Impact of COVID-19 on Chemical Suppliers in India

The chemical industry of India is one of the largest and oldest industries. The industry is responsible for supplying products and raw materials to various other sectors. Also, by the end of 2025 the industry is expected to have a market value of 300 million USD. Contributing to 2.11 % of India’s total GDP, it is the largest sector to generating revenue for the country. Thus, making it the third-largest in Asia. The chemical exporters in India have got a strong base and contributes to about 34% of the entire countries earning.

With the market shifting to a more environmentally aware R &D process, India’s chemical supplies face crucial challenges. However, taking all the factors into accounts is a big opportunity for the chemical exporters in India to explore. This is because a lot of products are to be a resourced and invented for various use.

The sector with 100% FDI is making the market open for investments. With the support of the Indian government, the industry in research and development has reduced the essential customs duties on several products. It is offering help through make in India campaign. Not just this Indian chemical industry also holds a large pool of skilled and cheap workforce. Therefore, the foreign companies taking an interest in the Indian chemical industry benefits from it. Furthermore, vast growth opportunity are available from the polymer and agrochemical industries for the chemical suppliers in India. This is due to the comparatively lower per capita consumption and various schemes undertaken by the Indian Government.

Impact on the Chemical Industry of India

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Due to the coronavirus’s ongoing pandemic, the chemical industry in India worth $163 billion is struggling to stay in the competition, despite ranking 6th worldwide in the sales of chemicals and holding 14th positions in the global export market. The chemical exporters in India are responsible for 34% of the total export of petrochemical production to China. But as the Chinese Market saw a hit, finding a new market is challenging. Also, with the decrease in the price of petrochemicals due to the pandemic has resulted in more challenges. It is estimated that the world’s chemical demands are likely to decrease due to the uncertain global economy and capital markets.

The chemical suppliers in India, apart from exporting chemicals to China, rely on them for the import of certain critical chemical raw materials. Every year about $30 brilliant bilateral trade happens from China. But due to the rising price of raw materials and delayed shipments, the sector is getting affected. As per the research, about 20% of the total chemical production has already been affected by COVID-19.

The chemical suppliers in India have been walloped by the dual crisis of fall in oil prices and the outbreak of COVID-19. However, historic deal pulled off by OPEC+ might somehow help in reducing the ongoing price war, but it would not be enough to reduce the tension created by the pandemic.

Impact on Chemical Exporters in India

Due to the ongoing crisis, the leading chemical suppliers in India are reducing their capital and operational expenditure in the sector. Also, they have to scale down the manufacturing operations to 40%-60% capacity due to a shortage of labor and destruction in the supply of raw material. As per the stats, in February 2020 the global production of chemicals dropped by 2.4 %, with Asian production declining to 3.9% in the same month.

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Based on these stats, each of the chemicals shows a decline in production due to the ongoing pandemic. However, the production of certain specialty chemicals like paints have declined from 7.3% and coating declined by 9.4%, respectively. Also the decrease in demand for paints and coatings has been noted due to the lower construction activities and demand from automotive and other industrial sectors.

The travel restrictions have directly affected the demand for petrochemicals like C4 fractions and derivatives, which include synthetic rubber, butadiene, acrylonitrile-butadiene-styrene, used mostly in manufacturing tires. Countries closing their borders do the pandemic; the people are allowed to travel less, resulting in lower demand for transportation and automotive industries. This eventually has reduced demand for tires, significant impacting the demand for synthetic rubber.

How to tackle the crisis?

Despite the ongoing decrease in demand and prices, the chemical suppliers in India are responding positively by keeping their operations on while ensuring the safety of the laborers. With the demand for products increasing from major industries, the chemical suppliers in India can focus on the growing demand for antiseptics, personal protective equipment, and disinfectants. The crisis has resulted in massive demand for protective packaging for preventing contamination of food, medical products, and personal care.

Seeing current condition of the market, a large number of chemical suppliers in India have already shifted their business to safety products required for restricting the spread of the virus. Some of the examples of companies switching there manufacturing are

  • The companies previously manufacturing fuel grade alcohol are now in business by manufacturing neutral alcohol for disinfectants and hand sanitizers
  • Plastic manufacturers for sports gears are now in business by making medical Shields
  • The companies are getting more and more involved in producing protective mask and face shield to stay in the market during the crisis
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In Summary

Being well aware of the nature of chemical industries, manufacturing plants needs to be full of workers as the operations cannot take place remotely. But the firms needs to meet the guidelines of social distancing.

 The chemical suppliers in India for implementing staggered shifts along with social distancing between the workers to ensure their safety and abide by the government guidelines. The chemical suppliers in India to eliminate human intervention, in the production are bringing in new technologies.

Bringing in the new technology with automatic implementation, remote control production, and data science augment will not only reduce the density of workers but will also guarantee an efficient operation with reduced efforts. Along with this, the chemicals suppliers in India are adopting advanced digital capabilities that would help them integrate the production operations, that would help them deliver products on time.


Guhur Muktar

I am an SEO expert, writer and blogger with a strong passion for writing. I shares opinions and opinions on a range of topics such as technology, reviews, design, Android, gadget and many more...

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