Chemicals

The future of the chemical industry in India depends on how companies take advantage of the emerging opportunities. With its comprehensive approach and experience, Corpseed helps clients hold the upper edge by mapping client’s productivity, efficiency and quality, and anticipating the changing landscape to unlock sustainable growth and operational excellence.

The Indian chemical industry, which is led by the Indian Chemical Council (ICC), is extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilizers. 

Due to several global oil and gas majors turning their sights on downstream chemical opportunities, the focus on petrochemicals in India may be increased, and higher investment in the sector could ease feedstock challenges and boost self-sufficiency.

The structure of China’s chemical industry is changing due to stricter environmental norms, tighter financing, and consolidation. While these shifts may benefit select large players in the long run, they could cause uncertainty for international players that source chemicals from China. That could create opportunities for India’s chemical companies in certain value chains and segments, especially in the short term.

Trade conflicts have erupted around the world, especially among China, the United States, and Western Europe. These have led to shifts in global supply chains, affecting bilateral trade between China and the United States, with possible repercussions for other economies. Large chemical markets that remain accessible in this scenario could present opportunities for chemical companies in India.

Industry-wide, there seems to be a move toward prioritization of core businesses and consolidation on a greater scale, often through big-ticket mergers and acquisitions. For players in India, scale will matter even more, as it could help to fortify their competitive advantage.

Digital technology has established itself as a lever to enhance efficiency and productivity. Many companies worldwide are embracing digital’s potential; India’s companies could also tap into this opportunity to expand their profit margins.

Chemical companies could prioritize environmental sustainability to protect long-term shareholder value, while continuing to comply with local regulations.

Indian Chemical companies have been focusing on sustainable development. Water, environmental impact, raw materials, safety over lifecycle and energy use are some of the issues grappling the industry. Indian chemical companies are largely investing in innovative solutions to find appropriate answers to these challenges

With over 50,000 production facilities in the country, the chemical business in India is fiercely competitive. The majority of these companies work in the bulk chemical industry, where economies of scale are crucial to maintaining a low-margin company. This necessitates a large upfront capital expenditure, which is prohibitive for small businesses. As a result, the basic chemical sector has just a few major companies. The focus in the specialty chemicals sector is on technology and research and development (R&D) as well as patent strength, which will necessitate a large amount of spending power to invest in technology and R&D as well as the ability to withstand losses until a product reaches commercial scalability.

While India has the potential to compete internationally in specialized and value-added chemicals, a lack of bulk chemical capacity has been a major issue, as India lacks incentives for raw materials, infrastructure, and electricity when compared to nations such as China. The Indian government has taken steps such as requiring certificates for imported chemicals to avoid the importation of low-cost, inferior chemicals at the importer's expense.

Due to the rising disposable income, median age of population, urbanisation and growing penetration and demand from rural markets, there are a lot of opportunities in the chemical industry. 

The other growth driver is the shift in consumer preferences towards a healthier lifestyle and environment-friendly products and the shift in production and consumption towards Asian and Southeast Asian countries in all sectors leading to increasing demand for Chemicals and Petrochemicals.

The growth drivers of the sector in India include a large domestic and foreign demand for chemicals and petrochemicals. In relation to that Four Petrochemical Investment Regions (PCPIRs) policies are being implemented in Andhra Pradesh, Gujarat, Odisha and Tamil Nadu which is expected to attract investment of around INR 7.63 lakh cr. 

Currently, India is ranked 17th in the world for chemical exports (excluding pharmaceutical items) and 7th for chemical imports (excluding pharmaceuticals products).

Textiles and clothing, agriculture, packaging, infrastructure, healthcare, furniture, automobiles, information technology, power, electronics and telecommunication, irrigation, drinking water, construction, and a variety of other articles of daily and specialized usage, among other emerging areas, are all served by value additions in the petrochemicals chain. A huge pool of qualified science workers is also available in India. The country boasts a number of world-class engineering facilities as well as significant research and development skills. The per capita consumption of chemicals is lower in India, compared to western countries, therefore presenting immense scope for setting up export-oriented manufacturing units through new investments. 

The government has started various initiatives such as mandating BIS-like certification for imported chemicals to prevent dumping of cheap and substandard chemicals into the country and Production Linked Incentives scheme (PLI) for manufacturing of Advance Cell Chemistry Battery under Atmanirbhar Bharat Abhiyaan.

To promote investment in the chemical sector and make the country an important hub for both domestic and international markets, the Government of India has decided to attract major investment, both domestic and foreign, by providing a transparent and investment friendly policy and facility regime under which integrated Petroleum, Chemicals & Petrochemical Investment Regions (PCPIRs) may be set up.

The Department of Chemicals and Petrochemicals (DCPC), Ministry of Chemicals and Fertilizers, Government of India, has implemented a number of flagship initiatives to improve the overall competitiveness, quality and output of the chemical industry. Mandatory standards set by the Bureau of Indian Standards (BIS), public procurement policies for chemicals and petrochemicals, better trade intelligence, schemes for setting up plastic parks and adequate support for research and innovation are some of the notable initiatives that are catalyzing the industry’s growth. The Government is also addressing challenges related to the availability of feedstock, access to industrial infrastructure and common user facilities, complex approval procedures, skill development and product-quality standards.

Corpseed helps clients build capabilities and capture new opportunities while focusing on strategy, commercial and service excellence, cost transformation, and addressing powerful forces reshaping the chemicals industry.