India’s specialty chem to grow at 15% until 2010-11

14 January 2008 16:49  [Source: ICIS news]

MUMBAI (ICIS news)--India’s $40bn (€27.2bn) specialty chemicals segment is expected to grow at a compound annual growth rate (CAGR) of 15% till 2010-2011 which is almost double that of the global growth rate of 8.7%, an official said on Monday.

“There exist huge opportunities in the Indian specialty chemical sector as the industries grow due to increased value addition and outsourcing to India, mainly due to the low-cost advantage and abundance of skilled manpower,” Ernst & Young (E&Y) partner Rajeev Dalal told ICIS news on the sidelines of the Indian Specialty Chemicals Conference.

Export of specialty chemicals from India is expected to increase at a CAGR of about 22% to $13bn in 2013 as compared with $4bn in 2007, he said in a report published by E&Y and the Federation of Indian Chambers of Commerce and Industry (FICCI).

India’s specialty market is valued at about $10bn, representing about 24% of the total Indian chemicals industry, he said, adding that in spite of current volatility the profitability of the global specialty chemicals industry has improved considerably.

“The Indian chemical industry is expected to grow at a higher CAGR [compound annual growth rate] of 13.6% to reach $75.8bn by 2011,” he added.

“This would increase India’s share in the global specialty chemicals from the current 1.6% to 2.4% by 2011."

The major segments under the specialty chemicals sector in India are paints and varnishes, adhesives, dyes and dye intermediates, flavours and fragrances, surfactants and pharmaceuticals.

The paints and varnishes market in India stood at $2bn in 2005-2006 and is expected to reach $5.3bn in 2011-2012, growing at an annual rate of 16%, he said.

The Indian adhesives market, which is way below the global per capita level of consumption in the sector, is expected to increase to 250,000 tonnes/year by 2011-2012 from 128,000 tonnes/year in 2004-05, a growth of 10%.

Dye and dye intermediates demand is estimated to rise at an annual rate of 4.7% to 900,000 tonne/year in 2010-2011 compared with 652,000 tonnes/year in 2004-2005, Dalal added.

He said that the profitability of the leading specialty Indian companies had improved significantly.

“Foreign companies are moving their manufacturing base to India mainly due to a highly motivated and creative workforce, a well- ducated pool of scientists, excellent market knowledge and low labour and equipment costs. This leads to about 50-60% cost savings relative to the US and EU,” he added.

However, he highlighted that the Indian companies may feel a increased pressure in terms of cost of production, even in specialty chemicals, from Chinese companies.

The conference is being held on 14-15 January in Mumbai. 

($1 = €0.68)

By: Isha Jha
+65 6780 4359

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