Indian chemical companies are investing heavily to tap opportunities arising from changes in global preferences and environmental issues for Chinese companies which currently control the global market, says Ravi Goenka, president, Indian Chemical Council (ICC) and CMD of Laxmi Organics Industries.
"We expect $150-200 billion investment in India's chemical industry within the next four-five years. If India can manage to get 10% chemical trade from China through scaling up and import substitution, the Indian industry can double our footprint to touch $300 billion in five years,” he says. The Chinese chemical industry has a size of about $1,550 billion, compared to the Indian chemical industry size of about $150 billion.
Goenka says majority of new investments happening in the country are in specialty and fine chemicals. “The $150 billion Indian industry is growing at over 11% organically, which means another $50 billion growth will come in the next 3-4 years. To get the extra $100 billion revenues, we need to fast track and invest with supporting policy initiatives, like the Production Linked Incentives (PLI) scheme for the Indian chemicals sector,” he says.
“During the Donald Trump regime in the U.S., he put lots of tariffs on products imported to the U.S. In the last 1-2 decades, China has put many dedicated plants for the western countries. With those kinds of high tariffs and changes in geopolitical situations, every country is now looking for self-sufficiency and additional sourcing destinations other than China. They were prompted by supply chain disruptions happening for the last few years. India has a great chance for tapping the opportunity. India has a fantastic ecosystem for chemical manufacturing, as the country has been producing chemicals for 120 years,” he says.
In the past few years, there were many safety and environmental issues for chemical companies in China, which prompted the regulators in that country to crack down on erring companies. In their endeavour to corner the global market, many companies in that country had compromised on quality and safety. This has caused supply chain issues for multinational buyers of their products. To de-risk reliance on one country, now the MNC companies are looking at sourcing from multiple countries like India, adds Goenka.