With multinationals such as Bayer, Clariant, DuPont and Sun Chemicals looking more closely at India to source their requirements, the country is likely to emerge as one of the top two low-cost specialty chemical exporters in the world.
India's specialty chemicals exports, which were around $2 billion in 2002-2003 are expected to reach the $12-15 billion mark by 2015, according to a recent McKinsey & Company report.
A significant part of this outsourcing opportunity in specialty chemicals will be captured by MNCs relocating their manufacturing to India.
While firms such as Rohm & Haas, Degussa have already set up plants in India, others such as Bayer, Clariant and DuPont have identified India as a key sourcing hub for intermediates. Sun Chemicals has also started sourcing ink intermediates from India.
Profits of manufacturers in the West are under pressure owing to overcapacity and fragmentation. This is one reason for the movement of manufacturing capacity to India.
The expiry of patents for a large number of drugs in the US and the need for re-registering a number of agri-chemicals in Europe has set manufacturers in this region thinking about shifting their facilities to low-cost economies before re-registering their products.
