Impact of COVID-19 on Chemical Industry in India – Opportunities and Scope
Industry overview
The chemical manufacturing process can be considered to be integral to the Indian economy. It has become part of the lives of Indians in various ways. We are linked to this industry inextricably, be it the drugs, garments, cars & furniture we use. This industry here is both knowledge & capital intensive. It does play a significant role to meet people’s basic needs and to improve their lifestyle.
On a broad segment, it is classified into Specialty, Bulk, Agrochemicals, Fertilizers, Polymers & Petrochemicals. The Middle East being the world’s greatest source for petrochemical feedstock is close to the country. This boosts economies of scale in India’s favor and has helped foster large & small scale chemical business here.
Positive outlook & consistent value creator
The chemical industry in India can be termed to be a global outperformer with regard to ROI. It has resulted in enhanced expectations to boost continual, sustained growth of bottom and top line.
According to industry experts, the growth is sure to continue in the near future. Chemical companies are benefitting from increasing demand in the domestic market from the chemical end-use sectors.
Chemical manufacturing process & Current Scenario
In India, it is highly diversified & covers over 80,000 commercial products sold in the market. Here, the chemical industry is delicensed besides several hazardous chemicals. FY 2017-18 witnessed a market size of about $163 billion. By 2025, industry experts expect it to cross $304 billion, due to increasing demand, especially for chemical products. The coming five years are likely to witness an increase of about 9% approximately per annum.
India’s chemical industry in the global market
The country’s chemical story can be considered to be one with lots of promise and exemplary performance. The chemical industry has been consistently referred to as a value creator. It is rather a hub of opportunities attracting global investors even during periods of global uncertainties. With worldwide chemical industries being affected by certain trends, the chemical manufacturing business plan is only expected to grow big. The future of the Indian industry including its trade performance depends on how significant players tap & prioritize this value.
- By volume, India is considered to be Asia’s 3rd largest producer & 6th in the world.
- With regards to polymer, it is the 3rd largest consumer & world’s 4th largest to produce agrochemicals.
- The global chemical industry contribution made by India is around 3.4%. This is apart from a 10.3% share of chemical product exports. Thus, globally in exports, it is ranked 14th, exclusive of pharma products.
- Indian specialty market has witnessed a growth of about 14% in the last five years. Experts expect their market size to touch around $70 billion by 2020.
- Dye intermediate & dyestuff production ranges for about 16 percent of the world’s production. Thus India can be stated to be a globally strong dye supplier.
- 100% FDI is allowed by the Indian chemical sector under the automatic route. However, few hazardous chemicals are an exception.
- Over 2 million people have been employed by the Indian chemical industry, thus generating employment opportunities & benefits.
- 69% of the total global production of Alkali chemicals is perhaps the largest share.
- During FY 2017-18, total petrochemical & chemical production in the country was around $7,44,607.71. The coming 5 years are likely to generate $100 billion in the petrochemical industry at 10% CAGR.
Future Scope after Covid-19
Covid-19 outbreak the world over have only presented the Indian economy with new roadblocks. Experts rather view this outbreak as an avid opportunity for industries to restructure in India. The world is currently trying to overlook China to meet its demands for chemical products & by-products. This in itself, presents a wonderful opportunity for the Indian chemical manufacturing process to witness tremendous demand in the long term. The EU & US have been trying to diversify its markets to mitigate China’s risk. India can take full advantage of the same.
There has been a slight increase in demand for packaging materials due to the pandemic outbreak. This is to prevent contamination of medical products, personal care, medicine & food. Thus significant demand is witnessed for chemicals associated with the packaging industry.
Sustained Growth
The macro outlook of India is full of long term optimism. Chemical companies have taken this optimism in a positive way, especially pertaining to long investment cycles. The current GDP of the country is an all-time low due to Covid-19 & global financial crises. It can, however, prove to be a short term challenge for Indian large & small scale chemical business.
With the promotion of ‘Make in India’ initiative, the chemical industry is likely to have a significant impact on the Indian economy. In the long term, the country’s economy is expected to grow rapidly under able leadership at the center. Thus, the growth of the Indian chemical industry, and it’s playing a significant global role is very much anticipated.
Formulations and Technology Books on Chemical Industry
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Project Reports Preparation
Click Here to check out Project Reports available in Chemical Industry
Before you start any industry, you need to get a project report prepared. Readers who do not know about the project report, let me explain – A Project Report is a document that provides details on the overall picture of the proposed business. The project report gives an account of the project proposal to ascertain the prospects of the proposed plan/activity. Project Report is a written document relating to any investment. It contains data on the basis of which the project has been appraised and found feasible. It consists of information on economic, technical, financial, managerial, and production aspects. It enables the entrepreneur to know the inputs and helps him to obtain loans from banks or financial institutions. The project report contains detailed information about Land and buildings required, Manufacturing Capacity per annum, Manufacturing Process, Machinery & equipment along with their prices and specifications, Requirements of raw materials, Requirements of Power & Water, Manpower needs, Marketing Cost of the project, production, financial analyses and economic viability of the project. Below are a few mandatory details you should include in your project report:
- Present Market Position and Expected Future Demand,
- Market Size,
- Statistics,
- Trends,
- SWOT Analysis and
- Forecasts.
The report provides a comprehensive analysis from industry covering detailed reporting and evaluates the position of the industry by providing insights to the SWOT analysis of the industry. The report should include:
- Plant Capacity,
- The requirement of Land & Building,
- Plant & Machinery,
- Flow Sheet Diagram,
- Raw Materials detail with suppliers list,
- Total Capital Investment along with detailed calculation on Rate of Return,
- Break-Even Analysis and
- Profitability Analysis.
The report should also provide a bird’s eye view of the global industry with details on projected market size and then progresses to evaluate the industry in detail.