In an interview, Kashiprasad Murarka, President, Indian Specialty Chemical Manufacturers’ Association (ISCMA) and Chairman, Mirachem Industries with chemical toady magazine talks about the speciality chemicals market in India.
By Shivani Mody
Speciality chemicals industry in India.
India's speciality chemicals industry is valued at about $25 billion, has successfully delivered 13 per cent growth over the past five years, primarily led by domestic consumption.
By constituting about 3 percent of the global speciality chemicals market, this sector has great potential and is to grow to 6-7 percent in 2023 with market size in the range of $ 80-100 billion.
The applications of speciality chemicals market includes advanced ceramic materials, construction chemicals, cosmetic chemicals, water management chemicals, oil field chemicals, textile chemicals, food additives, and others such as rubber processing chemicals, and speciality paper chemicals.
Speciality chemicals by functions include adhesives and sealants, catalysts, corrosion inhibitors, antioxidants, flame retardants, separation membranes, synthetic dyes, speciality pigments, demulsifiers, rheology modifiers, and water soluble polymers.
The potential for growth/opportunities related to the speciality chemicals.
Development of any economy or country is directly linked to the per capita consumption of chemicals. The chemical industry is a key enabler for other industries. As chemicals are consumed in varying proportion by every industry (rightly from electronics to paints, from pharmaceuticals to cosmetics), without chemicals sustainable development of other sectors is not possible.
The growth for speciality chemicals is driven by both domestic consumption and exports. Speciality chemicals have applications across consumer (eg. personal care chemicals), industrial (eg. water chemicals) and infrastructure (eg. Construction chemicals) segments are driven by the overall growth of the Indian economy.
Tightening environmental norms (eg. REACH regulations) in developed countries and the slowdown in China (in certain segments) are contributing to the growth of exports.
Agrochemical growth has a strong linkage to the growth of the rural economy. In certain segments (such as agrochemicals, dyes and pigments, flavours and fragrances), a significant proportion of production in India is exported. Exports are growing rapidly as India is becoming an important manufacturing hub for such chemicals.
“Make in India” campaign is also expected to add impetus to the emergence of India as a manufacturing hub for the chemicals industry in the medium term.
Partnerships and mergers & acquisitions landscape for the speciality chemicals in India.
As opportunities and ambitions expand, we are witnessing heightened levels of M&A interest by players across the spectrum. The increased globalisation of the sector, sustained market opportunities and the emergence of Indian leaders are combining to create an exciting period for speciality chemicals.
Global companies are looking to invest in India as a market for speciality chemicals is driven by consumerism and requires a certain degree of investment in R&D – a focal point for any leading company. This can help attract alliances/collaboration with global firms to jointly manufacture speciality chemicals in the country.
Challenges faced by the speciality chemicals industry in India.
India stands out as far as demography and availability of technical manpower are concerned. Speciality chemicals industry stands to gain rich dividend from this. The critical success factor for the industry is its capability to provide product/application development at a favourable price-performance ratio. The cost centre in this sector is in the areas of product development and marketing activities, hence the focus on improving products and usage intensity of speciality chemicals, to develop new products to give them a competitive edge in the marketplace, with unique features and benefits.
One of the main challenges will be to focus on taking the industry to the Green zone – eco-friendly products and processes, address the pollution issues and ensure zero discharge in water and air. This would also mean that industry has to look at developing proper technology that helps in moving towards green zone.
Other three systemic challenges the sector is confronted with are fragmentation and lack of scale, commoditization and regulations. Ability to scale up, offering differentiated products through innovation, implementing an effective sales and marketing strategy, and maintaining high levels of regulatory standards clearly separate winners from the crowd in this space.
Suggestions for improvement of the speciality chemicals segment.
India can play a dominant role in the global speciality chemicals industry as it has got an advantage of skilled human resources and a big consumer market. The government has to look at policies that favour the boosting of per capita consumption of speciality chemicals in India as this is one of the fastest growing sectors in the chemical industry.
Towards this the government has to look towards:
- Boosting the sector by initiatives in developing new industrial areas
- Simplify the business climate by speeding up licensing procedures, and industry-friendly norms for pollution.
- Enhancing the industry’s global outreach by bringing out favourable Import policy and provide proper guidelines for exports with better incentives
- Rationalising various taxes and simplify it to a single window tax system.
© Chemical Today magazine
Read More: Focus on speciality chemicals industry in India
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