Opportunities in the Chemical Manufacturing Industry in 2024
The chemical manufacturing industry is projected to double its size and reach $300 billion by 2025, clocking an annual growth rate of more than 10% according to the Chemicals Export Promotion Council (Chemexcil). India’s chemical manufacturing industry is extremely diversified as it covers more than 80,000 commercial products. Most of the modern manufacturing industries are dependent on the chemical industry ranging from soaps to automobiles. As the use of chemicals in our modern life is indispensable, now more than ever, the Indian chemical industry has grown rapidly in the past decade.
It is set to experience double-digit growth. The chemical industry is considered an important sector to propel the growth of the nation’s economy as it has a turnover of $160 billion growing at 100 basis points faster than India’s GDP. Read the complete blog to explore opportunities and start the chemical manufacturing industry.
Overview of Chemical Manufacturing Industry in India:
The Indian chemical industry has grown by more than 10% over the past 10 years. India ranks 14th in chemical products exports and 8th rank in imports The Indian chemicals and petrochemicals sector is expected to attract an investment worth INR 8 lakh crore. 22% of the total chemicals and petrochemicals market in India is captured by specialty chemicals. Chemicals Export Promotion Council (Chemexcil) chairman Satish Wagh has informed that the government is working on a draft chemical policy to meet the rising demand for chemicals and to reduce imports. India is revisiting its policies for the chemical and petrochemical sector to attract foreign participation.
The Indian chemical industry, led by the Indian Chemical Council (ICC), has set a goal of reaching $300 billion by 2025 which requires an investment of about $75-100 billion to decrease import dependency and improve chemical products exports. Bimal Gokul Das, additional vice-president of ICC has informed that to meet the Indian chemical industry’s raw materials requirements, India requires at least one new cracker every year with an investment of $1 billion each over the next 10 years to make basic chemicals such as ethylene, butadiene, propylene, and other derivatives required for the petrochemical industry.
Opportunities in The Chemical Manufacturing Industry in India:
1. AgroChemicals:
India is the fourth largest producer of agrochemicals globally and is expected to reach USD 4.7 billion by 2025. The Agrochemicals market is expected to grow at a CAGR of 8.6% between 2021 and 2025. Agrochemicals are broadly classified into pesticides, insecticides, herbicides, nematicides, fungicides, etc. The landmass available for agriculture is decreasing but demand for food products is increasing which is recognized as the major market driver for the agrochemicals sector. Integrating farming practices is also encouraging the farmers to use different agrochemicals to increase land productivity and maintain soil health. Increased government initiatives to assist farmers and rapid technological advancements are also propelling the growth of the agrochemicals sector.
2. PetroChemicals:
Petrochemicals contain hydrocarbons produced from the processing of crude oil which can be used in a wide array of industries such as plastic, agriculture, automotive, construction, packaging, and personal care. The petrochemical market is broadly classified into basic petrochemicals, intermediates, and other petroleum-based chemicals. Basic petrochemicals hold the largest market share which includes synthetic detergent intermediates, synthetic rubber, polymers, performance plastics, and synthetic fibers. Intermediates hold the second-largest market share in the petrochemicals segment.
3. Construction Chemicals:
The construction chemical industry in India is growing swiftly due to rising construction spending in the country and increasing government investments in infrastructure projects such as Make in India, Housing for All, construction of flyovers, metros, etc. Construction chemicals are segmented based on product type such as protective coatings, adhesives, sealants, protective coatings, industrial floorings, concrete admixtures, cement, grinding aids, waterproofing chemicals, etc. The construction chemicals market size stood at USD 43 billion in 2018 and is expected to touch USD 71 billion by 2026 due to the increasing population that requires more buildings to reside and work in.
4. Speciality Chemicals:
Specialty chemicals constitute approximately 20% of the total chemicals market in India by value and it is projected to reach USD 64 bn by 2025. Manufacturers of specialty chemicals can target segments such as agrochemicals, pharmaceuticals, textiles, polymers, etc. India is on the path to doubling its specialty chemicals market share in 5 years as China has been losing its cost-competitiveness and dominance in the market due to increased environmental costs and reduced government sops.
