Introduction:

Major economic sectors have not overlooked the valuable gem, the Indian chemical industry. The chemical industry is ranked 6th globally in production and 14th in exports. The chemical sector of India serves as a vital hub for various industries such as textiles, paper, paints, pharmaceuticals and agrochemicals, thus valued at 178 billion at present and set for a substantial investment of 8 lakh crore by next year. In this article, we have covered the evolution, trends, and key achievements of the chemical industry, as well as some key statistics that mark the difference in the industry. Let’s begin.

Indian Chemical Industry Outlook:

Indian chemical industry was valued at USD 220 billion in 2022 and is expected to grow to USD 300 billion by next year and thereby reach USD 1 trillion by 2040. Due to the extremely diversified nature and resource availability of India, and the capability of covering over 80,000 commercial products, the Indian chemical industry is unleashing its next wave of growth. Despite numerous challenges like inflation, geopolitical concerns, global pandemic and supply chain disruptions, the sector continuously stood and delivered great value to the stakeholders. Especially the proximity of the country to the Middle East which is the world’s largest source of petrochemicals stockpile, enables the sector to benefit from the economies of scale.

Currently, the trends involve prioritizing environmental sustainability and protecting the values of long-term shareholders. The key market players have embedded sustainability and greener production processes as the centrepiece of their ethos. Meanwhile, safety and environmental issues have plagued chemical companies extensively forcing the authorities of countries like China to crack down on the companies that are compromising on the quality and standards. This has both stimulated the supply chain issues and de-risk the dependency on one country. Therefore, the MNCs are thinking about sourcing their materials from countries like India.

India has a significant role in the production of basic organic chemicals, fertilizers, pesticides, paints, dyestuffs and intermediates. The tremendous growth in the chemical sector is due to the incorporation of advanced technologies, strong research capabilities, forward and backward linkages, futuristic plans and strategies in sustainability, increasing the valuation and adoption of circular business models.

Favorable conditions and Opportunities:

“Make in India” launched by the Indian government in September 2014 is taking shape due to a significant increase in the FDI (Foreign Direct Investment) and the Department for Promotion of Industry and Internal Trade issued the report that India received record FOI inflows in the recent years.

Additionally, due to Production Linked Incentive (PLI), sectors like automotive, electronics, pharmaceuticals, textiles and renewable energy are witnessing leaps and bounds of growth. Meanwhile, the Indian government has come up with several policy reforms such as labour law reforms, GST implementation, and liberalization of FDI norms in several sectors to attract more investments and multiple manufacturing. The strategy of maintaining the balance between the benefits of China’s manufacturing ecosystem with the need for risk mitigation and cost efficiency is followed in “Make in India” and a continued focus on reforms, infrastructure development and skill enhancement has further amplified the efficiency of the strategy.

Furthermore, the simplification of regulatory frameworks and the ease of doing business have created a comfortable environment for the chemical industry. The growing demand for generic drugs and vaccines and the growing consumer rate in specialty chemicals are driving the sector.

In June 2023 disclosed their plan to invest Rs.75,000 crores which is USD 9.06 billion over 5 years to expand the oil to chemical businesses. Meanwhile, Tata Chemicals disclosed their plans to invest about Rs. 8000 crore which is USD 967.45 million over the years which also includes scaling the business sustainably. Also, TATA Chemicals Europe has signed a pact with Essar-backed vertex for the sale of low-carbon hydrogen.

Overall the export opportunities, governmental support and shift towards sustainability and innovation present great opportunities in front of the chemical industry, therefore the market players are involved in capitalizing on these opportunities and focused on addressing the existing challenges that exist in the infrastructure and regulatory hurdles.

Challenges:

The majority of the challenges that exist in the Indian chemical sector are all about the operational challenges and all it requires are effective management to ensure safety, efficiency and profitability. Since the majority of the chemical production processes and manufacturing sectors are complex and require careful monitoring, the software systems that contribute facilities to cater to these requirements are growing in demand.

Therefore chemical manufacturers implement robust processes and safety management systems that cover from equipment design to emergency response planning and management.

Likewise, chemical companies are dependent on a complex network of suppliers and distributors to source raw materials and managing these supply chain processes imposes a significant challenge to the growth of the sector coordinating with multiple stakeholders and managing quality control, managing risks and other environmental compliances is the key.

Cyberthreats are becoming a major challenge and restraint for the growth of the chemical sector. Chemical sectors involve a vast number of sectors and they are increasingly relying on digital technologies. The growing number of cyber attacks and threats are leading the industry to substantial financial losses, infrastructural damages and thereby propelling companies to invest in robust cybersecurity systems to protect their operations and data privacy-related aspects.

Furthermore, the competition from emerging markets and huge investments from countries like China and major global players are driving the prices down and putting immense pressure on the established chemical companies that are operating in the country.

Advancements in the chemical companies:

Apart from digitalization and other advanced digital aspects, proactive plant monitoring has been providing immense benefits to the growth of the chemical industry. Chemical production processes fluctuate and there could be times when the production sector is witnessing uptime, or face issues that impact both uptime and product quality. These could lead to huge losses in terms of production and overall operation.

However, the plants are not focused on or monitored for their ability to capture relevant patterns and effects that mitigate the downtime-causing issues.

Therefore the companies are investing in the “Navigance plant monitors and software solutions” to do the analysis. The system provides intelligent and 24/7 monitoring and contextual alerting. These systems are run by advanced data analytics technologies that monitor the plant around the clock and spot even minor or potential risks and errors. Therefore the errors can be handled at the early stages and flagged to take preventative actions.

The advanced system helps in analyzing the plant data and trends effectively in a single customized user dashboard on a powerful cloud platform. Since the systems are embedded with targeted monitoring and well-established monitoring systems, they effectively focus on process safety and work limits.

A customer-centric approach is fast approaching the industry:

Like any other industry, the chemical industry is also rapidly involving and pleasing the customers in every way, this is done through a customer-centric approach across every aspect of the value chain. The processes begin with rebranding the chemical companies, to stay ahead of the competition. On the other hand, it also includes the incorporation of digital technologies that help automate trend sensing and social media scanning. Overall they are considering the pulse of the market trends and modifying the production processes based on consumer needs and preferences.

Quick industry trends:
 

Take away:

The chemical industry in India is part of a global network and comprises over 3600 partners and client service professionals across the globe, therefore holds a significant position in the Indian economy. It holds about 14% of the overall index of industrial production and thus plays a crucial role in the production of basic organic chemicals, fertilizers, pesticides, paints, dyestuffs and intermediates. Furthermore the utilization of advanced technologies, strong research capabilities, backward and forward linkages and other factors have enhanced their growth and put the Indian chemical industry in an organized manner. Likewise, the push for sustainable development, water and environmental impact, raw materials and safety factors are changing the overall structure of the Indian chemical sector and leading it to greater heights.