Stringent government regulations regarding environmental impact of manufacturing industries acted as a growth driver for water based adhesives and reduced the sales of solvent based adhesives, says Ankur Gupta of Ken Research.

 

Indian adhesive industry has consistently registered incremental year-on-year (YoY) growth rates during the period of FY’2010 - FY’2015. In FY’2011, the adhesives market in India registered revenues of Rs 42.4 billion which inclined to Rs 47.5 billion in FY’2012. The inclination in revenues of the adhesives market was mainly due to rising demand for adhesives from industrial sector such as packaging and automotive industry. The robust growth in the industry can be attributed to increasing revenue of Pidilite, which has been the major player in the industry. As of FY’2015, Pidilite claimed almost 50% of the total market.

 

Stringent government regulations regarding environmental impact of manufacturing industries acted as a growth driver for water based adhesives and reduced the sales of solvent based adhesives. Moreover, the high price of solvent based adhesives also limited their sales. Though the revenue contribution of hot melt adhesives has been low, it is set to increase in the future due to growing population and favorable industrial policies and government’s initiatives to promote industrialisation in India.

 

Consumer and industrial segments are the two segments which the India adhesives industry has been bifurcated into on the basis of end use of adhesives. The industrial segment of the India adhesives industry saw participation from a large number of global manufacturers such as Henkel, HB Fuller, Huntsman and 3M to name a few. On the other hand the consumer segment was dominated by Pidilite Industries Limited which is a domestic manufacturer. This segment witnessed excessive presence of small and medium manufacturers in the unorganised sector.

 

Adhesives market in India has witnessed a growing demand from the FMCG sector. Companies which manufacture packaged food and beverage items have initiated the deployment of these adhesives in densely populated areas to obtain a higher usage by customers. Moreover, the urban population which possesses a tremendous recognition level of usage of modern adhesives has spurred the growth of this market. The key aim of FMCG companies by using efficient quality adhesives in the market has been to provide users with better packaging facilities which are non-harmful as well as non-toxic to their health.

 

In addition to market driving forces, in automobile sector weight reduction is the most cost-effective means to reduce fuel consumption and emission of greenhouse gases. It has been estimated that for every 10% of weight eliminated from a vehicle’s total weight, fuel economy improves by 7%. This also means that for every kilogram of weight reduced in a vehicle, there is about 20 kg of carbon dioxide reduction. Thus, adhesives manufacturers are increasingly focusing on developing adhesives that help in reducing weights and contribute to reduction of greenhouse gases emissions.

 

The Government of India has permitted up to 100% foreign direct investment through automatic route for all products in the chemical industry except for hazardous chemicals. This policy of the government has allowed global adhesive manufacturers such as DuPont and BASF to establish operations in India.

 

Augmented foreign direct investment in the adhesive industry has paved the way for growth and expansion in the industry and has significantly improved the quality of products. Moreover, with the Indian government planning to invest heavily in infrastructure development, the construction industry in the country is set to register robust growth. Building and construction being a major end user segment for adhesives will also boost growth in the India adhesives industry exponentially. The growth in the industrial segment for adhesives is expected to be significantly higher than the consumer segment since industrial uses of adhesives will expand in the coming years.

 

However, adhesives market faces major challenge in terms of procuring raw material. The manufacturing process of adhesives entails extensive use of chemicals which are sensitive to storage conditions, have a limited shelf life and are governed by government policies. Though most of the chemicals required by the industry are available in India, some have to be imported creating obstacle in terms of lead time, exchange rate fluctuations and custom policies. The procurement of specialty grade chemicals becomes complex due to limited number of suppliers and availability issues.

 

Ankur Gupta is the Director of Ken Research Pvt Ltd. For complete report, refer following URL: https://www.kenresearch.com/metal-mining-andchemicals/chemicals/india-adhesive-market-research-report/4476-101.html