defense laws/Regulations for Chemicals Industry
The global chemical sector is one of the sectors which faces significant challenges domestically
and internationally such as Non-Tariff Measures (NTMs), Non-Tariff Barriers (NTBS),
antidumping, and subsidies etc. In addition to above mentioned trade defense measures, the
global chemical industry faces further challenges like lack of finances in research &
development, lack of eco-friendly technologies/systems, legal bindings to international
conventions, green peace protocol, accreditation to certifications, patent registration, laboratory
accreditations,
maintaining quality/standards, licensing, proper product handling, safety
measures, labeling, etc were used as defensive measures by certain countries to protect their
domestic industry on the grounds of above protocols.
7.1
Indian Regulations & Documentation Requirement in Chemical Sector14:
As discussed earlier, chapter-wise specific regulation imposed by India on the import of

chemicals such as quantitative restrictions and import of chemicals under the obligation of
international convention; India has also enforced the following regulations & documentation
requirement for the import, exports and investment in chemical sector.
Advance authorization application from industry for import of raw material against the
export of petrochemical items.
Applications for import of items covered under restricted list of import.
Approval from the petrochemical industrial for the issuance of import certificate for
chemicals, plant & machinery etc.
Issuance of consent certificate for import/export of chemicals covered under Rotterdam
Convention
Issuance of complete application along with end-use certificate for import/export of
Chemicals, Organisms, Materials, Equipment and Technologies SCOMET Items
14
Ministry of Chemicals & Petrochemicals India
45
Copy of earlier approval from Central Insecticides Board CIB & Registration Committee
for export of pesticides and application request from petrochemical industry for issue of
End User Certificate.
End-use Certificate for Non-Insecticidal application in respect of chemical industry for
chemicals appended to the Insecticides Act
India has imposed quantitative restrictions on the import of chemicals for few chemicals
which are covered under the obligations as per International Conventions.
The detail regulations and documentation requirement is mentioned in Annexure XVIII.
(a)
Indian NTBs on Pakistani chemicals15

The strong demand for certain Pakistani chemicals, particularly soda ash in Indian market
also became a victim of protective trade barriers of Indian authorities looking for excuse
to discourage imports from Pakistan. The Indian authorities have recently announced to
impose anti-dumping duty on imports of soda ash from Pakistan.
The Indian authorities are also delaying the renewal of certification by Bureau of Indian
Standards (BIS) for import of cement from Pakistan.
India has imposed an anti-dumping duty of up to USD 38.79 per ton on certain chemicals
such as soda ash, used mainly in detergents, imported from seven places including China,
EU, Pakistan and the US, to protect domestic players against cheaper imports16.
(b)
NTBs Product-Wise:
Likewise Pakistan didnt impose any NTBs on chemical originating from India, whereas
many countries filed NTBs against products originating from India. The products on which
NTBs filed against Indian chemicals by other countries includes requisition of registration
15
http://www.defence.pk/forums/economy-development/86527-india-blocks-chemicals-importpakistan.html#ixzz22NJfFrIM
16
http://www.eximguru.com/Export-Import-News/News/News.aspx?Id=9980&Tag=anti-dumpingduty&GridInfo=anti+dumping+duty+Export+Import+News01_Latest+Export+Import+News09
46
certification, a permission for importation, REACH certification (registration/testing &

certification), immigration issues and Non harmonized maximum residue limit (MRL) imposed
by EU, attestation of documents required by UAE which is costly /time consuming, prior
approval required by Korea, compulsory certification i.e. (a) Certificate of acceptance of foreign
certification by Derzh Standard or (b) Conformance certificate required, ISO 9000 standards
adopted by Derzh Standard on production systems and foreign certification recognition only to
the extent of international treaty are obligations of Ukraine and a fixed commission of 5% of the
value of the total import on Indian chemicals imposed by Syria.
For detailed chemical NTBs files on India Products, originated from India by multiple countries
see annexure XIX;
8.
Revealed Comparative Advantages (RCA) in Chemical Sector
In order to study the comparative advantages in chemical sector by both countries (Pakistan &
India) a revealed comparative advantage indices was performed for the last three years at HS 6
digit level. The RCA will give us an indication of how much a country (Pakistan or India) is
exporting a given good relative to how much the world is exporting that same good. A country is
said to have a revealed comparative advantage when its share of export of a given good/product
exceeds the equivalent share of export of the world. This is captured when the numerator is
bigger than the denominator, or equivalently when the RCA is above 1, meaning that a given
country exports, proportionally to its total exports, more than the share of exports of the world in
that given product. An RCA below 1 indicates that a country does not have a revealed
comparative advantage in a given good or equivalently that the world share of that given product
is higher than that of the country under analysis. From the analysis of revealed comparative
advantage (RCA), the following results have been interpreted for both the countries based on the
export statistics of 2010 at HS 6 digit level;
Inorganic Chemicals (HS-28): In inorganic chemicals Pakistan have revealed
comparative advantage greater than 1 only in 8 tariff lines, whereas India in inorganic
chemicals have revealed comparative advantage greater than 1 in 46 tariff lines in 2010.
Pakistan have highest RCA of about 16 in Hydrogen Chloride (HCL), whereas India have
highest RCA of about 13 in Dithionites and sulphoxylates of metal.
47
Organic Chemical (HS-29): Similarly in organic chemical Pakistan have comparative

advantage greater than 1 in 6 tariff lines, whereas India have revealed comparative
advantage greater than 1 in 148 tariff lines. Pakistan has highest RCA of about 10.2 in
ethylene dichloride, whereas India have highest RCA of about 53.6 in Organic
compounds nes.
Fertilizers (HS-31): In fertilizers Pakistan and India both have revealed comparative
advantage (RCA) less than 0, which infer that both countries are not even competitive to
export fertilizer to world.
Tanning & Dyeing Chemicals (HS-32): Similarly in tanning & dyeing chemicals
Pakistan have revealed comparative advantage greater than 1 only in three tariff lines,
while India have RCA greater than 1 in 20 tariff lines. Pakistan has a highest RCA (of
about 1.7) in Pigments and preparations based on chromium compounds, whereas India
have highest RCA (of about 13.3) in Ultramarine and preparations.
Essential Oils and Resinoids (HS-33): Whereas in essential oils and resinoids Pakistan
have low revealed comparative advantage less than 1, while on the other hand India have
comparative advantage greater than 1 in 8 tariff lines. India have highest RCA (of about
23.6) in Essential oils of other mints (HS-330125).
Soap/Detergents (HS-34): In soaps and detergents Pakistan have comparative advantage
greater than 1 in only two tariff lines i.e.
Soaps & organic Surface preperations
(RCA=3.7) and toilet soap (RCA=2.8). similarly on the other hand India have RCA
greater than 1 in only three tariff lines i.e. Anionic surface-active agents (RCA=2.3),
Polishes, creams & similar preparations for footwear or leather (RCA=1.3) and Organic
surface-active agents, nes (RCA=1.03)
Albuminoidal Substances (HS-35): Pakistan have revealed comparative advantage
greater than 1 in only one tariff lines i.e. Gelatin and gelatin derivs (RCA=4.1), whereas
on the other hand India have comparative advantage greater than 1 in three tariff lines i.e.
Casein (RCA=4.6), Gelatin and gelatin derivs; (RCA=2.7) and Egg albumin, dried
(RCA=2.2).
48
Explosives Chemicals (HS-36): However exports of explosive chemicals are banned in

