The diversified Indian chemical industry has about 80,000 chemical products and generates employment for over five million people. Investors and businesses can easily identify potential growth areas in the Indian chemical sector, as they are incorporating new technologies and bringing in new developments and schemes. Therefore, close observation of the chemical industry has always helped businesses and society in their growth and helped in assessing the nation’s position in the global market. In this article, we have discussed some of the recent developments and expansions in various aspects. If you are inclined towards learning the development updates of the chemical sector, then please continue reading the article. Let’s begin.

Driving factors of the chemical industry:

The demand of end-user industries such as the food processing sector, personal care, and home care are driving the growth of the Indian specialty chemical market. Specifically, the exports of organic and inorganic chemicals have risen significantly by 16.75% and reached USD 2.50 billion in April 2024.

The demand for chemicals and petrochemicals is rapidly increasing due to their intensive usage in manufacturing, construction and other specific industries. Additionally, the developing infrastructure and rapid urbanization have led to higher demand for construction, housing and consumer goods, all of which require chemicals and petrochemicals for production and development.

Specifically in the automotive sector, the growth has stimulated the demand for the production of conventional and electric vehicles, which significantly contributed to the demand for petrochemicals used in manufacturing components, batteries and other materials.

Therefore according to IBEF (India Brand Equity Foundation), India is the 6th largest producer of chemicals across the globe and 3rd in Asia, thereby the nation is contributing 7% to the nation’s GDP.

Additionally, due to the factors discussed above the demand for chemicals and petrochemicals across the nation is anticipated to triple and potentially hit USD 1 trillion by 2040.

Implications of growing demand:

Since the demand across several sectors is rising, India’s specialty chemicals firms are enhancing their production capacities and implementing advanced technologies.

Currently, global companies are seeking to derisk their supply chains that are dependent on China, therefore the chemical sector in India has better growth opportunities. On the other hand, the Dahej PCPIR project in Bharuch has attracted an investment of INR 1 Lakh crore which is approximately USD 12 billion, which is expected to generate 32,000 jobs in India.

Indian market players expanding their capacities:

Due to the rapidly rising energy demand, India is focusing on hydrogen as an alternative fuel source to reduce carbon emissions while meeting the energy requirements. Considering the situation, the Union government has approved INR19,744 crore for the National Green Hydrogen mission that aims to transform India into a ‘Global hub’ for using, producing and exporting green hydrogen.

The ultimate goal of the NationalGreen Hydrogen Mission Program is to incentivize the commercial production of green hydrogen and make the country a net exporter of fuel. The mission has a greater impact on demand creation, production, utilization and export of green hydrogen as a fuel for manufacturing sectors. Therefore the program focuses on developing multiple strategies regarding the production of green hydrogen, which includes funding for domestic manufacturing of electrolyzers and produce green hydrogen.

By 2030, the company is aiming to raise the production capacity to a minimum of 5 MMT per year and expand its renewable energy capacity to approximately 125 GW in India.

GAIL opening up a plant in MP

GAIL is a public sector gas distribution business in India and is considered a pioneer in gas distribution and has established its presence in about 67 geographical areas across India. Gail has recently commenced the operations of their 10MW Green hydrogen facility in Madhya Pradesh.

Shri Pankaj Jain, the Secretary of the Ministry of Petroleum and Natural Gas graced the inauguration ceremony on 24, May 2024. The senior official in Gail, the chairman and managing director underscored the remarkable capacity of the plant which is its capacity to produce 4.3 tonnes per day of hydrogen. Also, the hydrogen is produced at a purity level of 99.999 percent.

The initial plan with regards to the produced hydrogen is to blend them into natural gas and cater to the internal requirements at Vijaypur, then the prospects are expected to sell the high-pressure hydrogen to nearby consumers and explore its usage. The production processes utilize electricity from renewable resources such as solar energy and the plant is expected to produce about 4.3 tonnes of green hydrogen every day.

Considering the regulations related to blending hydrogen gas with natural gas, only 5 % of hydrogen is blended with natural gas. Therefore the company is conducting joint studies with Engineers India Limited and IIT Kanpur to get guidance regarding the increase in the blending ratio of hydrogen.

INR 200 crore fund – government approval for setting up green hydrogen  valley projects:

The Department of Science and Technology has allocated about INR 50 crores each for the upcoming Hydrogen Valley projects.

The Kerala Hydrogen Valley Innovation cluster is set up to produce hydrogen via biomass and electrolyzer pathways, that target the mobility sector especially marine and road transport.

The Bhubaneswar HVIC will produce hydrogen via the electrolyzer method that focuses on steel and mobility sectors.

The Pune HVIC plant will employ bioethanol and electrolyser methods for hydrogen production and they are focusing on fine chemicals and mobility industries.

The Jodhpur HVIC targets applications that include hydrogen internal combustion engines and blending in city-gas production.

Asian paints investment of INR 1305 crore to ramp up production capacity of Mysuru plant:

The existing capacity of the production plant at Mysuru is 300,000 KL per annum and it has been increased to 600,000 KL per annum. This increase in production capacity is made to meet the medium-term capacity requirements of the company. To increase the production capacity, the company has made an investment of INR 1305 crores and the same amount has been funded through internal accruals.

Other than these developments, several technological advancements in the industry include Mitsui Chemicals launching their project that uses a natural language processing model called Simple Contrastive Learning of Sentence Embeddings that creates vector representations to grasp the meaning of documents and other texts. The model caters to the requirements and applications of Mitsui chemicals products.

Conclusion:

Overall these developments, and expansions in the chemical industry signal robust growth and a strategic shift toward sustainability. The investments in new plants and green hydrogen projects are expected to spur further innovation and research in the chemical sector and are expected to have wide-range benefits across varied industries.