India is the fastest growing specialty chemicals market in the world, as per a study by McKinsey & Company. It is expected to touch $40 billion in 2025, up from $28 billion in 2018. This is in sync with the growth vis-à-vis the global specialty chemicals market that is poised to reach $953.9 billion by 2027, growing at a CAGR of 5% from 2020 till 2027.
Shift towards Asia
Asia promises to drive 75% of the specialty chemicals demand till FY25, primarily owing to disproportionate growth in China. This continent’s share in this sector is expected to grow from 47% in 2018 to 50% in 2025.
Buoyant growth and development
This immense growth world-wide can be attributed to improved standards of living, trade liberalization, upsurge in urbanization, awareness and of course, technological advancement. The pandemic has made this diverse industry more focused towards healthcare and sustainability. This global trend indicates a high demand for specialty chemicals offering a wide array of benefits like being anti-microbial, wrinkle-free and stain-resistant.
How are specialty chemicals different from the others?
All chemical products are categorized on the basis of the markets they serve. To understand this better, let us differentiate specialty chemicals from the other important product genres in the industry such as commodity chemicals, textile chemicals, pharmaceuticals, agro-chemicals and consumer products.
- Commodity chemicals are categorized solely on their chemical composition. Polymers, plastics, synthetic fibres and petrochemicals are the main examples in this category
- Agro-chemicals, slated to touch US$ 3.7 billion by 2022 in India alone, constitute all the products used in agriculture, like different fertilizers and pesticides
- Today, there is a huge, established segment of the chemical industry dealing with consumer products like soaps, detergents, toiletries and cosmetics
- The pharmaceutical industry is one of the main consumers of the chemicals industry. The key chemicals are used for the manufacturing of active drug substances, bulk substances and important components of finished products that are consumed by patients
- Specialty chemicals, also referred to as performance chemicals, usually comprise of molecules or mixtures of molecules called “formulations”, are used as ingredients in finished products. They are typically high-value and sold on the basis of their quality and not composition. Playing an important role in improving manufacturing processes, these chemicals are the backbone of many industries like textiles, ink additives, construction, automobiles, oil and gas, food and cosmetics
The Indian market
What makes this specialty chemicals industry so special and important for the progress of our country? Let us unearth some encouraging facts…
- A strong export presence – Factors like low-cost manufacturing facilities, a dedicated and qualified workforce, skilled labour at low cost as well as abundance of human resources have made India a preferred destination for international companies intending to spread their wings on a global platform
- Huge growth potential – Rise in disposable income and urbanization has perked up growth in the industry, particularly in the end-user segment like textiles, paint, personal care, homecare and adhesives
- Strong players – A unique business model and a strong entry barrier has provided an important impetus for growth in this sector. Important processes like vendor acquisition, customer retention and product registration are tedious with very stringent regulations. This bars mediocre players from entering the fray and promotes healthy competitiveness in the market
- Support from the government – The Indian government has proposed to draft a National Chemical Policy to facilitate this industry achieve a 6% GDP in the next decade. Introduction of timely product-linked incentive (PLI) schemes, as well as allocation of funds as part of Union Budgets, has also contributed to the exponential growth in this segment
Experts in the trade have outlined five pillars on which the futuristic growth of the industry in India will depend on:
- Creating a strong R&D ecosystem
- Setting up a one-stop investment destination
- Providing alternative chemicals destination
- Rolling out PLI schemes
- Sustainable chemistry
Fineotex: Leading the growth story
As a brand, Fineotex has made an indelible contribution to this industry since its inception in 1979. This debt-free company dealing in specialty chemicals has outshone its competitors by registering a phenomenal growth even in these pandemic-stricken times. The company has aggressively diversified, expanded and even invested in recent times to prepare itself for the spurt in demand expected from 2022.
To stay abreast of new trends in the industry, this vibrant organization has recently forayed into fast-growing segments like home care, hygiene and drilling while simultaneously strengthening its core textile chemicals business. Its strong in-house developmental capabilities, backed by an experienced management, are expected to help expand its distribution network as well as gain more traction with existing as well as new markets vis-a-vis the global terrain in the near-future.