both countries but both countries have revealed comparative advantage greater than 1
only in product that is matches export. In matches, Pakistan has RCA about 16 as
compared to India, who have RCA matches for about 13.14. The RCA results infer that
Pakistan have highest comparative advantage in match export to world than India.
Photographic Chemicals (HS-37): In photographic chemicals, the RCA analysis at HS6 digit level infers that Pakistan have RCA lower than 1 in all the products exported by it
under photographic to world in 2010, Whereas India have revealed comparative
advantage greater than 1 in 3 tariff lines in export of photographic chemicals i.e.
Cinematograph film (RCA=3.1), Cinematograph film, exposed & developed, of a width
of 35 mm or more (RCA=3.08), Photo film nes in rolls (RCA=1.5).
Miscellaneous Chemicals (HS-38): Similarly in Miscellaneous chemicals exports,
Pakistan have revealed comparative advantage less than 1, whereas India have
comparative advantage greater than 1 in 18 tariff lines in 2010. India have highest
revealed comparative advantage in product such as Rodenticides and other plant
protection products (RCA=15.3).
9.
SWOT Analysis of Pakistans Chemical Sector:
Strengths:
Pakistan has only developed its basic industries, consisting of refineries, fertilizers,
cement, sugar, polyester fibers and some other petrochemical based polymer industries,
to fulfill local demand.
Pakistan have a large potential in production of basic inorganic chemicals like Soda Ash,
Caustic Soda, Sulphuric Acid & Chlorine at a low price to cater the needs of the local
industry but also surplus is being exported to India and rest of the world.
Pakistan had a high potential to produced raw organic chemicals such include Pure
Terephthalic Acid (PTA), BTX and carbon black at low rates through natural gas and
coal.
49
Abundantly available raw materials for inorganic chemicals in the country at low rates,
which can enhance Pakistans competitiveness and comparativeness in production of
caustic soda, soda ash and chlorine
Weakness:
In organic chemicals investors show low interest in the production of Naphtha cracker
due to the reasons like highly cost intensive project, sophisticated technology involved,
export market limitations, insufficient current tariff spread
Pakistan has not been able to create its own capability for technological and engineering
infrastructure for the exploitation and commercialization of local or imported
technologies.
Domestic production of consumer goods is based on labour intensive, low value-added
products
In Pakistan, R&D institutions, universities and industry work in isolation and are
completely divorced from each others activities.
Low capacity of world scale basic petrochemical production facilities in Pakistan.
Complexity and low level of the technology involved in the chemicals production in
Pakistan.
High level of capital outlay required for the organic and inorganic chemical production,
so thats why industry needs foreign investment.
Highly cost Intensive project, market size limitations vis--vis world scale plants, no
sophisticated technology involved and insufficient current tariff spread are also main
reason for the growth and production of organic and inorganic chemicals.
The Caustic Soda manufacturing produces chlorine as a by-product which has limited
usage in the country. Only Engro Polymers is utilizing chlorine for the manufacture of
value added products i.e. PVC.
High cost of energy, non availability of natural gas and electricity hinders the production
capacity of the chemical industry.
High freight cost to export surplus capacity of chemical products.
50
Reliance on foreign engineering and construction companies for the commercialization of

