New Delhi [India], October 21 (ANI): The Indian chemical industry is gearing up to capture a bigger share of the global market as China struggles with unused production capacity, which is likely to keep chemical prices steady, according to Axis Capital report.
With an expected 4 per cent compound annual growth rate (CAGR) in the global speciality chemicals sector, India’s chemical industry is projected to expand at a faster pace of 15-20 per cent CAGR between CY22-30, driven by ongoing capacity expansion, R&D investments, and strategic market positioning.
Indian chemical companies have been expanding their production facilities in a well-planned manner, investing heavily in research and development (R&D), and securing contracts to make supply chains safer.
Currently, China accounts for over 40 per cent of the global chemical market, with the U.S. and the European Union each contributing 13-15 per cent.
India’s market share remains around 4 per cent, but is poised to grow substantially as global supply chains continue to diversify away from China.
This puts them in a good position to benefit from the global shift towards outsourcing. With high costs in Europe and companies looking to reduce dependence on China, Indian firms are stepping in to fill the gap.
Over the past decade, India’s top 20 chemical companies, spanning both speciality and bulk segments, have significantly ramped up their capital expenditures (capex).
The average annual capex surged from approximately Rs 33 billion during FY12-15 to Rs 70 billion over FY19-21, and further to Rs 116 billion in FY22-24.
This acceleration has been evident across speciality and bulk chemical companies, with capex in FY24 alone almost equaling the cumulative investment made during FY12-15.
This aggressive expansion has been largely supported by internal accruals, ensuring stable balance sheets and healthy working capital management.
Between FY22-24, the gross block for chemical companies saw a compound annual growth rate (CAGR) of 21-23 per cent, compared to a 10-15 per cent CAGR in the preceding period (FY12-18).
Speciality chemical companies, in particular, nearly doubled their gross block between FY20-24, benefiting from higher global commodity prices that boosted asset turnover.
Indian chemical firms are making concerted efforts to strengthen their R&D teams, embracing new chemistries and expanding into diversified product offerings.
These steps are in line with the ongoing global supply chain derisking that presents a significant growth opportunity for Indian players.
With contracts secured from global innovators, the industry is not only scaling up capacity but also enhancing its technical skills, process innovation, and cost optimization to bolster competitive positioning.
The companies’ ability to innovate and optimize costs will be crucial to sustaining growth, particularly amid intensifying global competition.
China’s recent push toward producing value-added chemical products for sectors like electric vehicle batteries, solar cells, and semiconductors could intensify the competitive landscape, posing risks to players in the generics segment.
However, Indian companies could benefit from their niche offerings and backward-integrated operations, allowing them to capture market share from China and Europe through higher volumes, process innovations, and new product introductions. (ANI)
Disclaimer: This story is auto-generated from a syndicated feed of ANI; only the image & headline may have been reworked by News Services Division of World News Network Inc Ltd and Palghar News and Pune News and World News
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