The chemicals industry in India is at the cusp of remarkable expansion, giving a knee jerk reaction to several budding aspirants. As the manufacturing base is looked to be improved upon and thus less in imports, the chemicals sector seems to be an alien field in fostering one’s adventurous maverick. The growing scope of the Agro-Chemical and Pharmaceutical Industries, coupled with the Indian government’s active encouragement in the form of specific interventions and the setting up of special investment zones, the conditions are conducive for startups in a range of industries from specialty chemicals, green chemistry, petrochemical derivatives to digital ones.
Growth Potential
The share of chemicals and petrochemicals in India’s Gross Value Added (GVA) was 2.75% during the years 2020-21, representing an increase from 2.33% in the previous year. This growth is indicative of the importance of the chemical sector as well as its growing consumption in diverse applications within the economy. The output of key chemical and petrochemical products stood at 26,570 thousand metric tons (MT) in the first half of 2022-23, marking a CAGR of 4.61% between the years 2017-18 and 2021-22. This steady growth pattern gives a positive signal for the creation of new markets, thus enabling the provision of market space for the start-ups to develop and grow within a given period.
Increasing Demand Across Industries
Some of the distinctive industries that are responsible for the demand in chemicals include pharmaceuticals, agricultural products, building and construction, and finally consumer products. With an increase in the economy, the demand for different classes of chemical products heightens thereby creating scope for different start ups in the market. For example, specialty chemicals are needed by the pharmaceutical companies for making drugs whereas the agricultural sector utilizes agrochemicals for the protection and improvement of crops. Startups that can cater to these industries with innovative solutions will find substantial opportunities for growth.
Government Initiatives Driving Innovation
The Indian government has established several policies aimed at enhancing innovation and growth within the chemical industry due to their growing appreciation of the latter’s potential:
Plastic Parks Scheme
As part of the Plastic Parks Scheme, the government has sanctioned the development of ten plastic parks in several states across the country. These parks are concept locations with world class infrastructure and central facilities for plastic processing and other related industries. This initiative is beneficial to already existing players and more importantly gives a perfect springboard to startups wishing to break into the plastic processing industry. This also provides common amenities which eases the entry of new entrants and enhances the interdependence of the players in the industry as their common facilities can be utilized by all the players.
Centers of Excellence
In a further bid to deepen the creative potential of the Regions, 13 Centers of Excellence (CoEs) have been created in leading educational institutions throughout the country. During their activities, these CoEs are engaged with sustainable polymers, specialty chemicals, and advanced materials, and provide the needed technologies to the young firms. The firms cooperating with these centers are able to obtain specialized knowledge, finance its research facilities and take part in research together with these centers. This environment inspires new ideas that consider both the demand and supply sides of the equation as well as the relevant regulation.
Petrochemicals Research & Innovation Commendation Scheme
Thanks to The Petrochemicals Research & Innovation Commendation Scheme, there comes recognition of as well as promotion of research works in the petrochemical sector. The government is also optimistic that these improvements will lead to increased innovation and business development in this important sector by providing them with a platform to demonstrate their improvement. Startups that engage in any R and D activities are likely to receive accolades and financing, which enhances their visibility and credibility in the market.
Investment Regions Spurring Growth
As a means of enhancing the growth of the chemicals sector, the government is in the process of building four Petroleum, Chemical and Petrochemical Investment Regions (PCPIRs) which will be located in Andhra Pradesh, Gujarat, Odisha and Tamil Nadu. These investment zones are expected to raise up to Rs. 7.63 lakh crores and provide jobs to around 33.83 lakh people. The creation of such investment regions enables access to desperate infrastructure, raw materials, and a potential clientele for such startups.
Infrastructure and Resource Availability
Also, the PCPIRs aim at a cluster development of chemical manufacturing activities with the pooling of resources. The start-up companies also make use of these resources that include utilities, transport and logistics that are important in such centers. Being located within such organized zones helps the start-ups to efficiently conduct their business operations at lower operational costs which in turn enables them to channel their attention on creation and expansion rather than waste it on overheads.
Related Videos on: Chemicals (Organic, Inorganic, Industrial)
Promising Areas for Startups
It is, therefore, logical to say that considering the changing nature of the chemicals sector, there exist several attractive sectors that are viable for anyone including the start-ups:
Specialty Chemicals
The marketers-driven demand of specialty chemicals in sectors such as automotive, electronics, consumer goods, etc. is on the rise. Start-up companies can manufacture some of the high-value specialty chemicals customized for certain purposes and applications to provide products that provide a better offer in these industries than what is currently available. One of the changes coming about is the changing demand for specialty chemicals.
Green Chemistry
Sustainability, as well as environmental considerations, has expanded its scope to great potential in green chemistry. The perception is that if a startup can make certain advances in the chemical processes or even the products of chemicals such beginners work for the good of the environment in which they operate. Therefore, by using raw materials and resources that are sustainable and reducing waste, these start-ups can develop and rear the green economy.
Petrochemical Derivatives
In the line of growing demand for the petrochemicals sector, there are places for petchem start-ups in further processing of petchem, that is concentrating their practices on product-centric development. From structures made of these materials to their utilization in clothes, there is a huge scope of growth in this segment and many players can win with original products.
Digital Solutions
The infusion of chemicals with digital technology opens up possibilities for start-ups to look for creative solutions around process improvement, effective supply chain management, and quality assurance. Startups achieve operational efficiencies and make more informed decisions by adopting new technologies such as Artificial Intelligence, the Internet of Things, and big data analytics, which improves the value of their offerings.
Recycling Technologies
With the increasing focus on the circular economy, there is a considerable competitive advantage, particularly for businesses that market chemical recycling or upcycling technologies. As positive social and economic expectations support these aspirations, within industries, developing efficient innovative recycling technologies may become necessary to ensure sustainable development across industries.
Conclusion
Startups and new investments are transforming the chemical industry in India into fertile ground. Entrepreneurs can establish profitable businesses in this high-growth sector due to government assistance, and the ever-expanding universe. You can also regard it as a challenge because the sector is still young and requires more flexibility. And innovative strategies from the players in the market. In addition, new and proactive companies are likely to be key players in the future of the sector. Startups can focus on applications in the chemicals space. Such as specialty chemicals, green chemistry, petrochemical derivatives, digital technologies, and recycling. This will not only help the startups in growing the chemicals industry but also, create a positive impact on the economy through sustainability and innovation.
Everything considered, the Indian chemicals market holds great potential prospects for businessmen. With the growth statistics being on the positive side, government policies being supportive and the provision of modern solutions being higher than ever, it is time for entrepreneurs to join this booming sector. Their entrepreneurial and innovative skills plus the resources they have will make the entrants in the Indian chemicals industry who are concerned about sustaining the business success in the present seeking better solutions for the future.
For any inquiry on starting this Industry: Visit NPCS