Over the last few years, the global chemicals industry has been moving towards environment-friendly products and practices. Companies are actively opting for sustainable alternatives and looking for new manufacturing hubs to adjust to shifting supply chains.

In this regard, the Indian Chemical Industry can be an excellent choice. It produces most of the chemicals which are necessary for producing environment-friendly products and due to its high domestic demand, is all set to be the next global chemical manufacturing hub. Furthermore, there are organizations like Tecnova which can help foreign companies establish their business in this market. They have time-tested entry and expansion strategies along with services like company incorporation and regulatory compliances, which can help firms set up their operations hassle-free.

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Indian Chemical Industry: Trends and Overview

Today, all products, may it be smartphones, ballpoint pens, apparel, plastic products, etc. contain some chemicals that were used in their production process. Thus, given the vast array of goods manufactured today, the chemical industry has become a booming segment.

To take advantage of this demand, international firms are always on the lookout for countries that have a developing chemicals sector. This enables them to source various products at competitive prices and sustainably run their operations in the long run.

Keep reading this blog to know why the Indian chemicals industry can be an ideal choice.

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Global Trends Related to the Chemical Industry

As per the latest reports, by 2027, the global chemicals industry is predicted to reach USD 6851.59 billion, indicating a 7.8% CAGR. Here are the top trends that can shape this industry in the coming years:

Green Chemistry Green chemistry puts increasing focus on developing products and manufacturing processes, which can help reduce the usage of hazardous chemicals. This trend aims to influence manufacturers to prioritize reducing environmental impact by following regulations and adopting sustainable practices.

This involves using alternate energy sources, implementing recycling technologies, enhancing waste management capabilities, and more. An excellent example in this regard can be of companies choosing plant-based feedstocks which can convert biomass into fuel. This helps reduce their dependency on petrol, thus significantly decreasing their carbon footprint.

Leveraging Data Analytics Chemical manufacturing organizations are increasingly opting for data analytics to improve their efficiency and profitability. They can use insights from big data to optimize plant operations, energy consumption as well and supply chains.

Moreover, they can track the historical performance of manufacturing equipment and use AI programs to forecast failures and mitigate downtimes. Apart from this, by leveraging supply chain analytics, they can optimize the entire supply chain from raw material sourcing to product delivery, thus reducing overall costs.

Innovative Manufacturing Techniques The adoption of new manufacturing techniques is another ongoing trend in the chemical industry. Companies are increasingly adopting automation, digitization, and other technological innovations to optimize their production process. It is also helping them cut down expenses, increase worker safety, and reduce environmental impact.

For instance, firms can now use extended reality (XR) to resolve labor shortages and train new staff. They can also use digital twins to simulate critical production scenarios and teach recruits how to remotely diagnose issues without risking their lives.

Additionally, cobots can help speed up the production process in hazardous environments. While, automated vehicles can cater to the transportation process, thus reducing human intervention.

Given these trends, it can rightly be said that the chemicals sector has strong growth potential, which acts as an incentive for companies to invest in this segment.

India’s Position in the Global Chemical Industry

The Indian chemicals industry ranks 6th in terms of production and 14th in the exports segment. It is one of the leaders in the global chemicals market. Additionally, it has a vast portfolio consisting of pharmaceuticals, agrochemicals, paper, paints, soaps, fertilizers, polymers, textiles, and more.

As per reports, by 2040, this industry segment is estimated to reach USD 1 trillion. It accounts for almost 16% to 18% of the global dyestuffs and dye intermediaries production, along with 15% of the world’s colorants industry.

Here are a few trends that are going to impact this sector in the long run:

Shifting Consumer Trends- Currently, most consumers are showing an increasing preference for environmentally friendly products. In this regard, the Indian chemicals sector can stand to earn high profits. The reason being, that it makes a majority of those chemicals which are used in the manufacturing of such products.

Changing Supply Chains- Geopolitical events like the Russia-Ukraine War and trade bans on China have left major international firms seeking new markets for sourcing products. Thus, the Indian chemicals industry, with its strong value proposition, can become the next big global chemicals hub.

Increasing Domestic Demand- India’s domestic demand for chemicals is estimated to account for over 20% of global chemical consumption. By 2040, experts predict this demand to rise to USD 1,000 billion.

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Specialty Indian Chemical Industry: A Closer Look

Specialty chemicals are products that provide a wide variety of effects. They are in high demand across multiple industrial sectors and account for almost 22% of the Indian chemicals industry and over 50% of all chemical exports.

Due to high domestic and overseas demand, it is currently the strongest segment of this industry. Furthermore, this segment is set for strong long-term growth as global companies are looking beyond China to fulfill their needs.

Specialty Indian Chemical Industry have two sub-segments, which are:

Food Ingredient Chemicals
The food and feed ingredient chemicals sub-segment consists of food and feed additives, fragrances, flavors, and nutraceuticals. Experts say that it has a market valuation of around USD 3 billion, expanding at 8.3% CAGR.

Agrochemicals
Reports say that India’s agrochemicals market is currently has a value of USD 5.5 billion, indicating an 8.3% CAGR. This sub-segment may account for almost 40% of India’s chemicals exports by 2040.

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How Businesses Can Benefit from the Indian Chemical Industry?

Here is how foreign organizations can benefit from the Indian chemicals industry:

Low Production Costs – According to market surveys, the machinery, material and construction costs in India are 70% lower than in other global chemical hubs. To be specific, material expenses are 3 times and 4.5 times lower than Saudi Arabia and Germany respectively. Furthermore, India has a competitive corporate tax rate of 25%.

Availability of Skilled Labor – After China, India has the highest labor availability in the world. Additionally, labor costs are significantly lower in comparison to other leading chemical manufacturing hubs. This will enable international firms to conduct sustainable operations in the long run.

Presence of Chemical Consulting & Industry Strategy Firms – There are several chemical consulting firms in India like Tecnova which can help companies enter and set up their business in India with ease. Moreover, they offer services like company incorporation and regulatory compliances, India sourcing and vendor development, partner search, etc. to cater to the various needs of clients.

Reference

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Industrial Manufacturing Consultant – TecnovaGlobal

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