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Section A: Chemical Industry

Opinions of chemical SMEs in the Mumbai cluster

Among the various opinions expressed by the respondent SMEs, the prevailing need to increase spending on R&D and IT was ranked the highest. Other high ranking opinions were; the challenge posed by the prevailing liquidity crunch coupled with high interest rates and the need to increase focus on brand building so as to enhance the marketing prospects.

Industry obstacles

Anti-dumping activities, a steep tax structure, high raw material/fuel prices, and stringent environmental norms are the major factors that hinder the growth of SMEs operating in the chemical industry in the cluster. The survey results revealed that higher raw material/fuel prices and stringent environmental norms were considered as the two key factors that hindered chemical industry’s growth.

Expected business growth

Majority of the respondents (about 52%) expect their business to grow between 10-20% during FY10 and FY11 . Among the others, 18% expect their business to grow by 0-10%, and 15% expect their business to grow by 20-30%. The remaining 15% respondents are quite optimistic about their business growth and expect their businesses to grow by over 30% in FY10 and FY11.

Industry growth prospects

The growth rate of the chemical industry, according to majority of the survey respondents (60%), is expected between 0-10% in the next 4-5 years. Among the rest, 10% respondents expect the industry growth to be more optimistic at above 20%, 13% expect the industry to grow between 11-20%, and 17% respondents expect the growth to be stagnant.

Cluster benefits

In the survey quality upgradation, liberal taxes and duties, easy availability of funds emerged as the benefits enjoyed by chemical companies in the Mumbai cluster. Among these benefits, companies found quality upgradation to be the biggest benefit derived from the cluster.

Future plans

Some of the future plans of the chemical SME’s include capacity expansion, entering new markets and modernisation. As per the survey, approximately 88% of the respondent SME’s indicated capacity expansion as part of their future plan while approximately 83% of the respondent SME’s indicated entering new markets as part of their future plan.