Opportunities in Chemical Manufacturing Industry in 2023
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 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 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 and is set to experience double digit growth. Chemical industry is considered as 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 to start the chemical manufacturing industry.
Overview of Chemical Manufacturing Industry in India:
The Indian chemical industry is growing at more than 10% from 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 it 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 recognised 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:
Petrochemical contains hydrocarbons produced from 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 holds the largest market share which includes synthetic detergent intermediates, synthetic rubber, polymers, performance plastics and synthetic fibers. Intermediates holds 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 increasing population that requires more buildings to reside and work in.
4. Speciality Chemicals:
Speciality chemicals constitutes approximately 20% of the total chemicals market in India by value and it is projected to reach USD 64 bn by 2025. Manufacturers of speciality chemicals can target segments such as agrochemicals, pharmaceuticals, textiles, polymers, etc. India is on the path to double speciality 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:
- The government has allocated USD 27 million under the union budget 2022-23 to the department of chemicals and petrochemicals.
- 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 production of agrochemicals, the government is planning to implement PLI scheme with 10-20% output incentives for the agrochemical sector
- To promote bulk drug parks, the Government has announced PLI schemes worth INR 1,630 crores.
- 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 to start and scale up your chemical industry, register in SolutionBuggy and get all the services from idea ignition phase to complete industry setup.
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