Chemical Industry Faces Challenges From Short-Term Policy And Poor Infrastructure

Chemical Industry Faces Challenges From Short-Term Policy And Poor Infrastructure

Chemical Industry Faces Challenges From Short-Term Policy And Poor Infrastructure: Due to the current recession in the chemical business, operators are refocusing their attention on specialty chemicals in an attempt to boost margins. Recent industry data show that over the past three quarters, the chemical industry as a whole has witnessed negative growth. In contrast, the specialized chemicals industry has experienced expansion and performed admirably.

Chemical Industry Faces Challenges From Short-Term Policy And Poor Infrastructure

According to insiders in the business, even if the specialized chemical sector has tremendous growth potential, it must address issues with infrastructure, R&D, and long-term policy making if it is to compete on the global stage.

Bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilisers are some main categories under which the Indian chemical sector can be divided. More than 80,000 commercial products are covered.

The specialized chemicals market in India accounts for 22% of the country’s overall chemicals and petrochemicals market, according to data compiled by the India Brand Equity Foundation, a trust formed by the Ministry of Commerce and Industry. According to a recent CRISIL analysis, India’s specialty chemicals market would expand more quickly than China’s, boosting its market share from 3-4% in fiscal 2021 to 6% by 2026.

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Leading chemical firm Meghmani Finechem Limited, whose chairman and managing director is Maulik Patel, told FE, Because several of our clients are also exporters, the demand bottleneck in the European and American markets has had an impact on our business.

Due to our expensive inventories, we experienced inventory losses. Meghmani Finechem’s revenue this quarter decreased by 15% to Rs 455 crore. However, the volume of derivatives and specialty chemicals increased year over year by 11%, and their revenue share increased from 21% to 38%.

The scenario is the same for the remaining manufacturers who work with speciality chemicals, he continued. I think specialized chemicals are becoming more prevalent in the Indian chemical industry. The demand situation on the Indian market is changing. Take epichlorohydrin (ECH) as an example. There is currently a volume of demand of about 2 mmt. But with the expansion of infrastructure, rising auto demand, and booming building, it is anticipated to quadruple in the next two to three years.

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Patel asserted that there is insufficient worldwide demand, despite the fact that there is sufficient demand on the home market and that concentrating on chemicals that rely on imports may be a solution.

He added that India is a sizable market and that international companies will be searching for domestic companies to work with in the upcoming years. India must overcome its infrastructure and R&D issues in order to access that and compete with global firms, he said.

The production of chemicals ranks India third in Asia and sixth overall in the globe, contributing 7% to the country’s GDP. From $ 220 billion in 2022 to $ 300 billion in 2025 and $ 1 trillion in 2040, India’s chemical sector is anticipated to grow.

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According to Abhay V. Udeshi, chairman of the Basic Chemicals Cosmetics and Dyes Export Promotion Council, countries are searching for alternatives to China because of the problems there. I believe that India has the potential to fill the void left by China. However, we must address problems like a lack of high-quality infrastructure, a sustainable framework for policy, and research and development.

He declared, We need a great plug-and-pay ecosystem for essential and fundamental services if India wants to overtake China as the global manufacturing hub. Long-term policies are required so that the manufacturer can be confident in his future planning.


For instance, the RoDTEP (Remission of Customs or Taxes on Export Products) policy, which has an expiration date of 30 September 2023, permits the repayment of taxes and customs. The government may decide to prolong it, but if the industry wants to grow and make plans for the next five to ten years, it has to know what the rules will be. Additionally, the government must offer tax advantages to encourage investment in R&D.

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There is a learning process, but the government is excellent at helping MSMEs become more sustainable. Even though there are signs of a demand rebound right now, 2023 still doesn’t seem to be going well. The desire for self-sufficiency is widespread, and we must comprehend the trends in demand in this dynamic industry, said Udeshi.

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