locally developed or imported technologies.
Imports of second-hand highly energy intensive plants based on antiquated technologies.
Reliance on the development of resource based, low technology, labour intensive
products for export.
High prices of basic feed stock: Basic raw materials constitute major portion of cost of
production (30% to 60%) in the chemical industry. Pakistans chemical industry either
uses natural gas or crude oil as feedstock for manufacturing process. The fluctuations in
oil prices therefore affect the growth projections of the firms.
Fragmented nature of industry: The chemical industry is having a fragmented structure
with more number of units in small-scale sectors spread in various parts of the country.
The installed capacities in most of the small-scale units are smaller as compared to global
scales.
Low R&D levels: The level of R&D investments in the chemical sector is low at around
0.3% of total sales. The areas for strengthening of R&D in chemical industry include
improvements in manufacturing process for reduction in cost of production, application
development to diversify demand, and new product development.
Opportunities
Pakistan can utilize alternative resources such as natural gas availability, Thar coal
reserves and import of cheap natural gas from Iran, to produce basic petrochemical
building blocks (Naphtha cracker) from; gasification of coal, dehydrogenation of
associated gases and cracking of natural gas. This opportunity surely opens the gateway
for the development of Petrochemical industry in Pakistan, which will support the local
chemical & allied products industries in meeting their raw materials requirements and to
save the valuable foreign exchange.
51
Pakistan has surplus capacity of caustic soda available in the country, which need proper
marketing and industry to export.
While in the production of caustic soda; a large quantity of chlorine is produced as a byproduct which is used in the production of PVC pipes, if proper marketing opportunities
and handling procedure is provided, a large amount foreign exchequers can be earned by
Pakistan through this sector.
Threats:
Domestic production of chemicals hampered because of competition from other
countries, which have flooded the Pakistani market with cheap and better quality
products, especially in the fields of construction materials and household consumer
goods.
Consumption of organic chemical as a raw material for the industry in Pakistan is reached
at a sizeable level due to hike in the prices of petroleum
A high import of organic and inorganic chemical products from abroad is a threat for the
domestic chemical industry growth and production.
Dumping of Caustic Soda in the country results in the closure of the industry and loss of
foreign exchange and revenue.
52
10.
CONCLUSION
It is a general perception among the political leaders and policy makers that Pakistan should grant MFN
status to India. This would provide Pakistan a political mileage but before granting this privilege,
Pakistan would need to raise more substantive issues notably Indian non-tariff barriers, subsidies and
protective tariffs particularly in the chemical sector. Pakistan has almost granting something close to de
facto MFN status to India in the recent past, considering composition of both formal and informal trade.
In conclusion, there is a much to be gained from liberalizing trade in chemical sector between India and
Pakistan but the trade in this sector is in favor of India. Pakistan export only 36 tariff lines of chemical at
HS-6 digit level to India, which accounts about US$ 39.7 million, whereas on the other hand India
exports 325 tariff lines of chemicals to Pakistan of worth US$ 379 million. For sustained and high gains
from bilateral trade liberalization in chemical sector requires free movement of goods, capital,
investment and people etc. To keep on building this momentum both countries particularly Pakistan
should negotiate for the level playing fields in the area of chemical sector where the Indian government
provides subsidies, concessions, special incentives, international obligations and non-tariff barriers to
promote and protect its industry. For example, Indian government provides duty protection to its
domestic manufacturers of organic chemicals (phenol), Nutrient based subsidy scheme for fertilizer
industry as well as import of 250 tariff lines of chemicals are permitted subject to SPS regulations, BIS
certifications and provision of international protocol (Montreal protocol), CITES and multiple Indian
cosmetic, drug acts registration and certification etc. In recent negative list, Pakistan has included only
65 tariff lines of chemicals items in banned list, while India under SAFTA has placed 31 tariffs lines in
sensitive list for Pakistan. India in order to discourage imports of chemical from Pakistans has imposed
BIS certification regulation on Pakistans cement exports and anti-dumping duty on soda ash, which are
Pakistans potential export to India.
Besides above restrictions, both India and Pakistan through negotiations need to tackle their restrictive
visa regime, particularly single point entry and exit of businessman, police reporting. Additionally there
requires reforms in policies of both countries in regulations of cross border trade particularly for logistic
service providers such as trucks and railways etc. These issues prohibits free trade in goods, without free
movement of people and investment runs the risk of creating trade monopolies, which would result in
suboptimal gains from the expansion of bilateral trade between both countries.
53
11.
RECOMMENDATIONS
Due to absence of clear policy framework on the development of chemical sector with
any road map and benchmarks has resulted into growth, which has been haphazard and on shortterm need basis. The chemical sector has no benchmarks at this moment in terms of its total
productive capacity, sales turnover, contributes to GDP and taxes, manpower employed, value
addition benchmarks in comparison to global trends and other indicators of the sector.
Although the Engineering Development Board and the chemical industry has published
Chemical Vision 2030, a chemical policy so that the chemical industry could own the vision
and play its due role in the implementation process of these policies. Based on the assumption
through desk research on chemical sector, the following recommendations have been suggested
to further strengthen the chemical sector.
i)
Pakistan needs to create its own capability and achieve self-reliance in project design,
engineering and the construction management required for the commercialization of
technologies through joint ventures.
ii)
There is a need to enhance and develop chemical industry capability in the production of
medium and high technology based chemicals for export, alongside to the present
industrial structure based on low technology resource based products.
iii)
Government should provide suitable incentives to entrepreneurs for the development of

an export-oriented chemical industry.
iv)
Industrial Policy for Chemical Sector: A comprehensive and consistent industrial

chemical vision and policy is necessary for a period of at least next 20 25 years e.g as is
the case of India. The consistency of this policy needs to be ensured over its life.
v)
Monitoring and Implementation Mechanism: The progress on implementation of

various visions and policies needs to be monitored periodically and at the highest level in
the country and change made if parameters change.
vi)
Infrastructure: The existing infrastructure at Port Qasim, EPZs, Special and other
Industrial Zones needs to be made self sufficient as far as requirement of power, gas,
54
water and other relevant offsite facilities such as, waste water treatment etc are
concerned. The government therefore, must increase spending on the infrastructure
projects. Creation of such infrastructure facilities by the government shall reduce the
project cost and enhance their viability. The prospects of setting up industrial zones along
motorway should be seriously examined.
vii)
Technology Up-gradation
Develop technological base through local research and development.
Design and build strong industrial and engineering base through setting up design and
engineering institutes so that they can provide local engineering industry with the
engineering fabrication drawings.
Foreign designing and engineering firms may be asked to provide fabrication drawings of
all the plants and machinery.
A technology development fund may be created to encourage local scientists and
researchers for carrying out the R&D work.
Scientists and Researchers should be offered market based salaries.
Any restriction for obtaining foreign technology may be completely done away with.
viii) Cost of Utilities

Presently, the cheaper feed gas to the fertilizer industry is being cross subsidized by the
industrial and commercial consumers.
The development surcharge collected from gas producing fields is taken in the
consolidated government funds. This surcharge should be used to promote chemical
industry where special natural gas is the raw material.This upfront cost of providing
power, water and natural gas should be borne by the government to partially offset the
high capital cost of setting up projects in Pakistan.
55
ix)
Human Resource Development: Specialized courses within the discipline of chemical

technology and chemical engineering were need to designed in consultation with the
subsectors of the Chemical Industry like pesticides, Dyes and Pigments, Paints and
Varnishes, Paper & Paper Board and Glass etc.
x)
Development Fund: The government should develop a set up of a special development

fund for the Petrochemical and Chemical Industry to provide loans on easy terms.
xi)
Financial Health of Existing Industrial Investors: The good financial health of

existing industrial investors is a big motivation for the potential investors. The
government should identify the sectors of the industries which are operating below
capacity utilization and offer them special incentives to operate to the 100% capacity in
order to have low cost of production.
xii)
Quality Control and Environment Standards: The private sector may be encouraged
to come forward in various sectors to implement ISO standards and product
specifications by Pakistan Standards and Quality Control Authority (PS&QCA). This
shall re-enforce implementation of standards besides creating employment.
Government should encourage chemical industries to get ISO 14000 certification by
making it mandatory for all units.
xiii) Incentives for value addition of intermediate by products being exported

