Intellectual Thoughts by Sanjay Panda: Indian Chemical Industry to grow by 11-12%

Indian Chemical Industry to grow by 11-12%

The Indian chemicals industry, which earned revenues in the range of US$155-bn to US$160-bn in 2013, is likely to grow at a rate of 11-12% in the next two to three years. Though commodity and bulk chemicals are likely to experience slow growth, owing to reduced industrial output, the specialty chemicals segment should show faster growth.

Sectors such as personal care ingredients & additives,  active pharmaceutical ingredients (APIs), paints & coatings, and construction & water chemicals are some segments likely to perform well. "Even in 2013, these sectors showed good growth and companies in this segment have been investing and expanding.

The specialty chemicals sector is characterized by requirements for high-value products, expanding customer base, and addition of new participants at various levels of the value chain. Overall, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of 13-14%. The sector forms about 15-16% of the total chemical industry, with dyes & pigments, leather chemicals, construction chemicals and personal care ingredients, being important constituents. In terms of production value, the specialty chemicals sector forms about 18-20% of the total chemical production in India. Though increasing regulatory requirements and raw material price fluctuations  have posed challenges for chemical manufacturers, exports have been increasing at a rate of 8-9%.