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Speciality Chemicals Industry In India

Speciality Chemicals Industry In India


Speciality Chemicals Industry In India – The country’s industrial and agricultural development is influenced by its chemical industry. It is the foundation for many downstream industries, such as paper, paints and textiles.


This industry covers 80,000+ products and serves a wide range of industries. This industry employs more than 2mn Indians. Speciality chemical companies at the top of their game are involved in green chemistry and sustainability, including reduced carbon footprints and better raw material supply.


Speciality chemicals have seen a rise in demand in many applications. This has helped to boost the market across multiple regions. The market’s main drivers are the growing demand from end-user industries like food, textiles, and automobiles.


Understanding speciality chemicals


Speciality chemicals are chemical products that have a specific effect on many industries. It is used in many industries, including automotive, aerospace and food. They could be any type of formulation, or a single chemical entity whose chemical composition affects the final product.


The main difference between specialty chemicals and commodity chemicals is that they are the result of extensive research and development. They only have one or two core uses, unlike commodity chemicals that have many different applications.


Speciality chemicals can further be subdivided based on their use in the end-user sector into personal care ingredients and dyes and pigments as well as water chemicals, textile chemicals, and application-driven segments.


These constituents make up over 80% of speciality chemicals and are the largest in the sector.


Global Chemical Industry


The global chemicals market is experiencing a boom, with an estimated USD 4.0 trillion being spent in 2019. The global chemical industry is 80% composed of commodity chemicals, with 20% made up by speciality chemicals. Speciality chemicals differ from commodity chemicals because of the intensive product R&D and innovation involved. This often leads to better margins and profitability, as well as lower Capex intensity.


Overview of global speciality chemicals


The global speciality chemicals market grew at 5.7% CAGR in the last five years and reached USD 805 billion by 2019. It is expected to grow at 6.4% in the next five years, reaching USD1.2 trillion by 2025. In the past few decades, there has been a shift in how chemicals are manufactured from North America and Europe to Asia.


China’s rise to prominence in the global chemical industry is one of the most notable trends. This can be seen in China’s rise in share of the global chemicals market, which has increased from 6% in 2000 down to 25% by 2020.


Trade flows in specialty chemicals


Due to the shift in manufacturing activity and the growth of speciality chemicals, the Asian market has seen a favorable economic environment over the past few decades. Asia has become a net exporter of a variety of speciality chemicals that were previously imported from North America and the EU.


China is now a major supplier of specialty chemicals to many countries around the world. India, however, is rising to prominence in this space due to China’s economic woes and the US-China Trade War.


Indian Chemical Industry


India’s chemical industry is one the fastest growing industries in the world. It currently ranks third in Asia, and it is the 6th largest global market for output. In 2019, India’s chemical industry was valued at USD 180 billion. This is one of the most promising sectors in Indian manufacturing.


India’s speciality chemicals segment is 18% of India’s total chemical industry, with a market value of USD 32 billion in 2019. Export opportunity and consumption growth are the main drivers of industry growth.


Indian Speciality Chemical Industry


The Indian specialty chemicals industry has experienced a 11% CAGR between 2014 and 2019, and will continue to grow at a 12% rate over the next five years. It is fragmented, with only a handful of players in the sub-segment such as UPL. This is the only domestic producer of speciality chemicals with net sales exceeding 1 billion USD and a global manufacturing system.


A company’s scale is a key differentiator across sub-segments. It helps them gain more of their customers’ wallets. Customers around the world expect suppliers to comply with the acceptable standards across the globe. This serves as an important barrier to entry for scaled-up businesses in the industry.


Speciality Chemicals Industry In India