MUMBAI: Indian speciality chemicals market has the potential to reach $ 60-70 billion by 2020 from the present value of $ 23 billion, a report said.
"Indian speciality chemicals market is currently valued at approximately $ 23 billion and has shown a strong growth at 14 per cent per annum over the last 5 years. Our estimates show that Indian speciality chemicals market has the potential to reach $ 60-70 billion by 2020," Tata Strategic report on 'Indian Chemical Industry' said.
Although the growth rate is encouraging due to small base, the consumption and overall penetration levels of speciality chemicals and additives are still very low in India.
With increasing consumption and high growth in end use industries several speciality chemicals would see a point of inflection in next 3-7 years, the report said.
Domestic demand of speciality chemicals is expected to follow an accelerated growth path. This demand is mostly driven by the strong growth outlook for end use industries. This, along with increased adoption of speciality chemicals and newer applications, can propel the growth further.
Indian speciality chemical manufacturers have strong presence in export market also.
APIsBSE 0.00 % and colourants (including dyes and pigments) are the key products exported. India exports speciality chemicals to nearby Asia-Pacific countries which don't have competitive scale of production.
India also exports to developed countries of Europe and USA where it leverages its low cost of production and quality talent pool.
Ability of companies to comply with global regulations and India's manufacturing competitiveness has helped the export market grow significantly.
The key speciality segments in India are agrochemicals, paints coating and construction chemicals, colourants, fine chemicals, personal care chemicals and aroma chemicals.
Going ahead innovation and sustainability initiatives are expected to be major factors for competitiveness. Development of processes/ products which eliminate or reduce the use of hazardous substances could become the key priority of producers. Consumers would be expected to pay premium for green chemistry and environmental preservation initiatives and appreciate this globally, the report said.
Moreover, stringent regulatory norms could further push the need to innovate cost effective industrial green chemicals.
Currently, the domestic speciality chemical producers also face challenges related to feedstock availability, higher operational costs, outdated technology/ process, limited investment in R&D & a negative perception amongst end consumers.
Apart from depending on regulatory interventions, Indian players should come together and pro-actively work towards collaborative investment to avert global competition, it said.