India’s chemical sector will become the next growth engine
A very good news has emerged for the Indian economy. If you think that India’s progress is limited only to IT or infrastructure, then you need to think again. The latest report of global consulting firm Boston Consulting Group (BCG) has presented a new picture. According to the report, India’s chemical market is going to grow at double the speed in the next few years. The market, which is worth around 150 billion dollars today, will cross the huge figure of 300 billion dollars (about Rs 25 lakh crore) by 2030.
1 billion dollar opportunity
A very interesting aspect has been highlighted in the report which is being called ‘Sunrise’ sector. India is currently investing heavily in semiconductor (chip) manufacturing. To make a chip, more than 40 types of ultra-pure chemicals are required. At present, we are dependent on Japan, Korea, Taiwan and China for these essential chemicals.
BCG report considers this as a “whitespace” for Indian companies. There is an opportunity of $1 billion for Indian manufacturers in inputs at the fabrication stage alone. If Indian companies invest in clean-lab infrastructure and purification systems, they can establish themselves as $100-200 million businesses in the next decade.
Now we need a ‘big bet’
Managing Director of BGC India, Amit Gandhi, says that India’s chemical industry is at a turning point. Companies have the money, capacity and credibility, but now they will have to take ‘bold decisions’.
The report clearly states that to achieve the target of 300 billion dollars by 2030, one cannot rely only on ‘momentum’ or the old pace. Indian companies will have to make one big bet that will define their portfolio in the 2030s. This means that now it should not be just about selling goods in ‘tonnes’, but about solving customers’ problems (Solving Chemistry Problems).
Advice on acquisition of foreign companies
The report advises that Indian companies should now think about acquiring mid-sized firms from Europe and Japan, especially family-owned companies. This will give them access to ready technology, brands and new markets.
BCG India Partner Amita Parekh also emphasized that the use of digital and AI to increase margins is no longer an option but a necessity. Considering the way demand is increasing in the beauty, personal care and construction sectors in India, such as advanced waterproofing or performance coating, domestic companies will have to strengthen their supply chain in India.