How Industry 4.0 and digital transformation accelerate the growth of India’s chemicals industry

Posted: August 07, 2024

The Indian chemicals industry is a dynamic and growing sector, adding around 7% to the country’s GDP and 15% to its manufacturing output. The sector is expected to reach $304 billion by 2025, fueled by the rising demand from various end-use sectors such as pharmaceuticals, agrochemicals, textiles, paints and plastics. If company leaders succeed in securing a competitive advantage, the ambition for $1 trillion may be met by 2040.¹

However, the sector also faces significant challenges such as the impact of geopolitical events, increasing competition, variable raw material prices, evolving environmental regulations and changing customer expectations. To navigate these challenges with agility and to achieve sustainable growth, the sector needs to speed up the adoption of Industry 4.0 and the implementation of digital transformation.

Transforming the Indian chemicals industry

Industry 4.0 —or the fourth industrial revolution— uses advanced technologies such as artificial intelligence (AI), internet of things (IoT), cloud computing, big data, analytics, robotics and automation to create intelligent and connected plants, factories, products and services. Digital transformation employs digital technologies to improve business processes, models and strategies. When companies pair digital transformation with the advanced technologies of Industry 4.0, they increase productivity, enhance quality, lower costs, raise customer satisfaction and create new revenue streams— all in a sustainable manner.

By incorporating the use of connected intelligence and insights supported by sensors, smart devices, and data analytics, chemical companies can track and manage their processes in real time, identify and avoid problems proactively, and reduce energy and resource use. This can help lower downtime, waste and emissions, as well as ensure profitability, improve customer satisfaction, and meet sustainability goals.

Beyond the numbers

Industry 4.0 and digital transformation promise benefits that extend beyond the obvious. Companies can improve in all kinds of areas, including:

• Product innovation: By using artificial intelligence, machine learning and digital platforms, chemical companies can speed up their research and development, create and test new products, and tailor their offerings to meet the specific requirements of their customers. This can help them stand out from their competitors, generate new markets and increase customer loyalty.
• Customer communication and collaboration: By using IoT, cloud computing and mobile applications, chemical companies can communicate with their customers, suppliers and partners, and provide them with value-added services, such as predictive maintenance, remote support, and performance optimization. This can help them enhance customer satisfaction, retention, and advocacy, and lower customer acquisition and service costs.
• Business model transformation: By using digital platforms, blockchain, and e-commerce, chemical companies can develop new business models like platform-based ecosystems, asset-sharing, and subscription-based services– as well as reach new customers and markets. This shift can help them diversify their revenue sources, grow their market share, and reduce their reliance on traditional channels.

Overcoming India’s unique challenges

While many organizations are already often working towards digital transformation, whether from within or in collaboration with external partners, they still often encounter obstacles. Challenges like data silos or an unwieldy number of tools and disciplines may hinder their adoption journey.

For many Indian chemical companies, the threat of data silos stops them before they even start adopting digital technologies. Furthermore, given the smaller scale of their plants, many Indian businesses find it hard to generate concrete business rationalizations based on the usual economic factors. Organizations will need to rethink their business processes and leverage solutions that can help manage operations across multiple sites from a single location— increasing efficiency in the short- and long-term. In some countries, organizations have built remote monitoring centers to achieve economies of scale and use a team of experts to monitor performance and provide solutions across multiple sites.

Another challenge many Indian chemical companies often face is that they not only have to build a chemical plant or factory, but also all the infrastructure that goes along with it. Many companies operate power plants with generators ranging from 100-300 MW. In such scenarios, companies need to consider technologies that work for both the process plant as well as the supporting infrastructure so as to fully optimize their investments.

A connected industrial ecosystem as a force multiplier

Success will hinge on adopting an ecosystem-first strategy for data and insights. By developing an integrated digital twin enhanced with AI and data analytics, chemical companies can consolidate data from the entire industrial lifecycle to generate insights that drive better, more confident decision-making.

A connected, integrated industrial cloud-based ecosystem further empowers companies to extend the advantages of digital transformation across its multiple locations as well as externally— to its partners, suppliers, and other stakeholders. With improved cloud-based connection, teams can view integrated data from any location, allowing them to work together from a shared reference point and bolstering real-time collaboration. This ultimately builds a set of continuous feedback loops that spark ingenuity at every level.

A connected ecosystem also enables the best use of human capital. Instead of each organization or site hiring a large number of experts across multiple sites, organization and their partners can hire the right resources at the right location and deliver value across the entire enterprise.

People, process and technology

Industry 4.0 and digital transformation are not just buzz words, but powerful forces of change and growth that will transform the Indian chemical industry. To unlock the real value and lasting benefits of this technology, leadership teams need to clearly define their purpose and strategy for the long-term. Throughout the adoption process, leadership teams will also need to be involved in identifying the business processes that need to be adjusted to ensure successful implementation.

By adopting and implementing Industry 4.0 technologies, the industry not only can improve its operational efficiency, but also achieve its sustainability goals, creating a positive impact on society and the environment. The time is now for the Indian chemical industry to embrace Industry 4.0 and digital transformation so it can unleash its full potential— and reach $1 trillion by 2040.

¹“Securing competitiveness in India’s chemical industry,” McKinsey & Company. 18 June 2024. https://www.mckinsey.com/industries/chemicals/our-insights/securing-competitiveness-in-indias-chemical-industry