The Sugar Industry has big potential of value addition through conversion of molasses to
alcohol and ultimately to ethylene and Polyethylene or production of gasohol (gasoline +
20% ethanol).
Naphtha a byproduct from the refineries is presently being exported. Its value addition to
produce Petrochemicals need governments support and incentives.
Local caustic soda is very expensive as compared to international market because of
charging all cost of chlorine which is being wasted. Its appropriate utilization shall reduce
56
cost of caustic soda which is a raw material / intermediate raw material for a number of
industries.
xiv) Establishment of Chemical Clusters
Specialty chemicals are small projects with very high value addition. Government should
identify locations and provide all infrastructure, good residential, recreational facilities &
utility facilities to develop this area and encourage investors.
If a Petrochemical is to be based on associated gas containing ethane, Potohar appears to
be a good location. If we decide to follow the molasses route, a place in Sindh or Punjab
where large number of sugar mills are located may be ideal.
xv)
Re-location of Plants
Government should need to offer incentives for the re-location of chemical plants after
thorough survey of outmoded technology / residual life.
Provincial Governments should need to devise a set up for special fund to develop
infrastructure for exploration and utilization of local minerals like iron ore, phosphate
rock and manganese ore etc.
Government may set up committees for revival of closed down / sick units of chemical
industry and submit recommendations.
Government should need to allocate up to 10% of natural gas for setting up of industries
where basic raw material is natural gas like petrochemical complex based on production
of ethylene / polyethylene from associated gases. Government may consider special gas
fields to dedicate for chemical industries. Gas may be priced equivalent to competing
Middle East, Gulf countries & Saudi Arabia.
A strong database of various technologies and technology providers may be developed
for Chemical Industries.
Cascading of tariff should continue for industrial growth in the country.
57
Annexure I:
Pakistans Negative List of Banned Chemical Items from India (2012)
Sector
HS-Code
Description
CD%
28030010
Carbon black (rubber grade)
25
28030020
Carbon black (other than rubber grade)
25
28030090
- Other
25
Inorganic Chemicals
28070000
Sulphuric acid; oleum
10
(8 Tariff Lines)
28151100
Solid
20
28151200
In aqueous solution (soda lye or liquid soda)
28362000
Disodium carbonate
10
28363000
-Sodium hydrogencarbonate (Sodium bicarbonate)
20
29054400
- - D-glucitol (sorbitol)
20
29054500
- - Glycerol
20
29054900
- - Other
20
29152100
- - Acetic acid
25
29153100
- - Ethyl acetate
25
29153300
- - n -Butyl acetate
25
29153600
- - Dinoseb (ISO) acetate
20
29163600
- - Binapacryl (ISO)
10
29163910
- - - Ibuprofen
20
29163990
- - - Other
10
Albuminoidal
29242910
- - - Paracetamol
25
Substances
29334990
- - - Other
(4 Tariff Lines)
29349910
- - - Furazolidone
25
29349990
- - - Other
29350040
- - - Sulphamethexazole
25
29350050
- - - Sulpha-thiazolediazine
25
29350060
- - - Sulphanilamide
25
29394100
- - Ephedrine and its salts
25
29394200
- - Pseudoephedrine (INN) and its salts
25
29394300
- - Cathine (INN) and its salts
20
29394900
- - Other
20
29396900
- - Other
10
29411000
-Penicillins and their derivatives with a penicillanic
Rs.4000/MT
acid
58
29413000
-Tetracyclines and their derivatives; salts thereof
10
29414000
-Chloramphenicol and its derivatives salts thereof
10
29415000
-Erythromycin and its derivatives; salts thereof
10
29419010
- - - Cephalexin
20
29419040
- - - Cephradine oral
20
29419050
- - - Ingredients for pesticides
29419060
- - - Cefixime in bulk
15
29419090
- - - Other
10
32064910
- - - Master batches (coloured)
15
32064920
Pigments and peparations based on cadmium
15
32064930
- - - Pigments and preparations based on
15
32065090
- - - Inorganic products of a kind used as luminophores
15
32110010
- - - For leather
10
32149010
- - - Silicon sealant
10
32149090
- - - Other
20
32151190
- - - Other
20
33030010
- - - Eau-de-cologne
35
33030020
- - - Perfumes
35
33030090
- - - Other
35
33061010
- - - Tooth paste
35
Soaps, organic surface-
34011100
- - For toilet use (including medicated products)
35
actives agents
34011900
- - Other
35
(3 Tariff Lines)
34029000
-Other
25
35052010
- - - Starch based glues
20
35052020
- - - Dextrin based glues
20
35052090
- - - Other
20
35061000
-Products suitable for use as glues or adhesives, put
37013030
- - - Presensitized printing plates
15
(2 Tariff Lines)
37013090
- - - Other
20
38021000
-Activated carbon
10
Miscellaneous
38029000
-Other
10
Chemicals
38061090
- - - Other
10
(5 Tariff Lines)
38099200
- - Of a kind used in the paper or like industries
15
38237000
-Industrial fatty alcohols
15
Tanning & Dyeing

Chemicals
(8 Tariff Lines)
Essential Oils &

Resinoids
(4 Tariff Lines)
Albuminoidal
Substances
(4 Tariff Lines)
up for
59
Annexure-II
Pakistans Export of Top ten Organic Chemicals Potential in Indian Market in 2010 (US$ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian MFN
India
exports to
exports to
imports
potential
rates %
SAFTA
world
India
from
trade
Preferenti
world
al Tariffs
rate% for
Pakistan
Grand Total
41910
25742
9444510
15988
10
7.76
291736
Terephthalic acid and its salts
17865
10843
488171
7022
10
290315
ethylene dichloride
17718
12282
118315
5436
10
6.8
291735
Phthalic anhydride
1699
1533
55417
166
10
291732
Dioctyl orthophthalates
1657
111
1478
1367
10
290531
Ethylene glycol (ethanediol)
886
88
512154
798
10
292610
Acrylonitrile
750
750
126178
10
290339
Fluorinated, brominated ,acyclic
321
30089
321
10
6.8
hydrocarbon
291612
Acrylic acid esters
187
190165
187
10
291533
N-butyl acetate
102
31218
102
10
294190
Antibiotics nes
91
330643
89
10
Source: Trade Map Authors Own Calculations

