EXECUTIVE SUMMARY
India's chemical industry, valued at Rs. 21,50,750 crore (US$ 250 billion) in 2024, is projected to reach Rs. 26,25,000 crore (US$ 300 billion) by 2028 and Rs. 86,03,000 crore (US$ 1 trillion) by 2040. The industry manufactures over 80,000 commercial products, employs more than 2 million people, and contributes approximately 7% to India's GDP. Globally, India is the sixth-largest chemical producer, the third-largest consumer of polymers, and a leading global supplier of dyes and agrochemicals.
Market Size (2024)
US$ 250 billion
Projected Market Size (2028)
US$ 300 billion
GDP Contribution
7%
Employment
>2 million
Introduction
The chemical industry in India is largely de-licensed, except for a few hazardous chemicals. This provides for a very dynamic atmosphere for growth and investments. The industry covers bulk chemicals, petrochemicals, and polymers, fertilisers, specialty chemicals and agrochemicals, involving a wide variety of chemicals ranging from alkali, inorganic and organic chemicals, pesticides and insecticides, dyes and pigments, polymers, synthetic fibres, synthetic rubber and performance plastics, where the production of alkali chemicals takes the largest share accounting for 73%. India is considered to be the sixth-largest chemical manufacturer in the world and third-largest in Asia with 7% contribution to GDP.
India is in a good position within international business with respect to its chemical industry, as it ranks 14th among chemical export countries and 8th among chemical importing countries (not including drugs). India contributes 2.50% to global sales of chemicals and is the second-largest exporter of chemical dyes and dyestuffs, producing 16% of total world dyestuff output.
The sector has a strong foundation in innovation through the presence of more than 200 national laboratories and 1,300 research and development centres. India has for a long time been at the forefront of production of generic medicines, biosimilar products, and vaccines, and supplies more than 50% of vaccines in the world. There have also been improvements in the market for disinfectants.
India has positioned itself as a global player in sectors like chemicals, polymers, agrochemicals, and pharmaceuticals due to its robust manufacturing sector and rising domestic demand. Under its 2030 vision, the country aims to become one of the world's leading hubs for chemical manufacturing, targeting a 5-6% share of the global chemical value chain. Traditionally, India has been the global leader in the segment of generic drugs and biosimilar products.
MARKET SIZE AND GROWTH
- India's chemical industry, valued at Rs. 21,50,750 crore (US$ 250 billion) in 2024, is projected to reach US$ 300 billion by 2028 and Rs. 86,03,000 crore (US$ 1 trillion) by 2040.
- The specialty chemicals market reached Rs. 5,83,972 crore (US$ 67 billion) in 2025, projected to reach Rs. 8,65,444 crore (US$ 93.40 billion) by 2034, at a CAGR of 3.65%.
- The agrochemicals market reached Rs. 1,40,327.60 crore (US$ 16.10 billion) in 2025, projected to reach Rs. 2,18,677.60 crore (US$ 23.60 billion) by 2034, at a CAGR of 4.19%.
- Chemicals and petrochemicals demand in India is expected to nearly triple, reaching US$ 1 trillion by 2040.
KEY SEGMENTS
The Indian chemical industry is likely to exhibit robust growth in FY38, on account of the growing demand from important segments of the chemical sector. The alkali chemicals segment is likely to continue being the leading one in the Indian market, followed by organic chemicals and inorganic chemicals, whereas pesticides and dyes and pigments segments are also likely to grow.
Alkali chemicals constituted 71.07% of the total chemical production during FY25. Total chemical production in India was recorded at 13,983 MMT during FY25 and is anticipated to be at 18,109 MMT during FY28. This is expected to grow further to 42,870 MMT during FY38.
INVESTMENTS AND FDI
- The total flow of foreign direct investment into the chemicals sector (excluding fertilizer sector) was Rs. 1,57,144.24 crore (US$ 24.83 billion) from April 2000-June 2026. The Chemicals sector formed 3.07% of the total equity inflow through FDI from April 2000 to June 2026.
- The Paradip PCPIR, located in the state of Odisha, has received an investment of about Rs. 1.44 lakh crore (US$ 17.30 billion), providing employment to about 40,000 workers through 13 chemical industries.
- The Dahej PCPIR situated in Bharuch has received total investments of around Rs. 1.29 lakh crore (US$ 15.42 billion), providing employment to more than 2.45 lakh persons in 2,079 chemical plants.
- In Andhra Pradesh, the PCPIR between Visakhapatnam and Kakinada has seen total investments of about Rs. 68,148 crore (US$ 8.20 billion), creating jobs for 86,123 individuals from 154 chemical companies.
- A total of 48 projects have been sanctioned in the Production Linked Incentive (PLI) Scheme for Bulk Drugs, during August 2026, at a cost of Rs. 6,940 crore (US$ 731.53 million).
GOVERNMENT INITIATIVES
- Production Linked Incentive (PLI) Scheme for Bulk Drugs
- PLI Scheme for ACC Battery Storage
- PCPIR (Petroleum, Chemicals and Petrochemicals Investment Regions) Policy
- Bulk Drug Parks Scheme
- Make in India
- National Monetisation Pipeline 2.0 (NMP 2.0)
- 100% FDI under the Automatic Route
DRIVERS AND OPPORTUNITIES
- Growing demand - is estimated that the Indian middle class will increase from 104 million in FY25 to 148 million in FY30, fuelling the consumption of cosmetics, agrochemicals, food, and paints and coatings.
