India's Chemical Industry
Chemicals and China+1
How Chinese environmental crackdowns and trade tensions pushed global buyers to source chemicals from India, and why Chinese overcapacity later squeezed Indian firms.
China is the world’s largest chemical producer.
The opportunity
- From 2017-18, China closed thousands of polluting chemical plants in environmental crackdowns.
- US-China trade tensions and the pandemic pushed buyers to diversify.
- Global firms sought China+1 suppliers, boosting Indian chemical exporters.
The boom
Indian speciality chemical firms signed long-term contracts and expanded capacity in 2020-22.
The reversal
- From 2023, China built huge new capacity and dumped chemicals at low prices.
- Indian firms faced falling prices and profits.
- India imposed anti-dumping duties on some Chinese chemicals.
Lesson
Diversification creates opportunities, but competitors’ overcapacity can squeeze margins.
India’s strategy
Focus on quality, reliability, niche products and long-term contracts.
The contract win
A European agrochemical company signs a multi-year deal with an Indian firm for an ingredient it used to buy only from China.
Thinking China+1 guarantees steady growth
Chinese overcapacity squeezed Indian firms after 2023.
Key takeaways
- Chinese crackdowns and tensions pushed buyers to India.
- Indian firms expanded in 2020-22.
- Chinese overcapacity from 2023 squeezed margins.
- India imposed anti-dumping duties.
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