Amidst rising local and global demands, India’s specialty chemical sector is set to invest heavily in increasing its capacity by manifold. Market experts believe that China’s decision to take its foot off the accelerator by shutting down plants on its own soil has played a key role in driving this move by the Indian specialty chemical players. In fact, recent chemical market data suggests that capital infusion could be the highest ever when compared to previous years. So while the specialty sector gears up for a monumental makeover, here are the key drivers of growth for the specialty chemical industry:
1. Domestically Procured Raw Materials
The specialty chemical is a low-volume sector i.e delivery quantities are not staggeringly high. As such if the sector participants have to import basic raw materials then it can negatively impact their price competitiveness, particularly in the international market. As such the need is for greater innovation in production and storage of raw materials. This would foster low-cost production and offer greater flexibility to stay price competitive in international markets.
Furthermore, India already enjoys key advantages in labor costs, technical manpower, electricity, etc over other foreign players. Hence, an ecosystem that facilitates B2B specialty players to procure raw materials locally as well as store them for the long term, will only add more power to their wings. Indian players would be able to compete at international markets both in terms of quality and volume.
2. Product Premiumisation
The specialty chemical segments comprise of strong B2B players across various sub-segments like Colourant (Includes dyes and pigments), Personal care, Textile chemicals, Water treatment, Surfactants, Paints and coatings, etc. These segments are primarily driven by consumer demands. A strong domestic economy will encourage market participants to not only scale production but also increase end-product values significantly. Demand-driven growth will be the key driver for India’s specialty chemical industry.
3. Investment in R&D
While most other drivers of growth are generic, R&D requires special focus, particularly in the specialty chemical industry. If we look at the journey of countries who have previously dominated the specialty market like the US, China, etc, one key finding would be that all the countries have invested heavily in R&D development. This has helped them improve product faster as well as remove pain points efficiently. India too can take a leaf out of their book and introduce the same for its own specialty industry.
4. Digitization
Digitization can play a key role in accelerating rate of growth. There are online B2B marketplaces which are already doing these. Specialty players can now find buyers and sellers online as well as get all real-time information like daily chemical prices India on their mobile screens. This has helped introduce greater accountability and transparency in the chemical space. Specialty players can particularly benefit from chemical analysis reports, chemical markets news, etc.
There is not an iota of doubt about the potential of the specialty industry to serve a growing domestic market as well as dominate the international market. The need of the hour is for industry bodies and policymakers to work cohesively and deliver an ecosystem that facilitates sustainable growth through innovations in manufacturing and distribution systems.
Komentar