The Indian Chemicals Industry, known for its diverse range of products and a mix of small and large-scale units, is currently undergoing a transformative change, according to a report jointly released by the Confederation of Indian Industry (CII) and KPMG in India.
Titled "Chemicals Value Chain Transition – Addressing the Impact of ESG, Globalisation, and Innovation," the report explores various aspects of the Indian chemical sector, emphasising the need for sustainability, digitalisation, and supply chain resilience.
Launched at the 5th edition of the CII Chemical Conference, the report outlines key growth trends across different chemical segments. India is positioned as a potential alternative platform for chemical production, leveraging benefits such as low-cost operations, raw material availability, skilled labour, and favourable government policies.
The report highlights some notable trends, including an increased momentum towards chemical consumption in Asian countries, a shift towards sustainable practices leading to investments in green chemicals, and the rise of automation, augmented reality, and digital twins to enhance operations and boost productivity. Additionally, the chemical sector is experiencing a robust M&A market, contributing to large-scale corporate carve-outs.
India is on a transition path, with local players evolving into global entities, making the country a prominent global manufacturing hub. Factors such as rising domestic consumption, increasing disposable incomes, and changing consumer preferences are propelling India to the forefront of the global chemical manufacturing map.
Sustainability is a key focus, with ESG (Environmental, Social, and Governance) factors gaining importance globally. Investors and stakeholders are increasingly considering sustainability and responsible practices as crucial factors in their decision-making processes. The report emphasises the need for stakeholders in the chemical sector to align with a sustainability vision.
Dubbed "Chemicals Hub 2.0," India aims to reduce import dependency by ensuring an uninterrupted global supply chain. Supply chain resilience is identified as crucial, given the potential impact on sectoral growth and national economies. The report calls for organisations to reimagine and manage their supply chains to ensure business continuity and future growth.
Innovation is identified as a cornerstone for the future of the chemical industry.
The report suggests key enablers, including government support for research and development (R&D), collaboration between companies, universities, and government agencies, and investment in new technologies to foster growth and innovation.
Commenting on the report, Manas Majumdar, Partner, Leader – Oil & Gas and Chemicals, KPMG in India, emphasised the need for a comprehensive and integrated approach, leveraging academia-industry-government collaboration to rejuvenate and keep the sector relevant.
Key takeaways from the report include strategic actions such as investing in research and development, adopting digitalisation for operational excellence, ensuring supply chain resilience, and seeking assistance from government bodies through incentives and support for sustainable practices.
The report underscores the potential for the Indian chemicals sector to enhance its market presence, sustainability, and positive impact on the economy through strategic initiatives and collaborative efforts.