ExecutiveSummary
This FICCI report on the Indian Specialty Chemical Industry,prepared by Tata Strategic Management Group, provides an overview of theAgrochemicals, Colourants and Other Specialty Chemicals industry segments. Thereport highlights the market size and growth, demand-supply scenario, tradeoverview and market, technological & regulatory trends, ending with a brieffuture outlook for each segment.
The Indian Chemical Industry forms the backbone of theindustrial and agricultural development of India and provides building blocksfor 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 thechemical industry and could grow at a higher rate of ~14%-15% over the next fewyears.
Over the years, Gujarat has become one of the most preferredlocations for industrial investment in India. Apart from having soundinfrastructure facilities, skilled manpower, excellent domestic andinternational connectivity and rich natural resources, what works for Gujarat is a focus on industrial development in the state. Gujarat has achieved an annualgrowth rate of 10.5% p.a. over the past five years and contributes ~16% to theindustrial production of the country. The chemical and petrochemical industryin Gujarat is the fastest growing sector in the State's economy. Gujarat is the leading producer of major chemicals in the country accounting for almosthalf of national production.
Agrochemicals
As an allied industry of agriculture, which accounts forabout one fifth of India's GDP, the agrochemicals industry is a significantindustry for the Indian economy. The Indian agrochemicals market grew at a rateof 11% from around USD 1.22 billion in 2008 to an estimated USD 1.36 billion in2009. 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 yearsdriven by excess capacity and availability of cheap labor. Exports account foralmost 50% of the industry revenues. Government focus on achieving food grainself sufficiency coupled with limited farmland availability is expected toprovide a further impetus to the industry.
Colourants
The Indian dyes and pigments industry valued at ~ USD 3.7billion dollars is about 7% of the global market, supplying various dyes andorganic pigments to the export markets like Europe and United States. The slump in global demand and commodity nature of several products hasresulted in margin pressures for industry participants. Also, there is agrowing need for environment friendly products and processes driven byregulations such as REACH (Registration, Evaluation and Authorization ofChemical substances).
An innovative approach is required to help the industryovercome the above challenges. Greater investments in research &development would help improve the product portfolio focussing on specialty andhigh performance colourants. Adoption of green chemistry practices could helpthe industry reduce its environmental footprint and ensure continued access toexport markets. This integrated approach will enable the Indian colourantsindustry to maintain its growth momentum at over 8% p.a. over the next fewyears.
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