Due to the recent Chinese special chemicals market overall facing decline, which provides potential development opportunities for India, Asia’s other emerging economies. According to consulting company Ambit Capital report data show that from 2013 to 2018, the global agrochemical market is expected to grow by 5.2%, total sales are expected to rise to 2018 from $619 billion in 2014 to $761 billion. Although small, the India market accounted for only 1%-2% of the world, but its market share is growing rapidly.

HSBC Global Investment Management vice president Dhiraj Sachdev believes that “commercial trade will transfer to India from China. The main reason for this phenomenon is in China, enterprises are facing more stringent pollution emission standards and rising wage costs. The special chemicals market in India only China 1/8, even 1/10, the special chemicals company in India to bring a lot of opportunities, including the expansion of company size and growth.”

In various industries, special chemicals were used to improve the quality of products, such as electronics, paint, coatings, plastics and automotive industry. Although the industry has great potential, but there are still many factors need to be considered and alert investors.

“This is a great game, you must be very careful investment, Hansal director Thacker Lalker group said,” we will be placed in the ABS chip at present, it is a foundation of special chemicals, widely used in consumer durable goods, toys, electronics and automotive interiors and its scope of application is inexhaustible. The existing consumption patterns will change, and it will promote the consumption of ABS. This industry can become a good investment choice is the reason, this is a high-tech industry, provides a natural barriers to entry. And it’s not like in the pharmaceutical industry, the pharmaceutical industry, from emerging markets, and has the technical and safety qualification of market participants is very limited.”

Co authors, Ambit Capital analyst Ritesh Gupta said in the report, his preferred investment options include PI Industries and SRF. “Because of the regulations, cost, and capacity issues, global agricultural investors are their outsourcing of manufacturing to India. This will bring many opportunities to India enterprises in the next 5-10 years.” The report is expected to PI Industries 2017 to 2018 price earnings ratio (P/E) will be fixed at 20.3 times over the same period, SRF price will be fixed at 15 times the profit ratio.

“Because India has the foundation of chemical production, research and development skills and the scale of national economy, so the special chemicals company in India will become more prosperous,” Vallum Capital, CEO Manish, Bhandari said, “the transfer occurs in the China market paradigm, the rise in Chinese to reduce pollution urgency and labor costs. We have established ecosystem based chemicals, which is the key factor in special chemical and pharmaceutical industries.”

According to the report, special chemical industry has become one of the best in the industry, in the past few years, most of the investors get return on investment 50%-100%. This makes the industry a year from 5 times earnings growth is expected to increase to 12-30 times a year. According to the report, due to the development of models and they provide high return of capital, expected earnings 15-20 times a year is not very high. “Special chemicals will not sell a product, they are selling a solution, which represents their profits will not be affected.

The fact is that the preferred value proposition of India investors is the purity of processing capacity, chemicals and protection of intellectual property rights, which is not only the capital arbitrage, analysts said.