Page 129 - CW E-Magazine (4-2-2025)

Point of View

Growth of India’s chemicals market is a given; but

manufacturing here will take some doing

The Indian chemical industry still remains a bright spot in an otherwise blighted landscape, though growth this year has been muted as compared to
the past. This is partly due to slowing down of the overall economy and private consumption adversely impacted by inflation. The external environment
remains challenging, and uncertainty looms as the threat of tariff and non-tariff barriers escalate in several parts of the world. Though these challenges
are real and need short-term combat measures – by industry and policy makers – it is important to not lose sight of the fact that the industry has a bright
outlook and will have to play a vital role if the dream of a Viksit Bharat (Developed India) @ 2047 – the centenary of Independence – is to be realised.
But there are several roadblocks that will have to be overcome of the targets are to be achieved. Some of the foremost relate to availability of skilled
human resources (which is ironic given our population); improving the safety profile of the industry; and raising competitiveness through technology
and policy interventions.

Essential and indispensable industry
First and foremost, it is important to recognise that the chemical industry is a vital one that cannot be wished away (as some would have). Its
products touch individuals and industries in multiple, indispensable ways, and this will only increase as India grows more prosperous and industrious.
The industry is critical to the many new technologies deemed essential to sustainable living, including all forms of renewable energy (wind and solar
power, in particular), and hydrogen-powered energy systems (think membranes, electrolytes). This not-so-obvious role of chemicals is well illustrated
by the case of batteries that go into electric vehicles, which have taken the automotive industry by storm. Batteries are in essence chemical reactors in
which chemical energy is converted into electrical energy during discharge (and vice versa during charging). Reports of fires (mostly in the two-wheelers)
have brought focus on the quality of the batteries and the need for efficient heat dissipation systems, which are typically chemicals and polymers used
in the form of conductive films, adhesive tapes, thermal pads, thermal mastics or even liquid products.

Growth in the Indian chemical market will also come from the upgradation of quality and performance even of products in conventional end-use
segments. Discerning products – be they foods, textiles, personal care products, or electronics – will boost demand for differentiated chemicals that
offer the performance boost.

In an Indian context, there are several growth drivers for this critical industry. Per capita consumption levels for most chemicals are currently way below
global averages, let alone of advanced countries, and these can only go up. Sustainability pressures could act as a brake on some sectors – e.g., plastics –
but even here the upward trend in demand is expected to be maintained, though perhaps at a slightly diminished pace. To give one perspective, China, with
a comparable population to India’s, has a chemical industry which is 5x larger!

In short, demand growth is a given. The ability to scale up the supply side adequately will depend on several factors and three are discussed hereon.
Improving public perception & getting the talent
It is a lamentable fact that the relevance of the industry is not so well recognised by policy makers – with some exceptions – and is reflected in
regulations put in place at national, state or even local levels. It is sad that the industry is largely viewed through the prism of the problems it creates,
stemming from unsafe operations that adversely impacts human lives and/or the environment.

Public perception of the industry matters. If the industry is to grow to quadruple in size by 2047 to meet the demand expected, it will need greater
societal acceptance than now. It is also key to attracting the talent the industry will need. It is a harsh reality that even today the chemical industry is not
the first choice when it comes to career options. While this is the case in many other parts of the world, it is particularly problematic for India given that the
industry here still has a long way to go before it can be said to punch at a scale commensurate to the size of the economy. A significant portion of engineers
and scientists trained in chemical technologies and chemistry – especially from premier institutions – are lost to the industry as they switch careers to desk
jobs such as marketing or finance or move out all together to other sectors, notably IT services. This has compelled the chemical industry – especially the
mid-size ones – to draw technical human resources from tier-2 and tier-3 institutions, most of which have ‘quality’ issues that needs substantial investments
(by companies hiring) in training and skill development.

The lack of ‘demand’ for courses in chemistry and chemical engineering has even driven some educational institutes to reduce batch intake or even
shut down these courses.

Captains of industry must dwell on all of these aspects, for selfish reasons if not altruistic ones. Many companies have great growth ambitions,
but lack the managerial bandwidth to match, and are often seen drawing in professionals past their retirement age to run operations. This is neither
sustainable nor desirable, and every effort must be made to recruit, mentor and train a new crop of leaders to drive growth.

Chemical Weekly February 4, 2025 129

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