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Units in chemicals sector set for rebound in revenue:
CRISIL SME Tracker
Growth mainly on account of recovery in domestic demand and higher realization due to a rise in the
prices of chemicals
Small and medium enterprises (SMEs) in the domestic chemicals sector are on course for 18-23 per cent revenue
growth in the current fiscal year (FY22), mainly owing to a recovery in domestic demand and higher realization due
to a rise in the prices of chemicals.
Moreover, an ongoing surge in exports as importer-countries reduce their dependency on China and turn to
suppliers elsewhere, including India, will support growth. However, India’s second Covid-19 wave will be a key
factor that needs to be monitored. China has also been shuttering chemical units to fight rising pollution, which will
also serve Indian companies well. SMEs account for 30 per cent of chemicals sector revenue in India.
The rebound in revenue growth follows a 13-15 per cent fall in FY21 due to the demand destruction that followed
the onset of the Covid-19 pandemic and a sharp fall in crude oil prices. The fall in demand is also expected to
impact margins in FY21.
During April-October, domestic demand plunged, with most end-use sectors grinding to a halt following the
lockdown. Exports also declined sharply owing to trade restrictions and a global slowdown. The rebound began in
India exports chemicals to the pandemic-hit US and Europe. With imports accounting for 20 percent of domestic
consumption, India is a net importer of chemicals, mostly from China.
Chemicals industry SMEs in India enjoy policy support through anti-dumping duties that vary by country and