Next Gen Industrials
Supply chain resilience for bulk chemical producers
02 Jul 2025
India’s chemical industry is entering a phase of strategic transformation. Currently valued at over US$ 300B, the sector is projected to grow significantly, potentially reaching US$ 1T by 2040. This growth is being driven by rising GDP, expanding demand across end-use industries, and India’s emergence as a global manufacturing hub. However, in an increasingly uncertain global environment, building resilience across the supply chain is no longer optional. It is now a critical lever for sustained growth. As global chemical supply chains face mounting pressure from geopolitical instability, climate events, and shifting regulatory norms, India has a unique opportunity to lead by embedding resilience at the core of its chemical value chain.
Building resilient supply chains to power India's next growth wave
The global chemicals industry, which contributes nearly 5% to global GDP, has experienced major disruptions over the past decade.The COVID-19 pandemic halted production,upended shipping networks and triggered demand volatility. The European energy crisis significantly increased input costs, while China's zero-COVID policies and stricter environmental norms reduced output capacity. These disruptions exposed key vulnerabilities in global supply chains and highlighted the risks of over-dependence on a single geography.
India’s
chemical and pharmaceutical sectors are no exception. Heavy reliance on
imported inputs, particularly from China, has left them exposed to similar
risks.In 2023-24, it imported APIs and bulk drugs worth ~US$ 4.4B, meeting 35% of it's total API requirements.Of this, 70% came from China. For some essential medicines, dependence is as high as 80-100%. Almost the entire requirement of fermentation-based APIs like ciprofloxacin, and norfloxacin is sourced from China.This underscores the urgent need to build resilient supply chains through domestic manufacturing and diversified sourcing.
Forces reshaping the chemicals ecosystem in India
India’s chemical supply chain is undergoing a structural shift driven by global, regulatory, and technological forces. As companies look to future-proof their operations, three key trends (As shown in exhibit below) are shaping the roadmap ahead.
Exhibit 1: Three structural forces reshaping supply chain
Firstly,
the China +1 strategy is redirecting global manufacturing flows,
creating export potential for India supported by its skilled workforce and
policy tailwinds.Secondly, sustainability imperatives such as the EU's Carbon Border Adjustment Mechanism are compelling Indian players to decarbonize operations and adopt circular models.Finally, digital transformation is emerging as a game-changer, with tools like digital twins, real time tracking, and predictive analytics enhancing visibility, agility, and resilience across the supply chain.
Rethinking strategy from efficiency to flexibility
India’s chemical companies must move beyond traditional supply chain models that optimize only for cost. Resilience requires diversified sourcing, intelligent planning systems, and the capacity to respond rapidly to changes in demand and supply.
This shift involves rethinking network design. Instead of centralized stock points and long lead times, companies should consider regional warehousing, multimodal logistics, and flexible manufacturing assets which can help reduce turnaround time, lower logistics costs, and improve service reliability. For instance, multipurpose plants that can serve varying demand are increasingly being seen as strategic investments in the specialty chemicals segment (As shown in exhibit below).
Digital tools will be central to this transformation.Real time market sensing, automated inventory, planning and scenario modelling, are now critical components of a modern, resilient supply chain. Companies like Bayer are leveraging digital twins to simulate supply chain performance and identify risks proactively.
Sustainability will also be a parallel priority. Indian firms such as DCM Shriram are complementing the supply chain modernization with renewable energy adoption, creating operations that are not just resilient but also future- ready and environmentally responsible.
Exhibit 2:Legacy "just-in-time" vs" Future "just-in-case" supply mode
Key imperatives for supply chain resilience
As Indian chemical companies navigate growing complexity and disruption, building resilient and agile supply chains has become a strategic priority. Six key imperatives(As shown in exhibit below) that can help organizations transition from reactive operations to future -ready ecosystems. These include aligning supply chain and business goals, redesigning networks for greater flexibility, and enhancing planning capabilities, tos respond swiftly to market shifts.
Companies must also foster collaborative partnerships across the value chain, embed digital tools for real-time visibility, and build internal capabilities through empowered teams and structured governance. Together these levers can help unlock long-term competitiveness and resilience.
Exhibit 3: Six strategic imperatives for a future- ready supply chain
How Praxis can help
At Praxis, we partner with chemical manufacturers to build resilient and future-ready supply chains. Our work spans supplier risk diversification, emissions-linked supply chain redesign, and digital enablement of logistics and planning. By assessing end-to-end network structures, modelling supply chain vulnerability, and identifying opportunities for green and tech-led transformation, we help clients embed flexibility, and sustainability into their operations. Our proprietary resilience and diagnostic tools and scenario-based planning frameworks provide actionable insights to navigate the uncertainty and unlock long- term value (As shown in exhibit below).
Exhibit 4: Capabilities we build and implement
