Indian specialty chemicals market at a glance

What are specialty chemicals?

Specialty chemicals, also known as the performance chemicals, are chemicals used based on their performance or function. To be precise, specialty chemicals are sold on the basis of their uses rather than their composition. They can be either single entities or a formulation depending upon their performance in the end product. Specialty chemicals are being predominantly used by chemical manufacturers across the world due to their growing demand from end-user industries.

The specialty chemicals are driven by extensive product research, development, and innovation; as they play important in the end application. Specialty chemicals are always classified based on the end-user industry for similar applications such as agrochemicals, textiles, dyes, cosmetics, etc.

Categories of specialty chemicals

Specialty chemicals serve a diverse range of sectors and find end application in various industries; they can be classified as:

AdhesivesNutraceuticals
Agrochemicals Petrochemicals
Nanotechnology Fungicide
Water treatmentHerbicide
InsecticideOrganometallic compounds
Additives Dyestuff and Paints
Polymer Flavors and Fragrances
Natural products Industrial gases
Catalysts Lubricants
Cleaning materials Surfactants
Construction chemicals Textile chemicals
Paper chemicals Cosmetic chemicals

Indian specialty chemicals market: Overview

India is the 6th largest producer of specialty chemicals in the world; the top global players are the USA, China, Germany, Japan, and Korea. The Indian specialty chemicals sector constitutes about 22% of the total chemicals and petrochemical market of the country. The Indian specialty chemicals market size in the financial year 2018 was about $35 billion; it is expected to grow at a rate of 12-13 % CAGR (compounded annual growth rate) over the next five years, according to a report.

During the financial year 2018-19, the Indian specialty chemical industry’s plan to invest in further expansion. The move came after the industry witnessed a sharp demand for the production of various products. With this growing demand, the industry drives further growth and diversification.

Top specialty chemicals companies in India

  • Aarti Industries Limited
  • Deepak Nitrite Limited
  • Bodal Chemicals Limited
  • SRF Limited
  • Ion Exchange (India) Limited
  • Meghmani Organics Limited
  • Sunshield Chemicals Limited
  • Sudarshan Chemical Industries Limited
  • Vinati Organics Limited
  • National Organic Chemical Industries (NOCIL) Ltd

The growing Indian specialty chemicals market

The specialty chemicals industry has emerged as one of the most crucial chemical segments in India. The dependency of other end application products on the specialty chemicals has increased their demand. The industry has seen significant growth over the last decade and expected to further in the coming years.

With the disruptions in the Chinese specialty chemicals market in 2018, the Indian specialty chemical industry witnessed a rapid growth pace. About 30 – 40% of Chinese production plants of monosodium glutamate and certain dyestuffs and pesticides were shut down due to environmental concerns. This supply curtailment led to an increase in the manufacturing of specialty chemicals in India to ensure an uninterrupted supply in the market.

The Indian specialty market has been growing at a faster rate and it is expected to double by the year 2025. Business experts also believe that India may soon turn into specialty chemicals manufacturing hub. The market is currently down due to the outbreak of coronavirus pandemic, but it is expected to grow further when the COVID- 19 situation is under control.

Strengthening “Make in India” movement

Specialty chemicals industry plays a key role to strengthen “Make in India,” a movement to encourage Indian companies to manufacture their products in India. Make in India can be a success only with the support of a strong specialty chemicals supply. For example, for an Indian based nutraceuticals company to develop a new pharmaceutical drug, it’ll require a new formulation of the components, which can be sourced by the specialty chemicals manufacturers. Similarly, it’s the same with any other products such as cosmetics, painting and coating, agrochemicals, home care products, personal care products, plastics products, construction, etc.

Specialty chemicals play an important role in development of a new product. With this critical role played by them, it is emerging as one of the fasting growing sectors. The immense potential of the Indian specialty chemical industry is now being recognized at the global level.

With its skilled manpower, huge consumer market, and the increasing production capacity, India can play a central role in the global specialty chemical industry.

The growth drivers behind the specialty Indian chemicals market

The Indian chemical industry is huge with $165 billion in 2018, and expected to grow further. Specialty chemicals contribute about 22% of the total chemicals and petrochemicals market. It is expected that the specialty chemicals market may double by the financial year 2025. The growing specialty chemical market is due to the increasing demand from various markets such as construction, textiles, pharmaceuticals, cosmetics, home care, personal care, and food processing to name a few. The specialty chemicals are a significant part of the Indian chemical industry today. The key factors that drive the growth of the specialty chemicals market in India are:

Skilled workforce: India has a huge skilled workforce working at a lower wage compared to other countries. This pool of talent and extensive support from the government has helped the specialty chemical industry to grow in India, and will further continue to do so.

Growing domestic consumption: The growing demand for end application product among the industries and user are gearing up the production of specialty chemicals. To keep up with the high domestic demand the market is expected to further grow in the coming years. Further, with the increased GDP (Gross Domestic Product), the middle-class household is expected to grow to 148 million by 2030. With the increased urban population, the consumption of end products will increase. This will further increase the demand for specialty chemicals.

Strong demand from industries: The focus on specialty chemicals is slowly shifting from China to India; as the Chinese specialty chemical market started seeing a downturn due to the introduction of stringent environmental norms last year, which eventually led to the closure of many chemical plants. To maintain the continuity of the supply chain, the Indian specialty chemical manufacturers increased the supply.

Availability of raw material: BPCL (Bharat Petroleum Corporation Limited), an Indian oil and gas company, made an announcement to manufacture specialty petrochemicals derived from propylene like acrylic acid, polyols and butyl acrylates. These will find applications in hygiene products, adhesives, plasticizers, water-based chemicals, and sealants. After the announcement made by BPCL, other Indian petrochemical giants like HPCL (Hindustan Petroleum Corporation Limited), Indian Oil and Ratnagiri Refinery and Petrochemicals Ltd are also planning to replicate this method by setting up various manufacturing units.

The increasing production capacity of these chemicals will increase the availability of raw materials for specialty chemicals. These chemicals were previously imported from other countries.

Investment in R&D: R&D is paramount when it comes to specialty chemicals; as it focuses on R&D for improvement in the processes, and improving the efficiency of the product forms the base for the industry. The Indian specialty chemical industry is still in the nascent stage; for it to develop at the global level, companies are investing in further innovation. The chemical companies with the support of the government are constantly investing to strengthen R&D capabilities.

The presence of Indian specialty chemicals in the international market

The Indian specialty chemicals is an emerging sector. The rising demand due to an increase in consumption and making up for the reduced import had led to the growth of this sector. Although the growth rate is increasing, the overall utilization is yet to reach its maximum. India is expanding the specialty chemicals production to meet domestic needs but it is expected to be a key exporter at the global level soon. India is already a net exporter of dyestuff and pigments, which will continue to grow. The trend will continue with the other specialty chemicals too. Moving further, India is also investing in innovation and sustainability initiatives; these are expected to be major factors for competitiveness.

The key specialty segments in India are:

  • Paints coating
  • Agrochemicals
  • Fine chemicals
  • Construction chemicals
  • Colorants
  • Personal care chemicals
  • Aroma chemicals

In order to make a strong international presence, the existing players will have to increase their production and accelerate investment in R&D and innovation. Continuous research will lead to the development of high-quality products, thereby, reducing the harmful substance. Research along with stringent environmental norms will pave the path for green chemistry and sustainable initiatives.