Leading SMEs of India 2023

64 | Leading SMEs of India 2023 [ INDIAN SME SECTOR OVERVIEW ] scheme for basic chemicals and act ive pharmaceut ical ingredients. Additionally, given that hydrogen is an important feedstock for the chemical industry, the launch of National Green Hydrogen Mission with a target to reach an annual production of 5 MMT by 2030 will facilitate transition of the industry to low carbon intensity feedstock. INDUSTRY TRENDS Diversification of supply chain: Global MNCs are looking to diversify chemical supply chain (China+1) toalternate locations to reduce concentration risks. Indian chemical manufacturers are increasingly sought as an alternate supplier for MNCs. Large capex plans: Large Indian chemical companies are expected to spend over INR 55,000 crores on capital expenditure over FY24-25. This capex is expected to further fuel the growth of the sector going forward. G r o w i n g d e m a n d f o r chemicals: There has been rise in demand for chemicals and related products from the end user industries. Besides rise in domestic demand, the demand from international markets is also witnessing traction over last 2-3 years Sus tainabi l i ty focus : The mandatory regulations related to chemical management & handling, chemical usage and envi ronment management have led the domestic chemical manufacturers to focus on sustainability aspects. Some of the green initiatives of the industry are use of green hydrogen as the potent ial feedstock, manufacturing of green ammonia and conversion of CO 2 to chemi ca l s l i ke methanol, amongst others. CHALLENGES Global slowdown and geo- pol i t ical tensions: Global d ema n d s l owdown h a s impacted the volume growth and increasing energy costs have led to rawmaterial inflation impacting profitability of Indian chemical companies. Lack of scale: Many chemical s egmen t s l i ke spec i a l t y chemicals are dominated by MSMEs which operate at a significantly lower scale. This impacts their ability to compete with the global companies. R&D spends: MSMEs face a cha l l enge o f l ow R&D spends and limited access to technology. This hampers their ability to scale up and move up the value chain. Besides, MSMEs also lack awareness about intellectual property rights related issues. GROWTH OUTLOOK India’s per capital consumption of chemicals is just one-tenth of the global average, there is an enormous potential for growth for the Indian chemical industry including MSMEs going forward. As per the government estimates, the demand for chemicals and petrochemicals in India is expected to reach to USD 1 trillion by 2040. Apart from growing demand, the use of digital technologies in the production process, strengthening of R&D capabi l i t ies , s t rong backward and forward linkages as well as availability of highly skilled manpower will help drive growth of the Indian chemical sector in the coming years. In addi t ion to thi s , var ious government policy measures like dedicated Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) zones as well as setting up of 10 plus plastic parks will provide significant boost to the investment for the sector. Amongst chemical segments, specialty chemicals will continue to remain the strongest pillar of India’s chemical sector by Dun & Bradstreet