Annexure III
Indias Export potential of Organic Chemicals to Pakistan in 2010 (US$ 000)
Product Code
Product Label
Grand Total
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistan
imports
imports
exports
potential
MFN
SAFTA
from
from
to world
trade
Applied by
rates%
world
India
Potential
Pakistan%
1721101
260666
8586928
798400
6.3
290243
P-xylene
353571
127622
426443
225949
294190
Antibiotics nes, in bulk
54702
4526
380496
50176
11.4
N/A
293499
Nucleic acids and their salts,
46303
13483
65557
32820
11.6
290531
Ethylene glycol (ethanediol)
234387
39
22944
22905
290511
Methanol (methyl alcohol)
27532
21792
21792
293339
Heterocyclic compds cntg pyridine
26981
6631
124051
20350
8.3
292690
Nitrile-function compounds, nes
50057
2909
22540
19631
60
292249
Amino-acids nes, and their esters;
20028
1763
22892
18265
292429
Cyclic amides and their derivatives,
21657
4014
31467
17643
N/A
291612
Acrylic acid esters
20860
14782
14782
293299
Heterocyclic compounds with oxygen
16473
3054
22044
13419
Source: Trade Map
Annexure IV
Pakistans Export Potential of In-Organic Chemical to India in 2010
Product
Product Label
code
(US$ 000)
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN rates
SAFTA
world
India
from
trade
Preferential
world
Tariffs
rate% for
Pakistan
Grand Total
29961
11358
2834190
11831
10
6.5
283620
Disodium carbonate
13117
9379
83523
3738
10
6.5
280610
hydrochloric acid
5517
621
621
10
6.5
282720
Calcium chloride
2837
1382
1382
10
6.5
283919
Silicates of sodium
2200
2093
2093
10
6.5
284700
Hydrogen peroxide
2148
1701
8160
447
10
6.5
282911
Sodium chlorate
835
11616
835
10
6.5
281700
Zinc oxide; zinc
547
5633
547
10
Sensitive list
peroxide
280300
Carbon Black
382
78765
381
283630
sodium bicarbonate
366
67
4336
299
10
6.5
Source: Trade Map (Authors own Calculations)

Annexure V
Indias top ten potential Inorganic chemical exports to Pakistan in 2010 (US$ 000)
Product
Product Label
Code
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports
imports
exports to
potential
MFN
SFTA
from
from India
world
trade
Applied
preferential
Potential
Tariff by
rates
world
Pakistan
Grand Total
423654
8902
2313918
108477
6.0
61
283329
Sulphates of metal nes
10049
86
37162
9963
282300
Titanium oxides
9059
43973
9059
283110
Dithionites and sulphoxylates of
9671
1832
15040
7839
238210
7328
7328
sodium
280920
Phosphoric acid & polyphosphoric

acids
281122
Silicon dioxide
5756
9793
5756
280300
Carbon (carbon blacks and other forms
5010
268746
5010
20
N/A
of carbon, nes)
283620
Disodium carbonate
4485
51774
4480
10
N/A
283319
Sodium sulphates nes
3303
5141
3303
10
284130
Sodium dichromate
4261
32
3266
3234
282110
Iron oxides and hydroxides
4052
35
3268
3233
7.5
283329
Sulphates of metal nes
10049
86
37162
9963
Source: Trade Map

Annexure VI
Indias Potential Export of Fertilizers to Pakistan in 2010 (US$ 000)
Product
Product Label
Code
Pakistan's
Sum of
Sum of
Sum of
Average
SAFTA
imports
Pakistan's
India's
Indicative
MFN
preferential
from
imports
exports
potential
Applied
Tariff
world
from
to
trade
by
Rates
India
world
Potential
Pakistan
to
India%
Grand Total
648402
1154
39901
24414
310590
Fertilizers nes,
13007
407
5943
5536
310210
Urea, wthr/nt in aqueous solution
239345
4588
4588
310530
Diammonium phosphate, in packages
313922
3151
3151
310420
Potassium chloride, in packages weighing
3017
25
8661
2992
310520
Fertilizers cntg nitrogen, phosphorus &
3177
204
7978
2973
potassium
310230
Ammonium nitrate,
1749
55
4289
1694
310221
Ammonium sulphate, in packages
1349
1726
1349
310430
Potassium sulphate, in packages
16745
1259
1259
310229
Ammonium sulphate/nitrate mixtures/
935
465
465
62
310100
Animal or vegetable fertilizers, in packages
310540
Monoammonium phosphate&mx
166
27
1249
139
38258
122
122
Source: Trade Map
Annexure VII
Pakistans Export Potential of top ten Paints & Dyeing chemicals in 2010 (US$ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN
SAFTA
world
India
from
trade
rates %
Preferent
world
ial Tariffs
rate% for
Pakistan
Grand Total
320890
Paints & varnish based on
28400
40
920519
28227
12927
51063
12927
10
2919
7738
2919
10
2701
22357
2694
10
Sensitive
polymers
320910
Paints& varnishes of
acrylic/vinyl poly,
320416
Reactive dyes and

preparations
320810
Paints & varnishes based on
List
2653
12189
2652
10
2570
58175
2566
10
Sensitive
polyesters,
320417
Synthetic organic pigments
list
320649
Inorganic coloring matter
1011
40116
1011
10
Sensitive
list
320620
Pigments and preparations
607
813
607
10
321519
Printing ink, nes
572
66843
572
10
320611
Titanium pigments
425
200588
425
10
321410
Mastics; painters' fillings
372
18734
372
10
320420
Synthetic organic
342
28
11861
314
10
Source: Trade Map Authors own calculations
63
Annexure VIII
Indias Export Potential of Tanning & Dyeing Chemicals to Pakistan in 2010 (US$ 000)
Product
Product Label
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports
imports
exports
potential
of MFN
SAFTA
from
from
to world
trade
Tariff
Preferential
world
India
Potential
Applied
Tariff
Code
by
Pakistan
Grand Total
315993
41971
1611794
216518
12.80909
320417
Synthetic organic pigments & preparations
25186
3985
435145
21201
15
N/A
320416
Reactive dyes and preparations
56722
18520
251487
38202
15
N/A
320412
Acid and mordant dyes and preparations
11587
5925
186113
5662
15
N/A
320419
Synthetic organic colourg matter nes,
11993
195
111053
11798
321290
Pigment dspr in a n-aqueous media
2844
101414
2841
15
321519
Printing ink, nes
7724
58477
7724
17
N/A
320420
Synthetic organic products used as
5082
574
53911
4508
20
N/A
fluorescent brightening agents

320414
Direct dyes and preparations
2149
834
52493
1315
15
N/A
320210
Synthetic organic tanning substances
15696
2794
41762
12902
320415
Vat dyes and preparations
32266
871
37419
31395
2.5
320411
Disperse dyes and preparations
12853
942
31812
11911
10
N/A
Source: Trade Map (Authors own calculation)

