The domestic chemical industry, currently $28 billion large, has the potential to become a $100 billion industry by 2010, registering a compounded annual growth rate of as much as 15.5 per cent, a latest industry report by global consultancy firm KPMG has said.

The KPMG report, commissioned by Chemtech, the leading chemical industry association, highlights the industry's potential to grow at a significantly higher rate than even the 8 per cent growth in the GDP projected in the 10th five-year plan, provided five key imperatives are addressed by the chemical industry.

These are formulation of aggressive growth strategies, industry consolidation, enhanced research & development activities, cost reduction and industry collaboration.

It suggests that the five imperatives will apply differently to each of the three main segments of the chemical industry -- basic, speciality and knowledge.

The basic chemicals industry comprises of companies specialising in petrochemicals, polymers and inorganic chemicals, among others, while the speciality chemicals industry covers segments such as adhesives and industrial gases.

The Knowledge segment, which, KPMG believes is critical for achieving the projected growth for the industry, comprises the agro-chemicals, biotech and pharmaceuticals segments.

Expanding on the Vision 2010 for the chemical industry, the KPMG-Chemtech report estimates the knowledge industry, which was worth only $5 billion in 2001, could grow to $42 billion by 2010, growing at a CAGR of 27 per cent.

The speciality and basic segments, on the other hand, could grow to $27 billion and $31 billion respectively (from $7 billion & $16 billion) by then.

Gautam Dalal, head of KPMG, underlined the need to stimulate demand in the domestic market in India, where per capita consumption of chemicals is even lower than many of the other developing nations, including neighbouring countries like Pakistan and Bangladesh.

He also said the growth in domestic consumption would play a bigger role than exports in helping the domestic industry fulfill the Vision 2010.

In the report, KPMG has also discussed an alternate base case scenario, where the Indian chemical industry will sustain its past performance and grow in line with the projected GDP growth rates as per the Tenth Plan.

In this scenario, the industry could grow to $60 billion by 2010, the report says.