F&S Projects Healthy Growth of Indian Chemical Industry

The Indian Chemicals Industry earned revenues in the range of USD 155-160 billion in 2013. It is likely to grow at a rate of 11-12 per cent in the next two to three years. Though commodity and bulk chemicals are likely to experience slow growth, owing to reduced industrial output, the specialty chemicals segment should show considerable growth.

Personal care ingredients and additives, knowledge chemicals like Active Pharmaceutical Ingredients (APIs), paints and coatings, and construction and water chemicals are some of the segments that are likely to perform well. Even in 2013, these sectors showed good growth and companies in this segment have been investing and expanding.

The specialty chemicals sector is characterized by requirements for high-value products, high-volume requirements with expanding customer base, a product-driven market, and addition of new participants at various levels of the value chain. Overall, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of 13-14 percent. The sector forms about 15-16 percent of the total chemical industry; dyes and pigments, leather chemicals, construction chemicals, personal care ingredients, and other specialty chemicals form part of the sector (this excludes pharmaceuticals and agrochemicals). Product customization and understanding of unique customer needs has been one of the key success levers for the Indian chemical industry. In terms of production value, the specialty chemicals sector forms about 18-20 percent of the total chemical production in India.

Though increasing regulatory requirements and raw material price fluctuations (India is dependent on imported raw materials) have posed challenges for manufacturers, exports have been increasing at a rate of 8-9 per cent. The growth is likely to continue due to a good and established customer base for specialty and niche products.