By: Rahul Koul
Last updated : March 24, 2021 11:35 am
There are nine megatrends impacting India and Indian chemical Industry providing a large headroom to grow
Indian chemical industry is one of the fastest-growing in the world. Currently, it ranks 3rd In Asia and is the 6th largest market in the world with respect to output after the USA, China, Germany, Japan, and Korea. The per capita consumption of chemicals in India is 1/10th of the world average, and even among developing countries, Indian consumption is low. This makes the country a very attractive destination to invest in and grow.
Each year India imports more than US $13 billion worth of petrochemicals, mainly for the want of feedstocks. With better supply chain solutions and technology, there exists an opportunity to manufacture petrochemical intermediates in India. One of the key challenges for Indian players is to get the right technology partner or players who will have to develop homegrown solutions.
What sets us apart
Calling the chemical and petrochemical industry as an enabler, Prabh Das, Managing Director & CEO HPCL - Mittal Energy Limited says it is poised to contribute to and share the growth story of India. “The growth of the Indian economy is expected to be strong and sustainable, with its large and growing domestic consumption. The major initiatives undertaken by the Government of India like Make in India, Smart Cities, Swachh Bharat, and Ease of Doing Business, etc., will catalyze and provide further impetus to the social and economic growth of India. The business sentiments in the country have certainly improved.”
As the youngest nation with a large workforce, it offers a low cost of manufacturing. It has a strategic location that provides access to both west and east and that makes it a strategic manufacturing location to supply to other countries. With very low per capita consumption, the Indian chemical industry provides a large headroom to grow. There are both organic and inorganic growth opportunities apart from huge scope to do innovations and customization for sustainable growth. The increasingly better business-friendly environment and infrastructure will also help in increasing the pace.
As per Deepak C. Mehta, Chairman and Managing Director, Deepak Nitrite Ltd, “India, even today is one-tenth the size of China in so far as the chemical industry is concerned. With improved infrastructure, road connectivity, coal, piped energy, India has achieved the eco-system as a formidable player in the chemical market. As India gains increased traction from major countries, looking at investment in the Indian chemical sector, both driven entrepreneurs and a positive government need to put their combined vigor to grow the chemical industry multi-fold in the coming decade.”
Key Trends
There are several global megatrends that would have an impact on the Indian economy, similarly, there are nine megatrends impacting India and Indian chemical Industry.
Growing per capita consumption: India's current per capita consumption of chemicals is 1/10th of global averages. Rising domestic demand from end-use industries will drive consumption.
Move towards greener solutions: Stricter environmental regulations from governments driving greener solutions. More and more consumers are now opting for greener solutions.
Nanotech and advanced polymers: Increased demand for advanced polymers with rising demand from packaging, new age mobility & electronic industries have given rise to emerging technologies such as nanotec.
Disruption through 3D printing: 3D printing technologies have caused major changes in the business model of the Indian packaging industry. A move from "Mass production" to "Mass customization" has been an emerging trend.
Emergence of technology platforms: Chemical companies plan to invest 5% of their annual revenues on digitization over the next five years. Online marketplaces are likely to be the major trend in India going forward.
Evolving B2B customers' preferences: Globally, Business to Business customers are increasingly looking for products with claims. Indian Business to Business customers’ requirement moving towards "Fit for Purpose" products & services.
Alternative feedstock: Indian companies are exploring alternatives like coal gasification, syngas, pet coke, etc. Coal India Limited (CIL) has completed a pre-feasibility study for producing 6.76 lakh metric tonne per annum of methanol through coal.
Mega-mergers & consolidation: Major deals like Dow -Dupont, Bayer-Monsanto, ChemChina-Syngenta could take innovative farming and crop protection techniques to a new level.
Access to strategic natural resources: Increased vertical integration to ensure access to natural resources has increased focus on the feedstock of natural origin.
It is well known that the chemical industry is the mainstay of industrial and agricultural development of the country and provides building blocks for several downstream industries such as textiles, papers, paints, soaps, detergents, pharmaceuticals among others. It is estimated that more than two million people are employed in this industry.
To achieve the target of the US $1 trillion manufacturing economy by 2028, the chemicals and chemical industry will be a key enabler and catalyst. With initiatives like the ‘Make in India’ program and Production Linked Incentive (PLI) scheme gaining steam, the key factors such as investments, innovation, and infrastructure are going to be the major thrust areas for chemical industry players.