07.26.19
The specialty chemicals market in India was valued at INR 2,083.8 billion in 2017 and is expected to expand at a compound annual growth rate (CAGR) of ~10.7% by 2023.
Consolidated demand from various markets such as textile, real estate, packaged food, personal care, household care, automobiles, consumer durables, and construction is propelling growth of the specialty chemicals market in India. In 2018, many chemical companies in China were shut down due to growing environmental concerns. This led to an increase in the manufacturing of specialty chemicals in India to ensure an uninterrupted supply in the market.
Key growth drivers of the market
India has a huge technically skilled workforce which helps boost the specialty chemicals market in the country. As of 2016, 51.09% of the total population of science, technology, engineering and math (STEM) graduates were from India. Apart from the availability of a large educated population, India offers unskilled labor at much lower wages as compared to other countries. The availability of a large talent pool, along with a nominal wage rate makes India an attractive production hub for various foreign companies. This, in turn, acts as a driving force for the specialty chemical market in India.
The Chinese government announced the closure of various chemical companies that produced hazardous waste, which led to the disruption of the supply chain. The developed markets are, therefore, now focusing on having an alternative supplier of chemicals apart from China to ensure an uninterrupted supply of end products, making Indian players more competitive.
Key deterrents to the growth of the market
In the specialty chemicals market, only a few Indian players can compete with global giants in terms of product development and innovation. As a result, Indian specialty chemical manufacturers are generating less revenue, and sales have also dropped as compared to foreign companies.
Indian specialty chemical manufacturers are often forced to deal with cyclicality, especially in the textile manufacturing sector. Therefore, companies face difficulty in surviving during periods of low demand. This, in turn, hampers the growth of small specialty chemical manufacturers of India.
