The European Union and the US were the leading chemical manufacturing hubs globally. These countries contributed about 40% of the total chemical output and dominated the global market until the great recession in 2008. China, India and other developing nations started faring better than the developed countries, as companies began shifting their bases to Asia.
Stringent green norms cooled China’s specialty chemical market.
China was the leading supplier of basic, specialty and other industrial chemicals over the last decades. The chemical industry of China has slowed down due to stringent green norms. The government has ordered shut down or moved polluting companies to green belt due to environmental concerns. India also faces ecological concerns, but it is not as severe as in China.
The closure of plants and slower economic growth have adverse impacts on the specialty markets in China. However, this has proved a boon for Indian companies manufacturing specialty materials to increase global market share and export. The specialty chemicals market is set to growth at 12-13 percent per year in India until 2024. The positive outlook and growth forecast has resulted in substantial investment from local and international firms in the specialty sector.
Unlike China’s economic slowdown, India is the fastest-growing nation in large economies, which has accelerated manufacturing in quality and quantity. Though most of the chemical companies in India are smaller than global firms, yet they are winning the race due to favorable conditions.
Critical drivers for India’s chemical industry growth
India is the third-largest manufacturer of commercial chemical products in Asia. The sector has over 3 percent of global chemical market share, but it is leading in dyes and intermediate stuff contributing over 16% in the global trade. The essential products of this sector are agrochemicals, pharmaceutical, polymer additives, textile, petrochemicals, home care, personal care, organic and inorganic chemicals exported to various countries.
The growth in India’s chemical sector has accelerated due to these factors:
Availability of cheap labor
The manufacturing cost of chemicals reduces significantly due to the availability of cheap labor in India. Abundant skilled professionals are available and at lower pay than the western countries. That has enabled companies to offer products at competitive prices to buyers.
Growing exports and domestic consumption
India ranks 17th in the chemical export while it is listed at 7th in the import globally. There is a growing demand for various chemicals such as construction, industrial chemicals, and others due to fast economic growth. In addition to export, domestic consumption has increased substantially over the years, allowing growth to local companies.
Supporting policies and focus from the government
India has improved its ease of doing business ranking in the latest edition. That has been possible to structure reform and policies supporting chemical industries. India has allowed 100% FDI in the chemical sector except for hazardous products. It has encouraged and brought a significant investment in this sector.
India’s specialty chemicals and other products are set to grow more in the coming years. The industry has attracted global companies, distributors and chemical exporter to India to procure products. But, buyers must consult with experts to make chemical sourcing an effortless and fast process.
About the author: The author is a content writer at Chemconn Sourcing, ChemConn Sourcing a leading chemical consultant in India , helping companies to procure various chemicals from the South Asian region. Consult with them for assistance now.