ADVERTORIAL
India ' s chemical Sector : resilient growth & strategic partnerships
Pankaj Mehta , president of Aarti Industries , looks at the opportunities in India ’ s burgeoning chemical market
In the ever-changing global industry landscape , India ' s chemical sector shines with growth and innovation , adeptly navigating shifts with resilience . Positioned as a leading chemical manufacturing hub , India leverages its strengths and strategic advantages , seizing opportunities amid supply chain diversification and industry realignment .
With projections pointing to extraordinary growth , the Indian chemical market is set to reach $ 1,000 billion by 2040 , according to McKinsey . Fuelled by substantial investments , totalling $ 91 billion in the fiscal year 2023 alone , the sector has demonstrated remarkable resilience and adaptability . Over the past seven fiscal years , from 2017 to 2023 , the industry ' s total size has expanded 2.7 times , revenue has surged 2.8 times and EBITDA has tripled , highlighting the sector ' s robust performance and promising outlook .
India ' s domestic potential : A catalyst for growth
India ' s promising trajectory is fuelled by robust domestic demand , propelled by government initiatives and bolstered by its unique demographic advantage , boasting the world ’ s largest and youngest population . Expected to rank as the world ' s third largest economy by 2030 , India ' s consumer market is forecast to surge by 300 % to approximately $ 6 trillion , driven by a burgeoning middle-income group .
With per capita chemical consumption levels at one tenth of the global average , India ' s chemical industry is poised for significant expansion . Rapid urbanisation and a burgeoning young population with disposable income will further drive demand , with import substitution opportunities evident , as imports currently fulfil 30 % of India ' s chemical needs .
Diversification & future prospects
India is charting new territories for sustainable growth , particularly in the speciality chemicals sector , beyond conventional areas like agrochemicals and APIs .
Investments in higher value-added opportunities , such as electronics , IT , telecommunication ( 5G ), electric vehicles , battery chemicals , CO 2 capture , polymer recycling and smart mobility , underscore India ' s commitment to diversification and innovation . These sectors rely on advanced speciality chemicals not currently produced domestically , presenting lucrative growth opportunities by leveraging the vast ecosystem .
Strategic alliances : Fuelling growth
India ' s chemical industry thrives on strategic collaborations combining local manufacturing expertise with international market reach . These alliances allow global players to tap into India ' s cost-effective production capabilities and skilled workforce .
India ' s adeptness in navigating geopolitical uncertainties has created an environment conducive to foreign investments , which is evident from the significant surge of foreign direct investment into the sector . Supported by initiatives like Make in India , which now extends to exports , India actively engages in free trade agreement negotiations with multiple countries and blocs , positioning itself as an attractive destination for manufacturing .
With its growing consumer market , favourable policies and youthful population , India is poised to excel in the global chemical industry , attracting partnerships across the product development cycle , from research to commercialisation . These partnerships encompass : 1 . Supply chain de-risking through Indian partnerships : Global chemical companies leverage India as a cost-effective manufacturing hub to de-risk their supply chains from China . Long-term supply contracts are increasingly signed across various industries , including agrochemicals , pharmaceuticals , paints , inks and coatings 2 . Technology sharing & process optimisation : Global players share labscale technology with Indian partners for scale-up and process optimisation , benefiting from India ’ s talent pool and cost-effective process development . Stringent IP protection laws further enhance the attractiveness of partnerships 3 . Plant construction & operation partnerships : Indian companies collaborate with global partners for plant construction and operation using international technology . India ' s state-of-the-art assets ensure safety , reliability , efficiency and quality , besides offering a capex reduction of 30-40 %, driving such partnerships
Aarti Industries has forged successful partnerships across manufacturing outsourcing , joint product development , feedstock assurance and supply , and technology sharing , leveraging its expertise to drive mutual growth and innovation in the global chemical industry . These partnerships offer a fast track to business growth in a competitive landscape , tapping into India ' s thriving market . ●
MAY / JUN 2024 SPECCHEMONLINE . COM
39