INDIA ADDA – Perspectives On India

IBEF works with a network of stakeholders - domestic and international - to promote Brand India.



Dikshu C. Kukreja
Dikshu C. Kukreja
Mr. V. Raman Kumar
Mr. V. Raman Kumar
Ms. Chandra Ganjoo
Ms. Chandra Ganjoo
Sanjay Bhatia
Sanjay Bhatia
Aprameya Radhakrishna
Aprameya Radhakrishna
Colin Shah
Colin Shah
Shri P.R. Aqeel Ahmed
Shri P.R. Aqeel Ahmed
Dr. Vidya Yeravdekar
Dr. Vidya Yeravdekar
Alok Kirloskar
Alok Kirloskar
Pragati Khare
Pragati Khare
Devang Mody
Devang Mody
Vinay Kalantri
Vinay Kalantri

India: The Next Chemicals Manufacturing Hub

India: The Next Chemicals Manufacturing Hub

India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to India’s GDP. The chemicals industry in India covers more than 80,000 commercial products. India accounts for 2.5% of the world’s global chemical sales, exporting to more than 175 countries. The industry is expected to reach US$ 304 billion by 2025 at a CAGR of 9.3%, driven by rising demand in the end-user segments for speciality chemicals and petrochemicals segment. Over the last few years, the Indian chemicals sector has outperformed all shareholder expectations, surpassing not only the entire equities market but even the majority of its upstream and downstream industries. India’s chemical sector is currently estimated to be worth US$ 220 billion in 2022 and is anticipated to grow to US$ 300 billion by 2025 and US$ 1 trillion by 2040. During the global pandemic, the chemical industry was one of the few sectors that not only survived but also grew by leaps and bounds.

The general global dynamics have prompted major multinational corporations to shift their focus to downstream chemical potential, resulting in a greater emphasis on petrochemicals and speciality chemicals in India to increase self-sufficiency. India's desirability as a manufacturing destination has grown as a result of competitive labour prices, the capacity to establish manufacturing units at a lower cost than in the developed countries, and recent adjustments to corporation tax rates that have moulded a more friendly ecosystem.

Chemical Industry in India

The chemical industry is a knowledge intensive as well as capital-intensive industry. It is an essential component of the expanding Indian industry. It covers basic chemicals and their derivatives, petrochemicals, fertilizers, paints, varnishes, gases, soaps, fragrances, toiletries, and pharmaceuticals. Over eighty thousand commercial goods are included in the chemical industry's extensive diversification. This industry plays a critical role in satisfying fundamental requirements and increasing quality of life. The industry is the country's mainstay of industrial and agricultural development, providing building blocks for a variety of downstream sectors such as textiles, papers, paints, varnishes, soaps, detergents, pharmaceuticals, etc.

Growth Factors

  • Rising domestic consumption

Over the next two decades, India is predicted to account for more than 20% of the increase in world chemical consumption. Domestic demand and consumption are anticipated to increase, going from US$ 170-180 billion in 2021 to US$ 850-1000 billion in 2040.

  • Changing consumer preferences

The growing global demand for bio-friendly products may help India, as it is a major producer of many chemicals used in such products.

  • Shifting supply chains

Firms are attempting to make their supply chains more resilient in response to the shifting geopolitical landscape and the drive to diversify away from the old core manufacturing markets. India could be a desirable destination because of its great value proposition.

Production of Chemicals

  • In February 2023, major chemical production was 874.30 million metric tonnes (MMT), while petrochemical production was 1,773.74 MMT.
  • In February 2023, production levels of various chemicals were as follows:
    • Soda Ash: 250.87 MMT
    • Caustic Soda: 269.17 MMT
    • Liquid Chlorine: 201.48 MMT
    • Formaldehyde: 19.13 MMT
    • Pesticides and Insecticides: 17.01 MMT


  • From April 2022-March 2023, exports of organic (US$ 9.64 billion) & inorganic (US$ 2.17 billion) chemicals were estimated at US$ 17.19 billion.
  • Imports of organic (US$ 18.3 billion) and inorganic (US$ 9.34 billion) chemicals totalled US$ 29.58 billion from April 2022 to March 2023. 
  • From April 2022-December 2022, imports of petroleum, crude and products stood at US$ 163.78 billion.
  • Exports of petroleum products are 73.63 billion during April-December 2022.
  • From April-March 2022, the export of agro-chemical was US$ 5.37 billion, dyes were US$ 2.04 billion and the other dye intermediates were US$ 183.49 million.
  • The import of agro-chemical was US$ 1.79 billion, dyes were US$ 0.31 billion and the other dye intermediates were US$ 1.22 billion during April-March 2023.
  • India exports to more than 175 countries in 2022. The major export destinations are USA, China and new destinations viz. Turkey, Russia and Northeast Asian Countries (China, Hongkong, Japan, Korea RP, Taiwan, Macao, Mongolia)

