Chronicling the Journey of the Budding Indian Chemical Industry

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Personal care and water treatment are both expected to continue performing well, due to increase in GDP and subsequent increase in the disposable income of Indian consumers. A booming infrastructure sector

has ensured steady development for construction chemicals, while the predominant role of foreign players has had a regressive effect on the domestic catalyst manufacturers.

A common strain running through all these sub-segments is a severe lack of cohesion and insufficient R&D, which, in turn, lead to higher prices. This, combined with the prolific presence of, and tough competition by, Chinese goods continues to deter the rate of development of the Indian speciality chemicals industry.

Healthy competition v/s potential threat

A more liberal foreign policy has lead to many major players setting up base in India, which, according to some experts, may pose a threat in disguise for the domestic chemical industry. To the surprise of many, however, many Indian players continue to valiantly hold their own, with the basic chemicals segment still dominated by domestic players.

The domestic speciality chemicals sector, although still relatively young, is populated by both domestic and foreign players, and is working hard to tilt the balance in its own favour. The knowledge chemicals sector, however, has had to grapple with rampant foreign acquisitions, a trend which is steadily undermining domestic presence in this sector.

Mr Lohokare points out, “Within the said segment [knowledge chemicals], pharmaceuticals, a market worth US$18 billion, is facing potential threat from foreign players dominating the segment. For instance, major takeovers have happened in this segment. While Ranbaxy has been acquired by the Japanese company Daiichi Sankyo Co. Ltd, US-based Abbot Laboratories has taken over Solvay Pharma and Piramal Healthcare.

Therefore, despite Indian generics being globally reputed, this trend of foreign acquisition is likely to continue.”

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