The chemical industry in India is a highly diverse sector that produces a wide range of chemicals, including petrochemicals, agrochemicals, fertilisers, polymers, and basic and speciality chemicals. Over the next five years, there will be a 9% increase in the nation’s overall need for chemicals. Here are a few of the compounds that are in high demand in the nation:
Polymers
Because more people are using plastic products, which frequently contain polymers, there is a rising need for polymers in the nation. A further element driving the demand for polymers is increased urbanisation. During the FY 2019–23, the demand for polymers is anticipated to increase at a CAGR of 8%.
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Particular Chemicals
More than other chemical industries, the demand for speciality chemicals is anticipated to skyrocket.
Demand has grown as a result of technological advancements that have created new specialised end-use applications. During the fiscal years 2019 to 22, the demand for specialty chemicals is anticipated to increase at a 12 percent CAGR.
Natural Chemicals
Across the globe, including India, the demand for green and environmentally friendly products is rising quickly. Both consumer (eco-cosmetics, eco-food components and additives, bio-plastics, etc.) and industrial segments exhibit a demand for these chemicals (eco-insecticides, eco-pesticides, bio-fertilizers, etc.)
Pharmaceuticals
As global health concerns spread, there is a rising demand for pharmaceutical compounds. Pharmaceutical chemicals are the starting point for producing pharmaceutical goods like pills, ointments, capsules, and more.
Given India’s low manufacturing costs and the high demand for these chemicals around the world, there is a lot of potential for their export.
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Impact of Chemical Demand on India:
Chemicals are currently playing a crucial role in several sectors of the Indian economy. These chemicals have been used for a wide range of uses, from manufacturing to research and development. In 2017, the chemical industry contributed to around 4% of India’s Gross Domestic Product (GDP). It is also estimated that chemicals contributed nearly 8% to the country’s export earnings and created more than 1 million jobs. Several new projects are underway or planned in the near future.
The chemicals and petrochemical sector in India is an important anchor for the manufacturing sector. The Indian chemical industry accounts for one-third of global exports, 50% of India’s total exports and 2% of world export revenues. It is a major driver of economic activity and a key component in the country’s export basket.
In 2021, India produced 23.98 million metric tons of chemicals and export earnings were $7.1 billion; 60% of these exports were to European Union (EU), Japan and SAARC countries. In 2016, chemical exports from India were 22% of the global value at $36 billion as compared to 72% from China.
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Chemical Trade with India
India ranks fifth in the world in chemical demand. The country is the second largest consumer of chemicals. In 2020, India was the second-largest consumer of caustic soda in Asia and seventh in the world. The most consumed chemical in India is Soda ash (40%) followed by Caustic Soda (38%) and Hydrochloric Acid (12%), according to the World trade report.
India imports petrochemicals, pharmaceuticals, plastics and pesticides from major global markets such as China, Japan and EU countries.
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Trends in Chemical Industry Production
Alkali chemicals enjoy the biggest production contribution in the chemical sector of India. Alkali chemicals have made up around 70% of the overall production over the years FY02–FY09, with organic chemicals making up about 20%. On the other hand, the output of dyes and dyestuffs has been continuously rising since FY04 due to their growing importance in industries including textiles, leather, plastics, and foodstuffs, while the share of dyes and dyestuffs and pesticides both remain incredibly low. However, the rate of increase in the manufacturing of organic compounds has been incredibly slow.
Inorganic chemical production increased continuously from FY03 to FY09 compared to alkali and organic chemical production increases, which caused this segment to develop at a CAGR that was somewhat healthier than the industry as a whole.
- Since FY03, soda ash has had the biggest share of the entire production of alkali chemicals. However, since FY08, caustic soda production has been outpacing soda ash production; its contribution rose to 38% in FY09 from 29% in FY04.
- Since FY04, carbon black has contributed more than 70% of the overall production in the organic chemicals segment, while out of the 19 products in the inorganic chemicals segment, methanol, acetic acid, and acetaldehyde account for more than 50% of the total output.
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The Indian chemical industry’s international trade is dominated by imports.
Chemical imports account for the majority of all significant chemical trade; since FY03, imports have made up about 68% of the overall volume of global trade. Around 3.4 MMT of main chemicals were exported by the chemical sector during FY08, while 7.4 MMT were imported. China and Saudi Arabia, as well as China and Africa, are the biggest importing and exporting nations, respectively. Due to the alluring incentives offered to Chinese chemical makers, their products are significantly less expensive on international markets and pose a serious threat to Indian chemical players. Organic chemicals dominated imports from FY03 to FY08 and made up an average of almost 57% of the overall volume of imports.
Due to strong local demand from end-user industries including the plastic and petrochemical industries, which have been seeing significant expansion over the past few years, organic chemicals accounted for almost 60% of all imports in FY08 at 1.2 MMT. However, due to outdated technologies, local players have been unable to match the rising domestic demand. As a result, despite the capacity for organic chemicals being added since FY04, production levels of organic chemicals have stagnated.
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How to start a chemical manufacturing industry?
Here is an easy 4-step process to begin your own small-scale chemical business for those who frequently question how chemical manufacturing business plans can be launched:
- Make a business plan first.
Based on market research and industry data, a business plan outlines the objectives, ambitions, and core values of a chemical company.
- Watch out for the opposition.
Prior to starting a chemical firm, it is crucial to be aware of the local rivals. Understanding the competitors’ advantages and disadvantages is necessary to know how to outperform them.
- Consult an authority like NIIR
High risks are associated with the chemical manufacturing process and its enterprises, but these risks can be reduced with the help of industry insights from seasoned businesspeople who are willing to mentor start-up businesspeople as long as they are not their direct competitors.
Frequently Asked Questions:
- What are the Current Trends in Chemical Demand in India?
- This question seeks an overview of the prevailing chemical industry trends and the types of chemicals that are experiencing high demand.
- Which Chemicals are Driving Growth in the Indian Chemical Sector?
- This question focuses on identifying specific chemicals or categories that play a significant role in the growth and expansion of the chemical industry in India.
- How Does the Demand for Chemicals in India Compare to Global Trends?
- This question explores whether India’s chemical demand aligns with or differs from global patterns and whether it is influenced by regional factors.
- What are the Key Factors Influencing the Demand for Chemicals in India?
- This question delves into the various factors such as industrial developments, government policies, and consumer preferences that impact the demand for chemicals in the Indian market.
- Are there any Specific Sectors or Industries Driving the Demand for Particular Chemicals in India?
- This question aims to uncover the role of specific sectors or industries like agriculture, pharmaceuticals, or manufacturing in driving the demand for certain chemicals within India.
These questions can help provide a better understanding of the dynamics and factors influencing chemical demand in India.
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- Select the path
Aspiring business owners have two options: they can either start their own company from scratch or purchase an established company. A startup gives someone the opportunity to create something based on their leadership style and objectives. However, due to its risky nature, financing the firm would be challenging. A lucrative business that has been purchased, however, has less uncertainty. If you have a great project report for a bank loan, it is simpler to secure investments and loans when it comes to funding.
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Reasons for Buying NIIR Report:
- Our research report helps you get a detailed picture of the industry by providing an overview of the industry along with the market structure and classification.
- Our report provides market analysis covering major growth driving factors for the industry, the latest market trends and the regulatory framework of the industry.
- Our Report provides an analysis and in-depth financial comparison of major Players / Competitors.
- Our Report provides indispensable buyers data with their company financials as well as the contact details, which can be an important tool in identifying the target customers.
- Our report provides forecasts of key parameters which help to anticipate the industry performance.
- We use reliable sources of information and databases. And information from such sources is processed by us and included in the report.
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