- Policy backing - 100% FDI is allowed through the automatic route, except for dangerous chemicals, along with consistent backing of the sector in the Union Budget.
- Investment opportunities - The PCPIR regions have an ambition to accumulate investments of Rs. 20 lakh crore (US$ 276.46 billion) by 2035.
- Shift to sustainable products - Increase in consumers' and industry's interest in environmentally sustainable products is opening up avenues for specialty chemicals, green chemistry, and sustainable chemicals production.
STRATEGIES
- Sustainability and green chemistry - Reliance Industries is determined to emerge as a carbon-zero company and has entered into a 15-year green ammonia supply agreement worth Rs. 26,512 crore (US$ 3 billion) with Samsung C&T Corporation.
- Capacity expansion and backward integration - Aarti Industries is making an investment of Rs. 200-250 crore (US$ 22.60-28.30 million) for establishment of an integrated manufacturing plant at Dahej SEZ, Gujarat.
- Diversification and specialisation - Gujarat Fluorochemicals Limited intends to exploit its production capabilities for refrigerant gases according to the Montreal Protocol and Kigali Amendment to emerge as a leader in the fluorochemicals sector.
- Skill development - The Central Institute of Petrochemicals Engineering and Technology (CIPET) is providing special training to develop skilled manpower for the industry.
M&A
- Astral Chemie Limited agreed to acquire a 60% partnership interest in Differentiated and Sustainable Solutions LLP for Rs. 39.11 crore (US$ 4.12 million) in June 2026.
- In May 2026, Dorf-Ketal Chemicals India purchased the water treatment division of Vasu Chemicals LLP, which represented the company's foray into the Indian water treatment industry.
- In May 2026, Sun Pharmaceutical Industries signed an agreement for acquisition of Organon and Co. at an approximate price of Rs. 1.11 lakh crore (US$ 11.75 billion).
- The merger between Paradeep Phosphates and Mangalore Chemicals and Fertilizers was finally completed in October 2025, which increased their production capacity by over 23%.
TRENDS
- Specialty chemicals demand rising - is estimated that India will see an increase in its specialty chemicals industry to Rs. 8,65,444 crore (US$ 93.4 billion) by 2034 on the back of growing demand from various industries.
- Rising demand for chemical usage due to growth in end-use sectors such as automotive (electric vehicles, lightweight materials), construction (smart city), water purification, and textiles.
- Disinfectant market rise - Rise in hygiene consciousness and healthcare spending is fuelling the growth of the disinfectant market in India.
- Increase in agrochemicals export - The agrochemicals are projected to comprise nearly 40% of total chemicals exports of India by 2040.
- New manufacturing hotspots - PCPIR identified areas have set a target for investing Rs. 20 lakh crore (US$ 276.46 billion) by 2035.
- Focus on sustainability - India's market for green chemicals, including green solvents, biodegradable surfactants, and bio-based polymers, is expected to grow at a CAGR of more than 10% and exceed US$ 15 billion by 2027.
RECENT DEVELOPMENTS
- June 2026 : Industries achieved the EcoVadis Platinum Rating 2026, scoring 87/100 for sustainability performance
- June 2026 : Gujarat Fluorochemicals moved to fully utilise its Montreal Protocol refrigerant gas production rights
- June 2026 : HPCL Rajasthan Refinery commenced commercial operations of its Rs. 79,459 crore (US$ 8.99 billion) integrated refinery-cum-petrochemical complex
- March 2026 : Tata Chemicals' Mithapur facility achieved a production milestone of 1 million tonnes of soda ash in FY26
- October 28, 2025 : Bharat Petroleum signed agreements to expand refining and petrochemical operations, including a proposed Rs. 1,00,000 crore (US$ 11.43 billion) greenfield complex in Andhra Pradesh
- July 2025 : The UK and India signed a Free Trade Agreement, removing tariffs on 99% of Indian exports, with the chemical industry among the major beneficiaries
FAQs
The Indian chemical sector includes bulk chemicals, petrochemicals, and polymers, fertilisers, specialty chemicals, and agrochemicals with over 80,000 finished products and more than 2 million employees.
The industry represents 7% of the total GDP of India and is estimated to be worth Rs. 21,50,750 crore (US$ 250 billion) in 2024, making India the world's sixth largest manufacturer of chemicals.
These sectors include five main components: bulk chemicals, petrochemicals and polymers, fertilisers, specialty chemicals, and agrochemicals.
Growth is driven by increasing middle-class consumption, FDI investments, PCPIR investment zones, and foreign firms diversifying their supply chain risks from China.
Specialty chemicals industry market value was US$ 67.00 billion in 2025 and is expected to register a growth of 3.65% CAGR to reach US$ 93.40 billion in 2034.
Some of the major policies are PLI Scheme for Bulk Drugs, PCPIR policy, Bulk Drugs Parks scheme, and 100% FDI through the automatic route.
The areas of opportunity include PCPIR identified manufacturing clusters for an investment target of Rs. 20 lakh crore (US$ 276.46 billion) by 2035, capacity expansion in specialty chemicals, and manufacturing green chemicals.
Firms are developing green solvents, biodegradable surfactants, and bio-based polymers, while the Indian green chemicals market is estimated to cross US$ 15 billion by 2027 at CAGR above 10%.
India's chemical industry is expected to grow to US$ 300 billion by 2028 and Rs. 86,03,000 crore (US$ 1 trillion) by 2040 due to increasing demand in India and diversification of the international supply chain.
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