Chemical Industry Outlook
Overview (mixed outlook, end market scenario, trends in raw material markets, opportunities, weakness)
Characteristics
- Highly dispersed and fragmented market scenario
- Increasing per capita consumption level
- Limited emphasis on export owing to high-volume consumption at domestic markets
- Higher cost of capital and import duties leading to low competitiveness and low focus on Resource & Development.
Key Sectors
- Organic Chemicals
- Inorganic Chemicals
- Bulk Drugs
- Petrochemicals
- Fine and specialties
- Agrochemicals
- Paints & Dyes.
One of the most diversified and rapidly growing industries across the globe, the chemical industry comprises companies specializing in the processing and refinement of chemicals, especially agricultural and industrial chemicals, gases, and other intermediate products. These consumer goods find utilization as building blocks in diverse industries including agro based chemical industries, pharmaceutical industries, fertilizer industries, textile industries, dye industries, cosmetics industries, plastic industries, and others, where they are employed in the manufacture of end use items like dyes, pharmaceuticals, pesticides, cosmetics, pigments, plastics, synthetic rubber, etc.
If we take into consideration the Indian chemical market scenario, we will see that the chemical industry has come a long way and made considerable progress in the last few years. A major driver contributing a lion's share to the growing economy of the country, it is a matured market comprising many chemical companies having streamlined and well-structured systems and operations. While most of the larger chemical companies in India specialize in a wide array of chemicals and allied products (bulk chemicals), there is also another broad, notable, and widely fragmented market comprising medium-scale and small-scale chemical manufacturing units, most of them developing fine and specialty chemicals. Both the markets in their own ways address requirements of different industry verticals like natural gas, metals, minerals, air, oil, etc. These verticals utilizing primary products of the chemical companies eventually introduce almost 70000 new secondary products in the market, which are consumed in bulk quantities by customers from all strata of the society.
Such large scale chemical consumption in the country stems from the steep rise in disposable income in recent years. This fact is well visible in India's GDP as well, which has escalated to 13% from a mere 9%. The government of India has also initiated a slew of policies and special economic zones centering on the petrochemical sector with a view to realign the Indian chemical market as a whole. Thus, with slash in tariffs and reconstruction of the existing industrial structure, the Indian chemical industry is on its way to experience a major growth trajectory in coming years.
Today, there are many chemical manufacturing companies who constantly guided by product innovation, diversification of operations and quality improvement are marking strong presence not only in India but in various overseas destinations as well. Supported by ongoing developmental policies and measures undertaken by these chemical companies, the chemical market of the country is expected to achieve around USD 100 billion in the upcoming years. Groundbreaking technology, extensive research capabilities, backward and forward linkages, development of domestic capacity to decrease the dependence on imports are a few pivotal factors that require immediate attention for the Indian chemical industry to prosper further in the international chemical market scene.
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