Chemicals & Allied Products

The Indian chemical industry has a highly diversified base that includes bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilizers. It is the 14^th largest exporter and 8^th largest importer of chemicals globally. With a production portfolio that spans 80,000 commercial products, the industry is projected to reach a size of US$ 304 billion by 2025. Dyestuffs and dye intermediates are a major area of strength for the industry where India accounts for around 16% of the global production and counts US, Germany, UK, Switzerland, Spain, Turkey, Singapore and Japan among its major markets.

The industry has been regarded as a consistent value creator over the past few years. The total returns to shareholders (TRS) for the Indian chemical industry grew at a CAGR of 15% between 2006 and 2019 as compared to 8% for the global chemical industry, according to McKinsey. A shift in production and consumption towards Asian and Southeast Asian countries is expected to ramp up demand for chemicals and petrochemicals. Indian players have the potential to produce US$ 111 billion worth of chemical products by 2023 for the domestic market itself.

Rising costs and environmental issues in China have led to a major shift towards India as a manufacturing base. Strong growth is expected across segments including petrochemicals (7.5% CAGR), polymers & agrochemicals (8% CAGR each) and specialty chemicals (12%), which makes the Indian market highly lucrative for chemical companies. Domestic companies are investing in innovative solutions to address issues of sustainable development like water, environment, raw materials and energy use. They are also investing heavily in the upcoming PCPIRs as well as new products as per the requirements of the market like green lubricants, microbial de-colourisation and degradation procedures for textiles and eco-friendly processes for synthetic dyes.

Exports of chemicals for 2019-20 stood at US$ 18.42 billion, led by organic chemicals (US$ 8.34 billion), agro chemicals (US$ 3.35 billion), dyes (US$ 2.69 billion), cosmetics & toiletries (US$ 1.71 billion) and inorganic chemicals (US$ 1.04 billion). The top export markets for the year were China (US$ 286.6 million), Turkey (US$ 220.8 million), US (US$ 199.49 million), Bangladesh (US$ 148.62 million) and Italy (US$ 118.26 million).