Specialty chemicals market may reach $70 billion by 2020: Report

The market for specialty chemicals in the country has the potential to expand from around $23 billion at present to $60-70 billion by 2020, according to a study report.

The Tata Strategic Management Group said in a report on 'Indian Chemical Industry' that the current base of specialty chemicals in India is small, but has the potential to expand.

While the growth rate has been encouraging the consumption and overall penetration levels of speciality chemicals and additives are still very low in India, due mainly to the small base, the study pointed out.

"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," the study pointed out.

With an increase in the number of end-user industries there could be a strong growth in both production and demand of specialty chemicals over the next three to seven years, the report said.

This, along with increased adoption of speciality chemicals and newer applications, growth will further expand the study pointed out.

India already has a strong presence in overseas markets for specialty chemicals, especially in active pharmaceuticals ingredients (APIs) and colourants (including dyes and pigments).

The country exports speciality chemicals to nearby Asia-Pacific countries, which do not have competitive scale of production.

While India has a cost advantage and manufacturing competitiveness in the developed markets, the study said, much will also depend on Indian companies' ability to leverage low-cost talent pool to ensure quality and comply with global regulations.

The study has focused on some key speciality segments like agrochemicals, paints and coatings, construction chemicals, colourants, fine chemicals, personal care chemicals and aromatic chemicals.

Going forward, the study said, sustainability of production, innovative production techniques, the ability to adapt to more environment friendly products and related regulation would be key to global competitiveness.

In addition to the high production cost and the lack of innovative, cost effective production methods, the domestic green chemicals industry has also been facing challenges related to outdated technology/ process, limited investment in R&D and a negative perception amongst end users, according to the study.