India's growing population and dependency on agriculture drives chemical sector demand. From April 2000-April 2011, total FDI inflows into the Indian chemicals industry was US$ 2.9 billion.100 per cent FDI is permissible in the Indian chemicals sector; manufacturing of most chemical products are de-licensed.

Total production in the Indian Chemical industry has grown at an annual pace of 10 per cent since FY09. External demand has also contributed strongly to the growth in the industry. Base chemicals covers more than half (52.3 per cent) of the Indian chemical industry; the segment was valued at US$ 43.3 billion in FY10 followed by pharmaceuticals (24.2 per cent).

Agrichemicals and Biotechnology are the minor components of the sector accounting for 2.4 per cent and 3.0 per cent of production in FY10. Speciality chemicals are relatively high valued; The sector is rapidly growing and have a diverse end-product market.

Chemicals constitutes more than 14 per cent of India’s total exports. Total exports of chemicals grew from US$ 2.6 billion in FY02 to US$ 11.4 billion in FY10, a compound annual growth rate (CAGR) of 20.1 per cent.