This FICCI report on the Indian Specialty Chemical Industry, prepared by Tata Strategic Management Group, provides an overview of the Agrochemicals, Colourants and Other Specialty Chemicals industry segments. The report highlights the market size and growth, demand-supply scenario, trade overview and market, technological & regulatory trends, ending with a brief future outlook for each segment.
The Indian Chemical Industry forms the backbone of the industrial and agricultural development of India and provides building blocks for downstream industries. The industry has registered a growth of ~10% p.a. over the last few years and is currently estimated to be around USD 50 billion. Specialty and knowledge chemicals put together account for about half of the chemical industry and could grow at a higher rate of ~14%-15% over the next few years.
Over the years, Gujarat has become one of the most preferred locations for industrial investment in India. Apart from having sound infrastructure facilities, skilled manpower, excellent domestic and international connectivity and rich natural resources, what works for Gujarat is a focus on industrial development in the state. Gujarat has achieved an annual growth rate of 10.5% p.a. over the past five years and contributes ~16% to the industrial production of the country. The chemical and petrochemical industry in Gujarat is the fastest growing sector in the State's economy. Gujarat is the leading producer of major chemicals in the country accounting for almost half of national production.
As an allied industry of agriculture, which accounts for about one fifth of India's GDP, the agrochemicals industry is a significant industry for the Indian economy. The Indian agrochemicals market grew at a rate of 11% from around USD 1.22 billion in 2008 to an estimated USD 1.36 billion in 2009. With 125 technical grade manufacturers and 800 formulators, India is the fourth largest producer of agrochemicals in the world after USA, Japan and China. Indian agrochemical exports have shown an impressive growth in the past few years driven by excess capacity and availability of cheap labor. Exports account for almost 50% of the industry revenues. Government focus on achieving food grain self sufficiency coupled with limited farmland availability is expected to provide a further impetus to the industry.
The Indian dyes and pigments industry valued at ~ USD 3.7 billion dollars is about 7% of the global market, supplying various dyes and organic pigments to the export markets like Europe and United States. The slump in global demand and commodity nature of several products has resulted in margin pressures for industry participants. Also, there is a growing need for environment friendly products and processes driven by regulations such as REACH (Registration, Evaluation and Authorization of Chemical substances).
An innovative approach is required to help the industry overcome the above challenges. Greater investments in research & development would help improve the product portfolio focussing on specialty and high performance colourants. Adoption of green chemistry practices could help the industry reduce its environmental footprint and ensure continued access to export markets. This integrated approach will enable the Indian colourants industry to maintain its growth momentum at over 8% p.a. over the next few years.