Indian chemicals industry to record 11-12% growth rate: Frost & Sullivan

The Indian chemicals industry, which earned revenues in the range of $ 155-160 billion in 2013, is likely to grow at a rate of 11-12 percent in the next two to three years, according to Frost & Sullivan, a business consulting firm. Owing to reduced industrial output, commodity and bulk chemicals are likely to experience slow growth, while the specialty chemicals segment is expected to show considerable growth.
 
“Personal care ingredients and additives, knowledge chemicals like Active Pharmaceutical Ingredients (APIs), paints and coatings, and construction and water chemicals are some of the segments that are likely to perform well. Even in 2013, these sectors showed good growth and companies in this segment have been investing and expanding,” said Chaitra Narayan, Associate Director, Chemicals, Materials & Foods Practice, Frost & Sullivan.
 
The specialty chemicals sector is characterised by requirements for high-value products, high-volume requirements with expanding customer base, a product-driven market, and addition of new participants at various levels of the value chain. Overall, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of 13-14 percent. “Product customisation and understanding of unique customer needs has been one of the key success levers for the Indian chemical industry. In terms of production value, the specialty chemicals sector forms about 18-20% of the total chemical production in India,” added Narayan.
 
Though increasing regulatory requirements and raw material price fluctuations (India is dependent on imported raw materials) have posed challenges for manufacturers, exports have been increasing at a rate of 8-9 percent. The growth is likely to continue due to a good and established customer base for specialty and niche products.