Petroleum, Chemical and Petrochemical Investment Regions (PCPIRS)

Under the PCPIR Policy, 2007, four Petroleum, Chemical, and Petrochemical Investment Regions (PCPIRs) are being implemented in the states of Andhra Pradesh (Vishakhapatnam), Gujarat (Dahej), Odisha (Paradeep), and Tamil Nadu (Cuddalore and Nagapanam) to promote investment and industrial development in these sectors. The PCPIR policy is being extensively revamped. The new PCPIR Policy 2020-35 aims to attract a total investment of US$ 142 billion (Rs. 10 lakh crore) by 2025, US$ 213 billion (Rs. 15 lakh crore) by 2030, and US$ 284 billion (Rs. 20 lakh crore) by 2035 in all PCPIRs across the country. The PCPIRs are designed in a cluster strategy to boost the petroleum, chemical, and petrochemical sectors on a big scale in an integrated and environmentally beneficial manner. The four PCPIRs are estimated to create jobs for around 33.83 lakh people. Around 4.21 lakh people have been employed in direct and indirect PCPIR-related activities. The Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIR) initiative will also attract an estimated US$ 276.46 billion (Rs. 20 lakh crore) investment by 2035.

Opportunities In India’s Chemical Sector

With a net trade surplus, the Specialty category is the most important pillar of India's chemicals business. The Specialty Chemicals segment is expected to be a main driver of this growth. Net exports are predicted to more than tenfold by 2040, from roughly US$ 2 billion in 2021 to US$ 21 billion. Almost 80% of the segment's exports would originate from four sub-sectors: agrochemicals, dyes and pigments, cosmetics and personal care, and food additive chemicals. It has the potential to contribute more than ten times the present figure of US$ 2 billion. In total, 16 speciality chemicals sub-segments perform well in terms of cost competitiveness and market attractiveness. These are two of these sub-segments:

  • Specialty chemicals

    With a net trade surplus, the Specialty category is the most important pillar of India's chemicals business. The Specialty Chemicals segment is expected to be a main driver of this growth. Net exports are predicted to more than tenfold by 2040, from roughly US$ 2 billion in 2021 to US$ 21 billion. Almost 80% of the segment's exports would originate from four sub-sectors: agrochemicals, dyes and pigments, cosmetics and personal care, and food additive chemicals. It has the potential to contribute more than ten times the present figure of US$ 2 billion. In total, 16 speciality chemicals sub-segments perform well in terms of cost competitiveness and market attractiveness. These are two of these sub-segments:

    • Agrochemicals: Agrochemicals are currently a US$ 5.5 billion market in India, expanding at an 8.3% CAGR. By 2040, it is predicted to account for about 40% of India's total chemical exports and nearly 13% of the worldwide ag-chem industry. Indian agrochemical businesses have a significant cost advantage over their worldwide rivals, owing to low raw material and manpower costs.
    • Food and Feed Ingredient Chemicals: The market for this sub-segment, which consists of nutraceuticals, food and feed additives, and flavours and fragrances, is worth US$ 3 billion in India and is expanding at a CAGR of 7-9%.


Source: Mckinsey

  • Inorganic chemicals

    The availability of feedstock is the segment's main determinant of production because inorganic chemicals require less processing than other products. However, it has a strong demand for several inorganic compounds, making it an appealing market. Six sub-segments appear as opportunities for creating an at-scale firm in the segment, underpinned by high growth rates of end-use industries and natural feedstock advantages. Exports in the inorganic sector will be propelled by carbon black, sodium, and titanium. Two of these are:

    • Fluorine: Fluorine is predicted to be a US$ 4.2 billion market by 2040, growing at a CAGR of more than 10%. Its expansion will be fuelled by increased demand from two of its primary end-use industries: pharma and ag-chem.
    • Sodium and Caustic: The CAGR for this sub-segment is predicted to be close to 10%. By 2040, sodium and caustic might be worth US$ 13 billion and US$ 11.5 billion, respectively.


