Blog >> Emerging Chemical markets - India

In our previous blog we focused on China as an emerging market and discussed on the current and future market situations. China is one of the top contenders and multi nationals are customizing their services and products to target the larger population of China. In this blog we will enumerate on the next competitive emerging market in the world. 

The second highest populous country in the world, India is one of the four fastest growing economies out of BRIC (Brazil, Russia, India and China), a term coined by Goldman Sachs Jim O'Neill to describe the "Big Four" fast-growing emerging market economies that were expected to surpass the developed economies by the 2020s. The reasons for this is attributed to many recent developments, both locally as well as globally. One of the main reasons for its growth is the government's growth conducive reforms and global slowdown. Other reasons include increased per capita income, increase in FDI, infrastructure development etc.

The recent dip in oil prices globally has had a positive impact on India as it imports 75% of its energy consumption. It has helped reduce the current account deficit and is also a reason for the decrease in inflation. Also, India?s proximity to the Middle East makes for economies of scale. The decrease in oil prices has slashed the energy imports bill and a lot of money may be saved. Not only the import costs are decreased but also input costs to many manufacturing companies such as paint, cosmetic, FMCG, automobile industries which use crude oil derivatives.

The Prime Minister's recent "Make in India" campaign was launched in September 2014 as an initiative to encourage manufacturing companies, MNCs as well as domestic, to manufacture in India. His recent frequent foreign trips have resulted in many investments from abroad such as: Mitsubishi Chemical Corporation (Japan), BASF (Germany), Akzo Nobel (Netherlands), Dow Chemicals (USA), Croda (UK), Rhodla (Belgium). 

Chemical Industry in India

The chemical industry is one of the oldest industries in India and is the third largest producer in Asia. It is poised to grow at 9% per annum and its worth is expected to become 200 billion USD by 2020. India currently accounts for approximately 3% of the world?s chemical market. The Indian chemical industry is a diversified sector with 80,000 chemicals that can be exported to many countries like Middle East, Korea, Japan and Singapore. In addition, industrial licensing has been abolished for most sub sectors except for certain hazardous chemicals. The ?Make in India? campaign could well be the next big step in the manufacturing sector growth.

Major investment opportunities in the Indian chemical industry lies with the agro-chemicals, polymers, specialty chemicals and dyestuffs. India exports about 50% of its current production of agro chemicals and 75% of colorants while the specialty chemical sector has grown by 14%. Other industries that provide opportunities include polymers, petrochemicals and bio-based products. Some growth drivers for the chemical industry in India are: 

• Low cost manufacturing
  
• Large population
  
• High domestic market demand
  
• Immense scope for new investments
  
• Strong R&D capabilities.
  

India's expertise in developing low cost yet high end chemical products is the key growth driver for Indian chemical exports. Some of the major export countries where Indian products are in demand are: USA, UK, Europe, South Africa, Bangladesh, Malaysia and Singapore.

Actions to be taken:

1. Ensuring availability of feedstock such as coal, oil & gas and supply of raw materials at competitive rates.
2. Develop and maintain the chemical inventory, which will help to understand the import and export knowledge and therefore target specific industries.
3. Companies should strive to manufacture products using cutting edge technology to cater to global market.
4. Chemical industries must work in close collaboration with end-use industries to help innovate products suited to Indian conditions.
5. There are good opportunities in segments such as Speciality Chemicals, Speciality Polymers, for catering to huge emerging domestic demand as also as a manufacturing hub.

 

Global slowdown has increased the pace for India's robust growth rate and it is poised to become a manufacturing hub by 2030. Our next and final blog on emerging markets will do a roundup of Middle East, Africa and Latin America markets. If you have any enquiries regarding the blog or about our products, get in touch with us.