Chemical Sector My View Nifty


Having survived the stormy market conditions over the last few years, the Indian chemical industry is now poised for next big wave of growth. The industry is at the verge of rapid growth, with the Government of India (GoI) providing an atmosphere of care and support. Indian Chemical industry is worth of $ 108.4 billion is the 6th largest in the world and the 3rdlargest in Asia, after China and Japan. The chemical sector accounts for about 14% in overall index of industrial production (IIP) and adds around 11% in national exports. The industry is on a high growth trajectory. In the base case scenario, with current initiatives of industry & government, the Indian chemical industry could grow at 11% p.a. to reach size of $224 billion by 2017.

Indian chemical industry substantially contributes to the economy; however the slow economic growth in 2013 has impacted the demand for chemicals. Nevertheless, the industry which is witnessing considerably slow is betting big on specialty chemicals that are expected to show considerable growth. Specialty chemicals include adhesives, additives, antioxidants, and biocides, corrosion inhibitors, cutting fluids, dyes, lubricants and pigments. Specialty and knowledge chemicals which form about 35-40% of the total chemicals industry, has been witnessing a double digit growth over the years due to increasing penetration and growth from a lower base. The specialty chemicals sector is characterized by requirements for high-value products, high-volume requirements with expanding customer base, a product-driven market, and addition of new participants at various levels of the value chain.

Moreover, Indian specialty chemical manufacturers have a strong presence in the export market, too. Active pharmaceutical ingredients and colorants, including dyes and pigments, are some of the key products exported. India exports specialty chemicals to Asia-Pacific countries and also to Europe and US. With a potential to grow to $70-$100 billion by 2020 from the present $23 billion, the specialty chemicals market has plotted a strong growth at 14 per cent per annum over the last five years and is expected to be the key driver for India’s chemical sector’s growth story. 

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