Government Policies to Boost Chemical Manufacturing:
- In the Union Budget 2023-24, the central government allocated US$20.93 million to the Department of Chemicals and Petrochemicals. This allocation underscores the government’s commitment to support and further develop the chemical sector.
- To improve domestic production, reduce imports, and attract investments, the government has set up a 2034 vision to propel the growth of the chemicals and petrochemicals sector.
- To encourage the production of agrochemicals, the government is planning to implement a PLI scheme with 10-20% output incentives for the agrochemical sector
- Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical KSMs/Drug Intermediates and APIs in the country with financial implications of Rs6,940 crore for the next eight years.
- 100% FDI is allowed under the automatic route in the chemical manufacturing industry which has attracted investments worth USD 20 billion between 2000 to June 2022.
Future Of Chemical Manufacturing Industry in India:
Due to disruptions in the supply chain in China, plenty of opportunities have opened up in the Indian chemical manufacturing industry. Additionally, Anti-pollution measures in China will also benefit Indian chemical manufacturers. Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIR) policy is expected to attract investment worth USD 280 billion by 2035. Special incentives through PCPIRs or SEZs to encourage downstream units will propel the growth of the chemical industry. If you are interested in starting and scaling up your chemical industry, register in SolutionBuggy and get all the services from the idea ignition phase to complete the industry setup.
Frequently Asked Questions (FAQs):
Q1: What are the key drivers behind the projected growth of the Indian chemical manufacturing industry in 2024?
Answer: The anticipated growth in the Indian chemical manufacturing industry in 2024 is propelled by several key drivers. These include robust government initiatives, increased investments, rising demand across diverse sectors, and the industry’s crucial role in supporting the nation’s economic growth. Factors such as policy reforms, technological advancements, and the sector’s resilience contribute to its promising outlook.
Q2: How can aspiring entrepreneurs benefit from government policies such as PLI schemes and incentives for the chemical sector?
Answer: Government policies, including Production-Linked Incentive (PLI) schemes, present significant opportunities for aspiring entrepreneurs in the chemical sector. PLI schemes offer financial incentives based on production targets, encouraging entrepreneurs to enhance manufacturing capabilities. These initiatives aim to boost domestic production, reduce dependency on imports, and create a conducive environment for investment, providing a favorable landscape for new entrants.
Q3: What role does SolutionBuggy play in assisting businesses within the chemical manufacturing industry?
Answer: SolutionBuggy serves as a catalyst for businesses in the chemical manufacturing industry by providing comprehensive assistance at every stage of their journey. From idea conceptualization to industry setup, SolutionBuggy connects businesses with expert consultants, facilitating services such as project assessment, regulatory compliance, market analysis, and strategic guidance. The platform acts as a bridge between businesses and industry experts, fostering collaboration and growth.
Q4: Are there specific challenges anticipated for agrochemical and specialty chemical segments in the coming years?
Answer: While the agrochemical and specialty chemical segments hold immense growth potential, they may encounter challenges such as evolving regulatory landscapes, environmental considerations, and the need for continuous innovation. SolutionBuggy’s network of experts can help businesses navigate these challenges by providing insights, market intelligence, and tailored solutions to ensure sustained growth in these dynamic segments.
Q5: How can SolutionBuggy contribute to the vision of making India a self-reliant hub for chemical manufacturing?
Answer: SolutionBuggy actively contributes to India’s vision of self-reliance in chemical manufacturing by connecting businesses with industry experts, fostering knowledge exchange, and facilitating collaborations. The platform enables businesses to access expertise, navigate regulatory frameworks, and implement best practices, empowering them to contribute to the growth of the domestic chemical manufacturing industry. Through its services, SolutionBuggy plays a pivotal role in building a robust and self-reliant chemical manufacturing ecosystem in India.
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