The chemicals industry in India has been witnessing a steady growth in the recent past and in a no Covid scenario, it was expected to become worth $304 billion by 2025. India is the 14th largest exporter and 8th largest importer of chemicals. Making over 80000 commercial products, India has been leveraging the advantage of being in close proximity to Middle East which is the world’s source of petrochemicals feedstock. What has also given a boost to the growth of this market is the 100 percent FDI allowed by the government through automatic route (except in the case of hazardous chemicals).
If we look at the major contributors, alkali chemicals are the most produced chemicals in India, comprising 69 percent of the total production of chemicals by the Indian industry. When it comes to petrochemicals, polymers are the front runners making up 61 percent of the total petrochemicals produced by the industry.
Although the pandemic has changed the forecasts of all industries, if we assess the forecasts in a pre-Covid scenario, then petrochemical demand was slated to grow at 7.5 percent with polymer demand growing at 8 percent. At the same time, the agrochemicals demand is believed to grow by 8 percent and of specialty chemicals by 12 percent.
“Various sectors are witnessing big changes. For example, the automobile sector will see demand for batteries and the Indian industry is ready to take up this challenge, provided the government supports it with long-term and short-term policy initiatives and required infrastructure,” said Bimal Gokul Das, Additional Vice President of Indian Chemical Council to Business Today.
Demand and Growth Drivers
In a time when global oil and gas majors are looking to leverage downstream chemical opportunities, it may signal an increased focus on petrochemicals in India, which can ultimately make India self-sufficient by allaying the concerns pertaining to feedstock. With the changing environment norms and geopolitical developments, several international players that procure chemicals from China are now looking for an alternative. This could spell massive opportunity for Indian chemical companies in several value chains and segments, at least for the near future. Another significant trend emerging in the sector is the progress and upscaling through mergers and acquisitions. Indian chemical companies in this scenario stand a good chance of joining hands with global players and increasing their market share across the world.
Last but not the least is the influence that digital technologies have made on the sector, helping it improve efficiency and compete with global companies in terms of operational standards.