Annexure IX
Pakistans Export Potential of Essential Oils in 2010 (US$ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN
SAFTA
world
India
from
trade
rates %
Preferential
world
Tariffs
rate% for
Pakistan
Grand Total
330499
Beauty or make-up preparations
10227
19
307348
9873
3021
41951
3021
10
Sensitive list
nes
330420
Eye make-up preparations
1107
19
4542
1088
10
Sensitive list
330590
Hair preparations, nes
1086
16258
1086
10
Sensitive list
64
330300
Perfumes and toilet waters
935
33941
935
10
Sensitive list
330510
Hair shampoos
680
8305
680
10
Sensitive list
330290
Mixtures of odoriferous subst
497
37236
497
10
330610
Dentifrices
463
4997
463
10
Sensitive list
330720
Personal deodorants &
435
35376
435
10
Sensitive list
antiperspirants
330530
Hair lacquers
408
73
73
10
N/A-
330113
Essential oils of lemon
407
2547
407
30
11.6
Source: Trade map (Authors own Calculations)

Annexure X
Indias Export Potential of Essential oils to Pakistan in 2010 (US$ 000)
Product
Product Label
Code
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports
imports
exports
potential
MFN
SAFTA
from
from India
to
trade
Tariff
preferential
world
Potential
Applied
rates
world
by
Pakistan
to India
Grand Total
330290
Mixtures of odoriferous subst use as raw
90518
3238
900579
85915
28
28447
2580
105945
25867
10
materials in industry
330510
Hair shampoos
20592
24165
20592
35
330210
Mixtures of odoriferous substances for the
16683
25
16519
16494
10
5622
109494
5622
35
N/A
food or drink industries

330499
Beauty or make-up preparations nes;

sunscreen or sun tan preparations
330590
Hair preparations, nes
3306
62026
3298
35
N/A
330720
Personal deodorants & antiperspirants
2523
5575
2523
35
330300
Perfumes and toilet waters
2056
372
80668
1684
35
330749
Room perfuming or deodorizing
1495
5505
1495
35
preparations
330491
Powders, skin care,
1392
13629
1392
35
330119
Essential oils of citrus fruits, nes
1351
5398
1351
10
330420
Eye make-up preparations
1626
1188
1188
35
Source: Trade Map

65
Annexure XI
Pakistan Export Potential of Soap & detergents to India in 2010 (US$ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN
SAFTA
world
India
from
trade
rates %
Preferential
world
Tariffs
rate% for
Pakistan
Grand Total
340119
Soap&orgn surf prep,shapd,nes;
14853
21
307058
14832
10
7377
8454
7377
10
Sensitive
list
340111
Toilet soap&prep,shaped;
5698
7771
5698
10
Sensitive
List
340220
Surface-active prep, washing &
500
11998
500
10
cleaning
340211
Anionic surface-active agents
231
16242
224
10
340120
Soap nes
216
12651
216
10
340490
Artificial and prepared waxes, nes
174
29156
174
10
340213
Non-ionic surface active agents
170
14
19354
156
10
340510
Polishes, creams for footwear or
159
2669
159
10
123
4165
123
10
119
26781
119
10
leather
340130
Organic surface-active products for

washing the skin,
340290
Surface-active preparations,
washing and cleaning preparations,
nes
Source: Trade Map (authors own calculations)

Annexure XII
Indias Export Potential of Soaps & Detergents to Pakistan in 2010 (US$ 000)
Product Code
Product Label
Grand Total
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports from
imports
exports
potential
Applied
SAFTA
world
from
to
trade
MFN
preferential
India
world
Potential
rates by
rates for
Pakistan
India
18.4
155244
11825
322230
119646
66
340211
Anionic surface-active agents
40783
10022
84359
30761
15
N/A
340213
Non-ionic surface active agents
26130
1330
38940
24800
20
N/A
340220
Surface-active prep, washing & cleaning
12402
16201
12402
25
N/A
340319
Lubricating & similar prep
8133
14
8514
8119
20
340490
Artificial and prepared waxes, nes
7710
11475
7708
340290
Surface-active preparations, nes
7372
24757
7367
25
340399
Lubricating preparations & similar nes
5956
5368
5368
12.5
340111
Toilet soap & prep; papers &
5061
28480
5061
25
N/A
nonwovens
340120
Soap nes
3415
21193
3415
25
N/A
340130
Organic surface-active products &
2337
7995
2337
22.5
N/A
preparations for washing the skin,

340219
Organic surface-active agents, nes
2326
159
13179
2167
10
340391
Lub/oth prep, for treat textiles, leather,
21454
25
2061
2036
16
N/A
furskins etc
Source: Trade Map

Annexure XIII
Pakistans Export Potential of Albuminoidal Chemicals to India in 2010 (US$ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN
SAFTA
world
India
from
trade
rates %
Preferential
world
Tariffs
rate% for
Pakistan
Grand Total
9312
354
167657
6061
350300
Gelatin and gelatin derivs;
8473
354
5576
5222
30
11.6
350610
Glues/adhesives of all kinds
232
9489
232
10
350510
Dextrins and other modified starches
207
20521
207
50
Sensitive
List
350520
Glues based on starches,
169
935
169
30
11.6
350790
Enzymes nes; prepared enzymes nes
127
41370
127
10
350699
Glues or adhesives, prepared nes
59
37418
59
10
350691
Adhesives based on rubber or plastics,
45
35727
45
10
Sensitive
list
Source: Trade Map

67
Annexure XIV
Indias Export Potential of Albuminoidal Chemicals to Pakistan in 2010 (US$ 000)
Product Code
Product Label
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports
imports
exports
potential
Applied
SAFTA
from
from
to
trade
MFN by
preferential
world
India
world
Potential
Pakistan
rates for
India
Grand Total
35254
371
232699
34194
12.0
350790
Enzymes nes; prepared enzymes nes
16517
222
40437
16295
10
350691
Adhesives based on rubber or plastics, nes
8792
17
26122
8775
15
350510
Dextrins and other modified starches
2634
46
20152
2588
15
N/A
350300
Gelatin and gelatin derivs; isinglass;
1292
50175
1292
10
350699
Glues or adhesives, prepared nes
1291
18
6692
1273
12.5
350610
Glues/adhesives of all kinds
1033
1496
1033
20
350190
Casein glues; caseinates
1003
927
927
10
350520
Glues based on starches,
1463
850
850
15
350110
Casein
689
76715
689
10
350400
Peptones & derivs; protein substances
296
59
1463
237
350211
Egg albumin, dried
123
7258
123
10
Source: Trade Map

