Chemical Companies in India: Challenges and Opportunities


The chemical companies in India is one of the most potent manufacturing sub-sectors. It has always been an integral component of the Indian economy, contributing about 7% of the Indian GDP. The chemical industry is involved in our lives in several different ways. We are associated with the chemical industry with the thermoplastic furniture we use on the synthetic garment we wear or the drugs we intake. The industry is not just an integral part of our life, but it also contributes significantly to agricultural and industrial development in India. It is connected with various other downstream like consumer durables, food processing, automotive, engineering, and others.

With globalization, the top chemical companies in India is facing many challenges, predominantly developed in a protected environment. The World Trade organization has assumed an increased role of India’s chemical industries in global economics, with an inevitable move towards an interlinked international economy. However, there have been times when the particular segment of the top chemical companies of India, like biotechnology or pharmaceuticals, has exceedingly performed at the world level.

Ranking of the chemical companies in India

The chemical companies of India are ranked 12th in the world 3rd in Asia and 10th in terms of global shipment of chemicals. They provide valuable inputs for other industries in India like textiles varnishes, papers, paints, etc. required in daily life. The chemical companies in India range from small, medium, and large-scale units. However, despite having an abundant supply of primary raw materials, India lags in terms of technical and marketing capabilities.

The chemical companies in India, growing at an average rate of 12.5%, offer a wide range of opportunities for both India and worldwide investors. The significant market potential combined with the existing human resources and abundant variety of support in the country has made it a profitable destination in the new millennium. 

Challenges faced by the chemical companies in India

  1.   Shortage of raw materials

Feedstock, the raw material used in the organic and inorganic chemical industries in India, is not easily accessible in the market. Unlike other nations like the Middle East, South East Asian countries, and China, vital feedstock like natural gas and naptha is available at a very eminent cost in India. This shortage of feedstock makes India uncompetitive in the worldwide chemical market. 

  1.   Comfort in Affordable Import

One of the most vital challenges the chemical companies face in India is the expertise in the availability of inexpensive imported chemicals. The Indian Government removed tax and other entry barriers on the import of several substances. This led to an improvement in the import of various chemicals accessible in the global market at a lower rate.

  1.   Remote Location and Poor Infrastructural Facilities

The top chemical industry in India is established along the west coast of India in Gujarat, while the most significant need for chemicals is in the southern and eastern regions of India. This increases in logistical transportation price, thus enhance the overall cost of chemicals.  In addition to this, the companies also face various infrastructural difficulties like no proper facilities on the ports, poor pipeline connectivity, inadequate power supply, disordered railway stations. The lack of these facilities has increased challenges for the chemical industries in India for obtaining raw material from chemical product vendors in India.

  1.   Complicated Regulatory problems and high tax rates

The massive duty tax levied on various raw materials is higher than the tax imposed on ready-made products.  This differentiates the chemical industries in India from the manufacturing sector, due to the high cost of raw material and the import of similar chemicals with negligible taxes.

Opportunities for the chemical industries in India

  1.   Enhanced  need for value-added products

Due to the different environmental factors, the need for the value-added chemical products like biodegradable polymers and performance plastics are likely to increase in the coming time. 

This would make developing new opportunities for the chemical industries in India to start, including the growing necessities of value-added chemical products.  After some more trials in value-added products, R & D can turn immense chemical business opportunities for the chemical industries in India.

  1.   Increase Export in Developing Markets

Another vital opportunity for the chemical industry in India is the developing countries of the middle east, Asia Pacific, and Africa. Unlike the grown Nations of Europe and North America, these Nations are developing faster by providing more opportunities for export to big and small chemical industries in India. Currently, India’s export share in the international market with just a 2% increase with every passing day would open modern export opportunities for the country

  1.   Coal Gasification

India has got an abundant supply of coal. By leveraging in gasification technology, petrochemical and chemical production can be expanded with coal making it an excellent opportunity for the chemical industries in India. The rising need for petrochemicals and coal gasification for generating more and more chemicals would result in a big chance to satisfy the expanding needs of the industry, which was earlier being met by expanded imports.

  1.   Reverse Special Economic zone in International Market

New opportunities would come to India by setting up chemical plants in Special Economic Zones in Nations like Myanmar, Mozambique, and Iran. This would result in cheaper raw material for the chemical companies in India. The chemical plats set up in SEZs would enable reasonable and easy duty-free import of raw material to the country for additional utilization.

During the last 4-5 years, the chemical industry in India has gained much-needed assistance. The Government is taking strict measures to reduce the challenges faced by the chemical companies in India. Also, they are coming up with new schemes and plans to take advantage of all the opportunities to its greatest extent. The new initiative of ‘Make In India’ would play a key role in providing the required extension to the chemical factories in India. The new schemes of the government would help the top chemical companies in India to expand efficiently in the world market.



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