the biggest export opportunity for Indian chemical companies is in specialties

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  • Published date: December 22, 2020
    • North Delhi, Delhi, India [ Ad Id - 116010 | Ad Views - 8 ]

In 2017, several Indian and Chinese companies competed to provide a polymer intermediate for a global chemical company. The deal is lucrative and will last 20 years, requiring a new plant. After a period of difficult negotiations and careful field visits, the global company awarded the contract to aarti industries of India.

Observers of international trade may be surprised that the contract was not acquired by a Chinese company. After all, China's low cost and manufacturing capabilities have made it a big exporter of all kinds of industrial goods. But in India, people are not surprised. Indeed, Indian chemical executives are betting that they will increasingly win in global markets.

The managers of Indian specialty chemicals saw the door open to India. China is cracking down on environmental violations, forcing some small chemical companies to close down; US President Donald Trump is making it harder to do business with China through a combination of import tariffs and intellectual property lawsuits; covid-19 is making it harder for all chemical buyers to rethink and diversify their supply chains.

These factors are prompting purchasing managers in the US, Europe and Japan to re-examine India as a source of raw materials for their chemical products. However, there are still many environmental, safety, logistics and political barriers for India to become the world's preferred supplier of chemicals.

Chemical manufacturing is one of the oldest and most diverse industries in India. China is leading in some areas. India, for example, is a strong global dyestuff supplier, accounting for nearly 16% of global dye and dye intermediate production, according to the government agency invest India.

In the chemical sector, India's largest export sector is specialty chemicals and the largest import sector is petrochemical intermediates, according to a report released in February by consulting firm McKinsey & Co. Overall, India faces a chemical trade deficit of US $15 billion a year.

"This deficit opens the door to two opportunities," the report said "Reducing the import of petrochemical intermediates could make India more self-sufficient and improve downstream investment in specialty chemicals. Increasing exports of specialty chemicals can bring India a greater share of global value. "

Most observers believe that the biggest export opportunities for Indian chemical companies are in the special products sector. "The global trade market for specialty chemicals is about US $700 billion to US $750 billion. India's export volume only accounts for about 4% of this, while China's market share is about 15%. So there are a lot of opportunities for Indian companies, "says Deepak palakal, head of strategy and technology at step, an Indian consultancy.

With the supply disruption caused by the covid-19 pandemic, interest in India as an alternative to China has grown. But some companies have been seeking diversification longer: Palekar says he has helped some Japanese companies establish ties with Indian companies for more than three years to reduce their dependence on China.

Indian executives are eager to take advantage of the opportunity. Rajendra gogri, chairman of aarti industries, said: "an important factor in favor of Indian companies is the increasing competitiveness of Indian companies compared with producers in other countries." Aarti won a 20-year supply contract that combines low construction costs, sound quality practices, solid intellectual property protection, and an experienced team to build and operate complex plants, he said.

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