Speciality chemical companies will also look at import substitution

The special chemical sector will strongly promote the development of Indian chemical industry. Specialty Chemical Companies in the chemical industry are expected to flourish due to domestic supply of raw materials, accelerated capital expenditure (capex) to build product development capabilities, and R & D investment to increase the attractiveness of the industry. Increasing R & D will enhance the status of these companies in the value chain of specialty chemicals manufacturing and become “proprietary chemical producers”.

Specialty chemicals companies will also study import substitution and export opportunities to further their business. According to a report on the Indian chemical industry by HDFC securities, special chemicals are manufactured according to their performance or function, which can be a single chemical entity or formula, and its composition will affect the performance and processing process of the final product. These chemicals can be further subdivided according to the end-user industry.

Companies supplying specialty chemicals to the pharmaceutical and agrochemical industries are expected to perform well, according to the HDFC report, due to steady growth in these sectors and strict regulation to create barriers to entry for competitors. Specialty chemicals companies are also investing heavily in capital expenditures to meet the needs of the pharmaceutical and agrochemical industries, which offer significant growth opportunities in view of the current epidemic.

Interestingly, India’s chemical industry is one of the fastest growing industries in the world. At present, China ranks third in Asia and the sixth largest market in the world in terms of output, after the United States, China, Germany, Japan and South Korea. The growth of the industry is mainly driven by consumption growth and export opportunities. The specialty chemicals industry can be subdivided into agrochemicals, dyes and pigments, personal care ingredients, polymer additives, water chemicals, textile chemicals and application drivers based on end users. They are the largest component of the specialty chemicals industry, accounting for more than 80% of the specialty chemicals industry.

According to the report of HDFC securities, the growth of specialty chemical enterprises will largely depend on their innovation ability. Indian chemical companies have increased investment in R & D activities, and India’s share of global R & D expenditure has risen from 2.7% in 2008 to 3.3% in 18. The report also stressed that global trade conflicts around the world, especially those between China, the United States and Western Europe, will further create opportunities for Indian chemical enterprises. The report points out that this has led to the transformation of global supply chain and affected bilateral trade between China and the United States. China accounts for 35.5% of the world’s chemical production. Many downstream multinationals that import most of the chemicals from China may consider replenishing this supply elsewhere, in which case the large chemical markets still available may provide opportunities for Indian chemical companies.

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