Is Indian Chemical Trading Sector Growing?

The chemical industry contributes significantly to India’s trade volume. The industry offers more than 80,000 commercial products, increasing India’s share in the global speciality chemicals market. This growth can be attributed to a revival in domestic demand, higher realizations due to rising crude oil prices, and better exports. In this article, let’s explore the growth momentum of the sector.

Chemical Trading Industry Highlights

• Significant Growth – The Indian chemical trading sector has experienced significant growth in recent years, with the market size of chemicals and petrochemicals reaching around $178 billion.

• Expected Growth – This whopping figure is expected to grow to $300 billion by 2025.

• Increased Demand – The speciality chemicals segment, which constitutes 22% of the total chemicals and petrochemicals market in India, has recorded a rise in demand at an approximate CAGR of 12% between 2019 and 2022.

• Global Consumption – India is expected to account for more than 20% of incremental global consumption of chemicals over the next two decades, with domestic demand projected to reach $1,000 billion by 2040.

• Top Contributors – In terms of state-wise market, Gujarat is the largest contributor to India’s chemical industry to date followed by Maharashtra.

Factors Pushing Trading Sector’s Growth

• International Factors- Several factors are enabling the Indian chemical trading sector’s growth, including trade conflicts between major global players like China, the United States, and Western Europe. These conflicts have shifted global supply chains, affecting bilateral trade and creating opportunities for Indian chemical companies in certain value chains and segments. 

• Domestic Factors- India produces a wide range of products related to petrochemicals, fertilizers, paints, varnishes, glass, perfumes, toiletries, and pharmaceuticals. The trading growth is also a result of strong participation from industry-dependent participants and various government initiatives. Other key drivers behind this growth are the robust demand across end-user industries, fueled by rising domestic consumption, strong export growth, and increasing import substitutions.

Insight

Industry-wide consolidation through mergers and acquisitions is becoming more prevalent, with scale playing an increasingly important role in fortifying competitive advantages for players in India. This could make a positive difference for India’s chemical companies and the industry. The traders and big players must thus focus on transitioning to the future with these available opportunities and ride the ongoing trends with a global outlook, aiming for more sustainable and higher value-generation business models.

Read more: Hydrochloric Acid: The Chemical Powering India’s Industries

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