Annexure XV
Indias Export Potential of Photographic Chemicals to Pakistan in 2010 (US$ 000)
Product
Product Label
Code
Pakistan s
Pakistan's
Pakistan's
India's
Indicative
Average
imports
imports
exports
potential
MFN
SAFTA
from
from
to
trade
Tariff
preferential
world
India
world
Potential
Applied
rates fro
by
India
Pakistan
Grand Total
25999
146
36850
5001
5.2
370790
Chemical preps f photographic
2422
49
4551
2373
370110
Photographic plates & film
9421
13
910
897
370239
Photo film, nes in rolls,sensitisd,
1076
820
820
370130
Photo plates&film in the flat,
4733
249
249
12.5
N/A
370610
Cinematograph film, exposed & developed
186
28301
179
370710
Sensitisd emulsions prepard for photographic
783
60
192
132
68
370231
Color photo film
265
115
115
370210
Photographic film in rolls,
46
42
42
370400
Photo plates, film, paper, paperboard etc
41
59
41
370244
Film in roll,
2570
37
37
370320
Photographic paper, paperboard & textile
2203
37
37
Source: Trade Map

Annexure XVI
Pakistans Export Potential of top ten Miscellaneous Chemicals to India in 2010 (US $ 000)
Product
Product Label
code
Pakistan's
Pakistan's
India's
Indicative
Indian
India
exports to
exports to
imports
potential
MFN
SAFTA
world
India
from
trade
rates %
Preferential
world
Tariffs
rate% for
Pakistan
Grand Total
15837
1811
2335223
14026
12
8.4
382490
Chemical/allied industry preparations/prods nes
7267
141
271954
7126
10
380891
Insecticides
3484
1572
255768
1912
10
10
380991
Finishing agents, use in the textile
1950
65
36353
1885
10
380893
Herbicides, anti-sprouting products
1130
62524
1130
10
10
380993
Finishing agents & dye for leather industry
589
33450
589
10
382440
Prepared additives for ceramics, mortars,
329
21917
326
10
concretes
380290
Activated natural mineral products;
255
30
9238
225
10
381700
Mixed alkylbenzenes & mixed
185
109492
185
10
alkylnaphthalenes
380910
amylaceous subs for textile, paper, leather
135
849
135
30
381400
Organic composite solvents & thinners,
131
19238
131
10
Source: Trade Map
69
Annexure XVII
Indias Export Potential of Miscellaneous Chemicals to Pakistan in 2010 (US$ 000)
Product
Product label
Pakistan's
Pakistan's
India's
Indicative
Average
Pakistans
imports
imports
exports
potential
applied
SAFTA
from
from
to world
trade
MFN
preferential
world
India
Potential
Tariff by
rates for
Pakistan
India
Code
Grand Total
555192
50926
2069216
417522
8.1
382490
Chemical/allied industry preparations/
110776
9065
103069
94004
7.9
380891
Insecticides
82863
8696
481040
74167
10.5
N/A
380893
Herbicides, anti-sprouting products
57181
12176
112406
45005
381700
Mixed alkylbenzenes and mixed
47897
14472
251863
33425
alkylnaphthalenes produced by the alkyla

381121
Lubricating oil additives
45286
26264
26261
382319
Industrial fatty acids, acid oils nes
20626
47038
20625
13.8
N/A
380892
Fungicides
19424
342
148886
19082
382200
Composite diagnostic or laboratory reagents
40500
278
18940
18662
20
380991
Finishg agents,dye carriers&oth prep,nes,for use
27484
1757
18578
16821
7.5
in the textile indust

381190
Prepared additives for mineral oils
10061
17805
10059
381230
Anti-oxidisg prep & other compound stabilizers
5195
49979
5189
for rubber or plastics
Source: Trade Map
Annexure :XVIII
Indian regulation and documentation requirement for chemical sector
S. No
1
Regulations
Required Documents
Advance Authorization Application from
DGFT Prescribed Format as per Foreign
Industry for import of raw material against
Trade Policy
the export of Petrochemical items.

2
Applications for import of items covered
-do-
under Restricted List of Import

70
Project Import Certification for chemical
Complete application having CA
industry
certificate indicating expenditure incurred

on the project ,CE certificate about
essentiality
Approval of application/request from
Copy of Industrial Approval (IL/IEM).ii)
Petrochemical Industry for issue of Project
Details of investment made in the project
Import Certificate.
(Land, Building, and Plant & Machinery)

duly certified by CA.iii) Complete list of
plant & machinery required (imported and
indigenous) required for implementation
of the project. iv) List of capital goods in
four copies with detailed technical
specifications, make, model no., quantity,
CIF value etc. duly signed by
MD/Director of the firm. v) Capacity of
plant & machinery to be imported under
Project Import duly certified by Chartered
Engineer.vi) Copy of Performa invoice,
catalogue, letter of import of plant &
machinery under Project Import.vii) Any
other relevant information related with
implementation of the project
Issuance of Consent Certificate for
Complete application with export
import/export of chemicals covered under
notification
Rotterdam Convention
6
Issuance of recommendation for
Complete application along with End-use
import/export of SCOMET Items
certificate by the importing country
Central Insecticides Board & Registration
i) Copy of Industrial Approval (IL/IEM)
Committee on application/request from
ii)Details of production and consumption
Petrochemical Industry for issue of End
of raw material during the last three years

71
User Certificate
duly
iii) Copy of earlier approval from CIB, if
available.
End-use Certificate for Non-Insecticidal
Complete application along with CA
application in respect of chemical industry
certificate on production and
for chemicals appended to the Insecticides
corresponding consumption for the last 3
Act
years etc.
Issuance of recommendation on FIPB
Complete application along with copy of
proposals in respect of chemical industry
Board Resolution & No Objection

Certificate from the existing partner of the
Jt. Venture etc
10
Recommendation to Department of
SIA/FIPB prescribed format
Economic Affairs, Ministry of Finance on

application for Foreign Investment
Proposals in respect of petrochemical
industry
11
Issuance of recommendation for grant of
Complete application
industrial license in respect of hazardous

chemicals
12
Fixation of input/output norms on export
Complete application with manufacturing
of chemicals
process, CA certificate on production

consumption for the last 3 years etc.
13
Recommendation for R&D laboratory
Complete application
recognition
14
SIA/FIPB prescribed format
Industrial Policy & Promotion (SIA) on

application for Foreign Technology
Collaboration
15
FTA/CECA
Commerce on proposal for Free Trade

