Pharmaceutical Industry is the 3rd largest industry in India, growing at a very high rate due to both Indian and Foreign companies contribution.
Whereas chemical companies has not performed well according to their potential in the last 10 years, But for the first time in so many years the numbers of fourth quarter (Q4) has come great and now the people who were not talking about this industry has started giving their attention by seeing its performance, Now it’s being the great time for the chemical industry.
Earlier there were only few chemical companies performing well but now there are many other companies who are also showing good results in the chemical sector, so now we can compare these companies performances with our friends & colleague , that is something great that is happening in this industry.
Chemical Industry Growth
The chemical Industry has witnessed growth of 14-15% in the last 5 years, The major reasons behind the growth of Indian chemical industry are
1) Structural advantage
In the upcoming years the domestic chemical industry is likely to grow at 12-14% due to growing market and increased purchasing capabilities, With the increase in population the demand for urbanisation has increased which are fuelling the demand of construction, textile, paints and Adhesives due to which the opportunities for chemical companies has increased.
2) Large domestic consumption
Chemical Industry is the largest consumer of its own products, Around 34% of the output of chemical companies is consumed by other Chemical company’s, With the growth of chemical industries the demand of internal consumption wills also going to increase.
3) Huge Export demand
Chemical industry contribute around 5.6% of India’s total exports Dyes , agro chemicals and pharmaceutical are the area in which chemical industries has strong presence in exports, Dyes are supplied in many countries like Spain, Japan, U.S, U.K, Germany, Singapore, Switzerland and Turkey.
Government policies and FDI investment
Indian Government knows that for the growth of Indian economy, chemical industry will going to play a very imperative role That’s why Government has allowed 100% FDI in chemical sector, Government has delicensed many chemicals except few because of their hazardous nature .
The list of licensed products are –
1) Isocyanides & di-isocynates of hydrocarbons
2) Phosgene & its derivatives
3) Pydrocyanic acid
For the growth of Indian Chemical Industry, Government has taken large number of steps in the 12th five year plan(2012-2017).
Some of them are:
- Government has targeted to increase the participation of chemical manufacturing companies from 16% to minimum 25% by 2025, For the growth of Indian chemical industry investment is need in the manufacturing sector.
- Government has proposed USD 10mn chemical innovation fund to encourage entrepreneurs for innovation generating growth.
- USD 80 MN fund has been proposed for the set up of technology up gradation.
There are more than 71,000 chemical manufacturing industries located all over india in which both small and large scale enterprises are included.
Top 10 chemical companies are:
2) TATA CHEMICALS
3) UNITED PHOSPHOROUS LIMITED
4) VIKAS WSP
5) AARTI INDUSTRIES
6)GUJARAT HEAVY CHEMICALS
7) GUJARAT ALKALIES & CHEMICALS LIMITED
8) PHILIPS CARBON BLACK LIMITED
9) INDIA GLYOCALS
10) PIDILITE INDUSTRIES
Future prospects & Investment opportunity in chemical sector
Indian chemical industry is expected to grow at very high rate in few years and is expected to double its market share at global chemical industry. Indian chemical industry has the capabilities to grow at very high rate if some of the important steps taken such as correct product mixture, M&A opportunities, securing feedback.
Some of the investment opportunities are:
- Indian chemical companies can invest in setting a plants in the other countries which are rich in resources to secure feedback.
- Chemical companies can also invest in finding such products which are competitive and profitable for them by using the available resources in India.
- The companies can earn huge profit if they invest money in speciality chemicals to fulfil the enormous domestic demands.