Source: Mckinsey

  • Petchem

Opportunities in petrochemicals are highly dependent on the scale and vertical integration capabilities of chemical businesses. For instance, bulk polymers (Polyethylene, Polypropylene, PVC, etc.) score highly on the market attractiveness and cost competitiveness indices thanks to backward integration at the cracker level. However, other businesses are better suited to concentrate on goods whose feedstock are freely accessible on the merchant market, such as C4, C6, and C8 derivatives. Exports in the segment will be led by C8 (Paraxylene) and C6 (Benzene) building blocks, as well as bulk polymers PP,LLDPE, and HDPE. In the Petchem industry, India has an abundance of feedstock for higher carbon building blocks (C4, C6, and C8). As a result, its combined surplus production of Butadiene (C4), Benzene (C6), Paraxylene (C8), and Orthoxylene (C8) is much larger than that of its competitors.

Source: Mckinsey

Government Initiatives

  • National Policy on Petrochemicals
    • Setting up of Plastic Parks
    • The programme intends to establish need-based plastic parks, an ecosystem with cutting-edge infrastructure, and common amenities through a cluster development model, in order to consolidate and synergize the capacities of the domestic downstream Plastic Processing Industry. The scheme's overarching goal is to support the economy by boosting sectoral investment, production, and exports while also creating jobs. Ten Plastic Parks have been authorised under the Scheme in the States of Madhya Pradesh (two), Odisha, Jharkhand, Tamil Nadu, Uttarakhand, Chhattisgarh, Assam, Uttar Pradesh, and Karnataka.

    • Setting up of Centres of Excellence in Polymer Technology
    • The scheme's goal is to improve the country's existing petrochemical technology and research, as well as to encourage the development of new polymer and plastic applications. In phase-I of the Scheme, which was in place from 2013 to 2017, the Government of India provided financial support up to a maximum of 50% of the project's overall cost, subject to a cap of US$ 7,25,448 (Rs. 6 crore) over a period of three years. The Scheme was extended until 2020 with updated parameters in 2016-17, with the goal of fostering applied research and technology transfer from lab to industry. So far, 13 Centres of Excellence (CoE) have been approved and built within the facilities of prestigious educational/research institutes.

    • Petrochemicals Research & Innovation Commendation Scheme 2023
    • The scheme for establishing Plastic Parks, the scheme for establishing Centres of Excellence, and the National Petrochemicals Awards Scheme have been reviewed/revised and renamed the Petrochemicals Research & Innovation Commendation Scheme with effect from January 2023. The Department's vision is to be realised through the promotion of R&D and human resource planning and development. The policy intends to institutionalise the Petrochemicals Research & Innovation Commendation Scheme in order to achieve this goal.

  • Chemical Promotion & Development Schemes (CPDS)

Chemical Promotion Development Scheme (CPDS) has been implemented in DCPC's Chemical Division since 1997 under Plan Head of Account. The goal of CPDS is to facilitate the growth and development of the Chemicals and Petrochemicals industries through the creation of knowledge products such as studies, surveys, data banks, promotional material, and so on, as well as the dissemination of knowledge through seminars, conferences, and exhibitions. The Scheme also intends to encourage research and innovation by honouring excellent achievements in the field of chemicals and petrochemicals. The Scheme's goal is to provide financial assistance in the form of Grants-in-Aid (General) to various organizations/industry associations, etc. to conduct workshops, seminars, studies, and other activities that will allow the Department to form firm opinions on various policy issues affecting the Chemical and Petrochemical sectors.

The funds utilized under CPDS since 2018-19 are as follows:


Fund Utilized (Rs. in crore)











Road Ahead

The future of the Indian chemical business appears bright, and the country might become a driving force in the global chemical market's demand and supply. The chemical industry in India continues to be a desirable hub of opportunity and a steady value creator. With the stocks of several specialised companies expanding dramatically, the industry has historically generated great riches for investors. Strong demand across end-user sectors, driven by expanding domestic consumption, strong export growth, and increased import replacements, are likely to be the key growth drivers for the chemical sector. Growing local demand and expanded exports will drive the growth of the Indian speciality chemicals industry. Many Indian speciality chemical firms have developed specific competencies and built supply partnerships with worldwide networks. Due to the sector's strong performance, speciality chemical firms are increasing production capacity to satisfy rising demand for their goods.