72
Agreements etc. in the chemical sector &

Petrochemical sectors
Source: Indian Chemical and petrochemical Ministry
Annexure XIX: NTBS filed against India

HS
Industry
Requirements
Country
Certification
Armenia
280000 Chemicals
Certification
Colombia Strict Registration procedures
280000 Chemicals
Registration
EC
280000 Agro
NTBs
Registration, permission for importation
chemicals
Registration/ testing & certification under

REACH (wef June, 2007) costs around Euro
85000 - 325000 per chemical, about 30000
chemicals covered. REACH mandates
gathering of information by manufacturers and
importers on properties of chemical substances
for safe handling and register this information
in a central database rune by European
Chemical Agency, Helsinki
280000 Chemicals
Immigration
Middle
East
280000 Chemicals
Customs
Syria
Fixed commission of 5% of the value of the

total import.
280000 Chemicals
Documentation UAE
Attestation of documents by UAE which is

costly /time consuming
73
280000 Chemicals
Regulations
UAE
Enquiries through middlemen wherein product

specifications are vague
280000 Chemicals
Certification
Korea
Prior Approval required
284400 Nuclear
Certification
Armenia
Authorization issued by the Government
Certification
Armenia
290000 Chemicals
Certification
Colombia Strict Registration procedures
290000 Chemicals
Registration
EC
material
290000 Agro
chemicals
Registration/ testing & certification under

REACH (wef June, 2007) costs around Euro
85000 - 325000 per chemical, about 30000
chemicals covered. REACH mandates
gathering of information by manufacturers and
importers on properties of chemical substances
for safe handling and register this information
in a central database rune by European
Chemical Agency, Helsinki
290000 Chemicals
Customs
Syria
Fixed commission of 5% of the value of the

total import.
290000 Chemicals
Documentation UAE
Attestation of documents by UAE which is

costly /time consuming
290000 Chemicals
Regulations
UAE
Enquiries through middlemen wherein product

specifications are vague
290000 Chemicals
Certification
Korea
Prior Approval required
330000 Cosmetics
Certification
Ukraine
Compulsory Certification i.e. (a) Certificate of

74
& Toiletries
acceptance of foreign certification by Derzh

Standard or (b) Conformance certificate by
Ukrainian agency. ISO 9000 standards adopted
by Derzh Standard on production systems.
Foreign certification recognition only to the
extent of international treaty obligations of
Ukraine.
360000 Matches
Minimum
Argentina If price below MIP, importer to validate
Import Price
invoice from Customs in origin country and

submit full set of original documents
380000 Insecticides/ Minimum

Fungicides
Argentina If price below MIP, importer to validate
Import Price
invoice from Customs in origin country and

submit full set of original documents
380000 Agro
Certification
Armenia
Standards
EC
Non harmonized maximum residue limit
chemicals
380800 Pesticides
(MRL)
75

32-Pakistan Trade Liberalization Sectoral Study On Chemical Sector

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32-Pakistan Trade Liberalization Sectoral Study On Chemical Sector

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PAKISTAN INSTITUTE OF TRADE AND DEVELOPMENT

COMPARATIVE ANALYSIS OF PAKISTAN AND INDIA CHEMICAL INDUSTRY

Working Paper Series

Classification of Chemical Industry: ....................................................................................... 9

Trend analysis of chemical Industry ...................................................................................... 12

Pakistan-India Bilateral trade of Chemical Industry ............................................................. 14

Pakistan Export to India: .................................................................................................... 14

b) Pakistan Imports from India.................................................................................................. 15

Organic Chemicals (HS 29) ........................................................................................... 18

a) Pakistan Exports to India: ..................................................................................................... 18

Pakistan Imports from India: ............................................................................................. 20

Inorganic chemicals (HS-28) ......................................................................................... 22

a) Pakistans exports to India: ................................................................................................... 22

a) Pakistan Imports from India .................................................................................................. 28

Indian policy/subsidy on fertilizers:................................................................................... 29

d) Indian Import Policy Conditions & Requirements for Fertilizers Chemicals....................... 30

Tanning or dyeing extracts (HS-32) ............................................................................... 30

a) Pakistan export to India ......................................................................................................... 31

Essential Oils and Resinoids/ perfume, cosmetic or toiletries (HS-33) ......................... 33

a) Pakistans Imports from India ............................................................................................... 34

Soaps/Detergents (HS-34) .............................................................................................. 35

a) Pakistan Exports to India: ..................................................................................................... 35

Albuminoidal substances (HS-35) ................................................................................. 37

a) Pakistan Exports to India ...................................................................................................... 37

Explosives Chemicals (HS-36) ...................................................................................... 39

Photographic chemicals: (HS-37) .................................................................................. 39

Miscellaneous Chemicals: (HS-38)............................................................................... 40

a) Pakistan Export to India ........................................................................................................ 40

Policies and Procedure for Chemical Industry ...................................................................... 43

Indian National Chemical Policy Initiatives .................................................................. 43

Trade defense laws/Regulations for Chemicals Industry ...................................................... 45

Indian Regulations & Documentation Requirement in Chemical Sector: ..................... 45

Indian NTBs on Pakistani chemicals ............................................................................. 46

NTBs Product-Wise: ...................................................................................................... 46

Revealed Comparative Advantages (RCA) in Chemical Sector ........................................... 47

SWOT Analysis of Pakistans Chemical Sector: .................................................................. 49

10. Conclussion ........................................................................................................................... 53

Global Chemical Outlook 2011 (UNEP)

Identification of Pakistans export potential, for the chemical sector, in India.

Identification of Indias export potential, for the chemical sector, in Pakistan.

Identification of NTBs that need to be addressed to facilitate exports, of the specific

Have trade defense laws been used in this sector.

Scope and Methodology

Classification of Chemical Industry:

Basic Chemicals: This category is also known as commodity chemicals which is

Life science Chemicals: include differentiated chemical and biological substances,

Specialty Chemicals: Products include electronic chemicals, industrial gases, adhesives

The chemical industry in Pakistan and India is classified as follows:

Classification of Chemical Industry in Pakistan

Classification of Chemical Industry in

1. Basic Chemicals: also known as

the classification of primary sector Industry

resources (ores) into primary products.

chemicals, bulk petrochemicals, other

In Pakistan this industry is well established,

chemical intermediates, plastic resins,

manmade fibers, dyes & pigments and

printing inks etc.

technologically advanced. In Pakistan the

2. Special Chemicals: also known as

primary chemical Industry for production

performance chemicals and are

derived from basic chemicals. The