Indian Chemical Industry has a diversified spectrum of the manufacturing base covering 80000 plus commercial products belonging to varied sectors. The industry is broadly categorized into Bulk chemicals, Agrochemicals, Petrochemicals, Specialty chemicals, Inorganic chemicals, Polymers, and Fertilizers.
Over the years, the industry’s consistent value creation has promoted itself to the sixth position among the world’s top producers of chemicals. This particular industry employs more than 2 million people of the country, apart from manufacturing growth.
Besides the growth opportunities found in the Indian Chemical Industry, there are several difficulties in the core of the industry that impedes the progress towards its possibility to compete at international platforms. Some of the most frequent challenges confronted by the industry are explained here.
Challenges Confronted by Indian Chemical Industry
1. Scarcity of Raw Materials
A massive shortage of quick accessibility of raw materials is identified as a critical challenge that hampers the industry’s growth prospects. Both organic and inorganic chemical industries’ progress is jeopardized due to high-end shortages of feedstock. Some of the primary raw materials, such as naphtha and natural gas, are available at expensive rates. In contrast, the same items are found in abundance in the Middle East, China, and South Asian countries. As a result, the shortages keep the country uncompetitive at a global chemical market.
2. Procuring Basic Chemicals via Imports
The most noticeable challenge in front of the Indian chemical industry is the efficient and ample availability of affordable chemicals through imports. The Indian government has waived off taxes and entry barriers on the imports of many chemicals. In response, a vast improvement is observed in the imports of several chemicals easily accessed from global markets at meager prices.
3. Lack of Adequate Infrastructure at Remote Locations
Geographically, India’s primary chemical industry is located and established beside Gujarat’s western coast. Whereas, the actual need for chemicals lie in the southern and eastern parts of the country. Eventually, this leads to expensive logistic facilities, which further adds a layer of costs that leads to chemical price hikes. Moreover, the enterprises encounter with so many unidentified infrastructural challenges. Some of them are insufficient facilities at ports, poor pipeline connectivity, inadequate power supply, and disordered railway stations.
4. Higher Taxes and Elaborate Regulations
Enormous duty taxes are levied on several raw materials. These taxes sometimes exceed the tax imposed on ready-made products.
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The chemical industry of India has got highly disappointed in the manufacturing sector. The core reason is no easy access to the raw materials supplied at higher prices than the overseas market. And the imported feedstock has no duties and taxes attached to their prices.
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Key Developments of Indian Chemical Industry
The key players of the Indian chemical industry have put their focus on sustainable development. In tune to the same, the reports say that in 2018-19, the chemicals industry’s market size had stood to $178 bn. A renowned chemical group of companies initiates some of the significant developments observed recently in the industry.
1. Investments in Innovative Solutions
Intending to combat the industry’s invincible challenges such as water, raw materials, lifecycle safety, and energy resources usage, the chemical companies have come up with innovative solutions. For instance, to enable water recycling, the “waste to wealth” reverse osmosis technology program is introduced by Kanoria Chemicals & Industries Limited (KCI) at its Ankleshwar plant. On similar lines, the Arulpuram plant at Tirupur and Bristol-Myers Squibb adopted such technologies for water conservation and waste management programs.
2. Availability of New Products with Changing Requirements
The development of India’s chemical industry has taken place in innovative product offerings. With the changing requirements of the market, various new products in the segment of textiles have taken place. Bio-diversity for natural dyes and the development of an eco-friendly methodology for synthetic dyes has proven to be a successful initiative. As part of the R & D strategy, companies like DuPont and Tata Chemicals have set up a knowledge center in India that focuses on green technologies for refinery procedures. Besides, a company like Shanti Inorgochem Pvt. Ltd is a pioneer and a leading player in the manufacturing inorganic chemicals. Being the largest producer of Sodium Bisulphite Solution, it contributes to India’s growth by exporting its products to the UAE, Kuwait, Malaysia, Venezuela, and North America.
3. Other Growth Drivers
In addition to the above developments, various growth aspects have played a key role in developing the chemical industry.
Opportunities and Development of Chemical Industry in India
As a consistent contributor to the values, India’s chemical industry will remain the most attractive hub of opportunities. The worldwide trends leading to the global crisis has opened new avenues for Indian chemical companies.
The chemical players are now set to tap the industry’s potentials that can shape the chemical industry growth in India. From the macro-level perspective, even though the short-term is visualized to pose a challenge, the country’s long-term growth story remains optimistic for the chemical companies.
1. Growing Requirement for Value-Added Products
There will be a growing need for value-added chemical products in the forthcoming years. Items such as biodegradable polymers and performance plastics are predicted to be in maximum demand because of changing environmental factors. The chemical industries in India will foresee a new opportunity coming up that will ensure the vast demands of these value-added chemical products.
2. Gasification of Coal
India is blessed with abundant coal mines. This scenario turns out to be an excellent opportunity for the Indian chemical industry. The production houses can extend its petrochemical and chemical manufacturing through the aid of gasification technology. Presently, there is a raising need for petrochemicals. As a result, more and more chemicals can be generated with this technology. In this manner, India would save on the imports done for acquiring such products, because the same can be produced within the country.
3. Enhancement of Exports
The Middle East, Africa, and the Asia Pacific countries are considered to be the fastest-growing zones. This scenario can be turned into a lucrative opportunity for the Indian chemical industry. As compared to the European and American countries, these nations can provide considerable growth and development to India’s big and small chemical industries. The rising markets on a global market will serve as a gateway to modernization into exports for India.
4. Establishing Special Economic Zones at the Global Level
Countries such as Iran, Myanmar, and Mozambique can become SEZ establishment hubs for India. The chemical plants can be placed into these countries due to the cheaper availability of raw materials for the chemical industry. Besides, cheap and duty-free imports will enable additional utilization of the resources.
Moving Forward – India as an Emerging Chemical Hub
The future of the Indian Chemical Industry is bright and sustainable. With the closure of several plants in China and the European Union, the top Indian chemical companies shall continue to acquire great benefits. Irrespective of everything, the company is geared up to improvise the quality and output of Indian products. The international markets now see India as a chemical supplier.
The experts have a mixed review of the chemical industry’s growth due to the current situations of 2020. However, India’s chemical industry is set to grow exponentially with substantial capital investments and supportive government policies.