How to Start a Small Scale Chemical Business

The chemical industry is a supporting pillar to other industries and creates an impact on those niches as well
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

  • |
  • Oct 27,2020
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  • 14 Mins Read

The Indian business ecosystem is ever-changing. Millennials are today showing much interest in becoming entrepreneurs and starting a small production business. Chemical business certainly outweighs other businesses in the segment. Not just that, small scale chemical businesses also help increase exports of India and contribute to the country's GDP. 

According to a report by Statista, with more than 80 thousand products, the Indian chemical industry is one of the most diversified sectors. It supports a host of other sectors and acts as a backbone in the development process of the nation. The Indian chemical industry is one of the largest worldwide, in terms of revenue. 100 percent foreign direct investment was permitted under the automatic route within this sector, with some exceptions for hazardous chemicals. Since the financial year 2016, there have been FDI investments of over one billion U.S. dollars each year in the chemical sector excluding fertilizers.

The report also states that excluding chemicals or hazardous nature, the chemical industry in India was de-licensed. In the first six months of 2020, there were 24 acquisitions of Indian companies by international players.

The chemical industry is a supporting pillar to other industries and creates an impact on those niches as well. If a person seeks to start a small scale chemical business, then here are a few steps.

Business Idea 

Once a business idea is developed, its blueprint should be checked anew. You can use several tools and plans to test the resilience of your business model. After seeing the viability of the business plan, then ascertain competitors, find strengths and weaknesses. Following this, you have to find the target audience for your business.


While starting the business, you have to be aware of competitors’ strategies and plans. Knowing their advantages and demerits would help fill loopholes in your business plan. After assessing the competition in the market, you can create a foolproof strategy and make your business more competitive as compared to the rest.


A business in the chemical industry is a risky venture. Primarily, it is intimidating to deal with chemicals without any experience or knowledge. To lessen the risk, you can consult an industry expert. A veteran can be approached to seek advice and guidance while starting a small scale chemical business. Their opinion is extremely valued and thus, you should work accordingly. 

To find a better veteran, search for a senior consultant. A veteran industrialist would give you advice without any prejudice. 


For a successful business, it is important to be a part of a thriving market or industry. To find out about the market, opt for a market feasibility report. The report will offer you helpful business insights along with industry trends, customer demand, and business structure. After going through the report, you will be able to make the right business-related decisions.  

Business Plan 

To kick-start your small scale chemical business, you have to create a business plan that comprises the company’s objectives, yearly or monthly goals, and its ultimate mission. Therefore, creating a business plan is the most significant task and has to be done precisely.   

In an alternate situation, if your business plan is not promising, then there are huge chances that your business may shatter in the offing. 


To run the business safely, it is essential to perform legal formalities for the business. You have to get your business registered locally. Following that, you have to procure a license to run a chemical business in the local premises without any objection.


After registering the business, it is intricate to find out a business location. While ascertaining the location, you have to make sure that it is close to the market, in turn, making the movement of goods easier. Similarly, it has to be ensured if the raw materials are easily available around the business location as it will also impact the overall production. 

These are some essential steps for starting a chemical business. Every individual who aspires to become an entrepreneur has to follow these steps. If there are any more steps that you want to share, then please share it with us in the comment section.

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