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India's Chemical Sector: The Big Picture |
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6th |
Largest chemical producer globally |
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~7% |
Contribution to India’s GDP |
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US$1 Tn |
Market opportunity by 2040 |
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3rd |
Rank In Asia by production |
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80,000+ |
Commercial chemical products |
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4th |
Largest agro-chemical producer |
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New Chemical Cycle is Unfolding |
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China Headwinds to India Tailwinds Earlier, the biggest risk for Indian chemical companies was cheap Chinese imports, often below the Indian cost of production. China's pressure has structurally reduced due to multiple factors |
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Yuan Appreciation: ~20% vs India Chinese products are now significantly more expensive for Indian buyers, eroding China's cost advantage. |
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Increase in Logistics Cost: ~1.5x rise Container freight rates have increased amid disruptions in the Red Sea and the Strait of Hormuz, sharply raising the cost of Chinese chemical imports into India. |
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Export Rebate Removal: Effective 1 April, 2026 Under anti-involution, the Chinese government removed export rebates, further raising the landed cost of Chinese chemical exports. |
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India Trade Agreements: Australia, EU, UK, US India has signed landmark trade deals, reducing tariff barriers on chemical exports and opening significant new export corridors. |
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Rising Costs Would Separate Winners From Losers |
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| Chemicals are largely oil & gas derivatives. |
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With Brent crude at >US$100/bbl and key building blocks like Methanol, Ammonia and Propylene in acute shortage, input costs have risen sharply across the value chain. |
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Higher crude price costs would be passed on to end consumers. |
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While gross margins may face near-term pressure, sector leaders with pricing power and scale may gain market share at the expense of unorganised players. |
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Kotak Nifty Chemicals ETF: The Smart Way to Play The Cycle |
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Sector Leaders Only: Top 20 chemical companies from the Nifty 500 Index by free float market cap. |
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Low Cost: Relatively lower cost compared to actively managed funds. |
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Diverse Exposure: Spans speciality, commodity, agro, fertilisers, explosives, carbon black & industrial gases. |
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Source: Bloomberg, IBEF, Shanghai Containerised Freight Index as of 11 May 2026, Trading Economics, ICIS, S&P Global, KMAMC Internal, KIE, bblBarrel, AMFI Basic Industry classification used, as per the latest data available. |
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The information contained in this document is extracted from different public sources/KMAMC internal research. All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication. This is for the information of the person to whom it is provided without any liability whatsoever on the part of Kotak Mahindra Asset Management Co Ltd or any associated companies or any employee thereof. Investors should consult their financial advisors if in doubt about whether the product is suitable for them before investing. |
The material includes statements/opinions which contain words or phrases such as "will", "believe", "expect" and similar expressions or variations of such expressions, that are forward-looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with the statements mentioned with respect to but not limited to exposure to market risks, general economic and political conditions in India and other countries globally, which may have an impact on services/ investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. Past performance may or may not be sustained in the future. |
These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of this document in certain jurisdictions may be restricted or totally prohibited, and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions. |
For detailed portfolio and related disclosures for the scheme, please refer to our website https://www.kotakmf.com/Information/forms-and-downloads. The portfolio and its composition are subject to change, and the same position may or may not be sustained in future. The fund manager may make changes based on market conditions and in the best interests of the investors. To view the latest complete performance details of the Scheme, kindly refer to the factsheet on our website at https://www.kotakmf.com/Information/forms-and-downloads. Investors should consult their Financial Advisors if in doubt about whether the product is suitable for them. |
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. |
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