The Indian chemical industry is poised for growth. The country’s central location and abundant natural resources offer an excellent opportunity to become a major player in the global chemical market.

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India has an established, low-cost manufacturing base that can be leveraged for the benefit of its chemical industry. Furthermore, India’s population and the labour pool are young and highly skilled with over 20% of the population having a tertiary level education according to Forbes 2022 report. The country’s human capital is still growing, and therefore more highly skilled employees will continue to come.

India is positioned as a key market in Asia, and its chemical industry is set to grow rapidly in the coming years. This growth will be driven by the supply chain (i.e., the companies involved in chemical procurement) and the demand of the industry. Once the supply chain becomes stronger, it should increase the competitiveness of Indian chemical companies, which will also improve their profit margins.

The global chemical market is highly competitive and globally integrated, with an estimated demand of $5.31 trillion by the year 2025. In order to respond to this, Indian companies will have to enhance their manufacturing capacities and address the high cost of raw materials in the country.

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Indian chemical companies will also have to focus on their research and development (R&D). Most Indian companies are already in need of advanced technology that can help them improve their manufacturing processes.

According to the Organisation for Economic Co-operation and Development (OECD), India is one of the top five countries in terms of growth potential in the chemicals and plastics industry. The OECD expects that Indian chemical production will double in the next ten years, which is faster than any other country.

The global chemical market currently has a $2 trillion capital base, with an expected 10% annual growth rate over the coming years. The demand for materials from emerging markets like India, China and Brazil will drive this growth.

In recent years, India has been experiencing a boom in the chemical industry. With an increase in demand for plastics and other goods, more than 50 new plants are planned to be built across the country by 2020. This would create around 100,000 new jobs.

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Every year the Indian chemical industry exports between $70 billion and $100 billion worth of goods around the world. India’s total imports of chemicals increased from 8% to 19% from 2010-2013. India’s chemical industry has been growing at a rate of 11 – 14% annually.

India’s domestic market for plastics is the second fastest-growing in the world. India produces about 3 billion pounds of plastic per year. The chemicals that compose these plastics are imported from other countries, including the United States, Germany and Japan. Chemicals make up 8% of India’s total trade volume, with imports making up 2/3 of that percentage.

In 2014 alone, India imported $9 billion worth of chemicals from China. With an iron grip on the Indian market, China is expected to increase its role in the Indian chemical industry.

Although there are a few chemicals that are mined by the government, India houses many privately owned units. These units usually get their raw materials from other countries and then process them, which means that India relies significantly on imported chemicals and fuels.

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There are 5 key factors that will determine if chemical industries in India will grow:

a) Raw Material Prices: Chemical companies need raw materials at affordable prices in order to produce chemicals.

b) Access to Government Raw Materials: India has the potential to be a major supplier of chemicals to its neighbouring countries, however, the lack of government-owned raw materials could hinder that growth.

c) Fossil Fuel Prices: Companies need cheap oil and gas in order for them to stay competitive against other countries.

d) Infrastructure: Infrastructure plays a crucial role in the development of chemical industries as companies need proper roadways and ports for exporting their products.

Sectoral Scenario

Currently valued at $178 billion, the Chemicals and Petrochemicals business in India is projected to reach $300 billion by 2025.

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Indian Market Outlook:

India is the sixth-biggest chemical manufacturer in the world, and the industry of chemicals & petrochemicals accounts for one of the largest portions of the GDP of the entire nation. More than 80,000 commercial items are part of India’s highly varied chemical sector. According to the FICCI research, the overall annual output for the chemical sector was US$163 billion in FY18 or 3.4% of the worldwide chemical industry. India produced 27,847MT of key chemicals and petrochemicals in 2018–19, a rise of 4.15% from 2017–18. Similar to how Alkali chemicals have the largest contribution to the chemical industry, accounting for about 69% of the overall production. Additionally, the manufacture of polymers comprises around 61% of all basic main petrochemical production.

India has low per-capita usage of chemicals (one-tenth of the global average). Over the coming ten years, there will likely be a rise in the demand for chemical products due to rising disposable income, population growth, and a society that is gradually moving toward the middle class. Demand for petrochemicals is anticipated to increase at a CAGR of 7.5% from FY 2019 to FY 23 while demand for polymers is anticipated to increase at an 8% rate. With an 8% CAGR, the Indian agrochemicals market is anticipated to grow to $3.7 billion by FY22 and $4.7 billion by FY25. India is seventh in the world in terms of import and fourteenth in terms of export of chemicals (excluding medicines). Additionally, of the total amount of chemicals consumed annually, exports make up roughly one-fourth and imports more than one-quarter.

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Benefits of the Chemical Industry

The Indian chemical industry has a lot of benefits.

The foundation of India’s industrial and agricultural success is the chemical sector. It will take a combination of regulatory action, corporate-level initiatives, industry-academic partnerships, judicious investments, and increased global access to meet the industry’s ambitious growth ambitions.

It is well recognised that the chemical industry is a significant enabler of economic progress. Everything from the common cellphone to solar panels that produce carbon-free electricity to LED lights that provide efficient lighting is made possible by products from the chemical sector. In India, the chemical industry plays a crucial role in both providing fundamental necessities and raising the standard of living. India has a highly developed refining industry that produces numerous essential feedstocks for the chemical industry despite the country’s severe lack of conventional hydrocarbons.

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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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