The specialty chemicals India industry was valued at about $25 billion, which was achieved by the double-digit growth in the last five years. This is seen as one of the next most significant trends for the investors to bet on.
The chemical companies of India accounts for about 3% of the global specialty chemicals market under-seen a growth of 13% over the last five years significantly led by the domestic consumption of the chemicals.
With the required help from the international companies, the specialty chemical India industry can reach to next level. Here are 5 critical success factors that led to the growth of the specialty chemical India industry in the global market.
• Achieving high growth
To achieve the expectations of the fivefold market of specialty chemical India companies, the companies in India should aim to grow at a rate of 20%- 25% every year to increase the opportunity and gain market share.
Also, international companies must help achieve their higher aspiration by empowering the top Management teams in India and developing their capability. In addition to this, the local management teams of specialty chemicals India must focus on and formulate strategies about the methods to increase the market share in the global economy. In short, the company should come up with strong Business development teams that will provide them with the right information on the market.
Such teams would help the companies to identify the opportunities in specialty chemicals India industries and help them develop relationships and partnerships to accomplish targets. The international company set up in India with multiple business units may come across with some of the business firms having small resources of their own for investment in the sector for attracting the attention to the global parent company. In such a scenario, the companies with Indian chief executive officers can assign and share the profit and loss responsibilities of such companies. This would help in driving growth in the sector and capture across business unit synergies. In addition to this, they must also work hard to attract the required talents fit for building up their business in India and must focus on providing them with a competitive salary.
• Investment in specialty chemical India market
Most of the international companies in India underestimate the extent to which much of a day they invest in the development of the specialty chemical India market. Furthermore, the chemical companies India must work with the key market players to provide them with the required information that would benefit using specialty chemical products.
Secondly, the focus of international companies must remain on the development of the local products at the right price as this would help drive demand growth. A massive sector of demand for specialty chemicals in India comes from lower price segments. The companies need to work in the industry to bring and new consumers who have been buying products previously manufactured cheaply without specialty chemicals. Thus, it can result in the formation of a market for new consumers.
Thirdly, the companies must focus to support the implementation of chemical products to adhere the environmental standards. This is because it would help the society accept the highly advanced specialty chemical ingredients, which would eventually increase the demand for environmentally-friendly specialty chemicals. This can be achieved with joint efforts of specialty chemical industries, and the government.
• Development of an exclusive model
India’s specialty companies make it difficult for the international companies to use their previously used business model in the country resulting in companies rethinking their strategy.
Specialty, chemical India companies face challenges to meet the needs of the countries fragmented and dispersed and uses market. Thus, the company must come up with a critical account strategy along with its partners and large customers of other companies and local distributors that would help them develop an active distribution network across different geographical locations to increase the coverage and decrease investment cost. Using the strategies, companies can manage to return on the invested capital.
• Benefiting from India’s cost advantage with investment introduction for export and in R&D
Chemical companies India offers significant potential for international companies to access the low-cost manufacturing and Research strength of India through partnership and M&A. India, with its large number of skilled workers and lower wage rates scheme, offers a massive benefit to the international companies. India being a significant exporter of crop protection chemical products, printing inks, dyestuffs, and pigments has a substantial scope to become a global production base for the market segments of speciality chemicals.
• Meet the needs of infrastructure in India
International companies must consider the challenges of manufacturing specialty chemicals in India and consider the conditions in the business case. Despite having plant construction lead time lower than the leading companies, and lower capital expenditure, the specialty chemical companies in India, face extreme challenges to access intermediates, to store and distribute infrastructure and to get reliable power.
The international firms by setting up their industry on the sites having the best infrastructure along with reliable power suppliers and Port facilities will benefit them a lot. The companies’ project must have a blueprint of building a captive power plant at least the power backup for the projects requiring a dependable power generator. In contrast, the companies requiring building blocks that are not available in India should consider manufacturing products that are more downstream and integrating upstream with the availability of necessary chemicals. In addition to all this, the company should also consider planning a hold on the safety stock of raw materials that must include additional financing requirements to meet their overall business case.
The international chemical companies in India have worked for the past several years to incorporate the specialty fibres into new radicals of chemicals to meet the needs of Indian buyers, which has already translated into tens of millions of dollars. Thus, it is clear that the chemical companies in India offer a great chance for international companies to expand and invest in the sector during this time.
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