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Can India Outpace China in Chemicals? The Strategic Playbook

Can India Outpace China in Chemicals? The Strategic Playbook

The Indian chemical industry, valued at $220 billion in 2023, is not only expanding rapidly but also transforming in nature. With favourable policies, rising domestic demand, and increasing global appetite for speciality chemicals, the industry is expected to touch $300 billion by 2030 and $1 trillion by 2040. Consequently, the Indian chemical industry is now seen as a key driver of India’s economic ambitions, already contributing 7% to GDP, ranking 6th globally, and supporting over 2 million jobs.

Indian Chemical Sector Landscape

To begin with, the Indian chemical industry contributes 3.4% of the global chemicals market and exports to over 175 countries. Moreover, the government has opened the sector for 100% FDI, except in hazardous chemicals, thereby encouraging foreign investment. However, despite these strengths, India faced a $31 billion trade deficit in 2023, primarily because of petrochemical imports.

Global Positioning and Tailwinds

China Opportunity

As global supply chains diversify away from China, the Indian chemical industry is emerging as a preferred hub. Consequently, speciality chemicals are driving this shift, enabling Indian firms to capture new markets and deepen their presence in global value chains.

Government Interventions

Furthermore, policy measures are providing a strong foundation. The PLI scheme for bulk drugs and advanced chemistry, combined with Petroleum, Chemicals & Petrochemicals Investment Regions (PCPIRs), ensures large-scale investments. The industry already has an investment pipeline worth $100 billion by 2035.

Policy Framework

At the same time, the proposed National Chemical Policy emphasises sustainability, safety, and R&D. Export incentives and Quality Control Orders (QCOs) are also creating a level playing field, ensuring Indian products meet global standards.

Sustainability in Focus

In addition, companies are embracing green chemistry, renewable energy, and circular economy models. For instance, Godavari Biorefineries, Epigral, and Aditya Birla Chemicals are pioneers in bio-refineries and carbon-intensity reduction. Simultaneously, energy-efficient upgrades and zero-liquid discharge plants are gaining traction, underscoring India’s shift toward responsible manufacturing.

Export Trends

Exports are also on an upward trajectory. In 2024, India’s chemical exports stood at $82.4 billion. Notably, speciality chemicals accounted for almost 50% of this value, while agrochemical exports are projected to exceed $9.6 billion by 2028. Thus, exports remain a cornerstone of growth, reinforcing India’s global competitiveness.

Breadth and Depth of Players

The sector’s diversity is reflected in its leading companies. For example:

  • Deepak Nitrite is making strides in phenol, acetone, and green projects.
  • SRF Ltd. is advancing in fluorochemicals and high-performance polymers.
  • Aarti Industries continues to secure large export contracts alongside sustainability-linked R&D.
  • Godavari Biorefineries is building ethanol-based green plastics.
  • Aditya Birla Chemicals and Epigral are investing in renewable integration and advanced technologies.

Moreover, global-facing firms such as Pidilite, UPL, Atul, Camlin Fine Sciences, and Reliance Industries are actively innovating in sustainable solutions, while public sector leaders like Indian Oil Corporation are setting up large-scale recycling plants. Collectively, this breadth underscores the ability of the Indian chemical industry to serve multiple sectors—from agriculture and pharmaceuticals to construction and electronics.

Speed Breakers

Nevertheless, challenges remain. India still depends heavily on petrochemical and API imports, which creates vulnerabilities. Additionally, regulatory delays in environmental clearances, infrastructure gaps in ports and logistics, and a shortage of R&D talent present significant hurdles. Therefore, overcoming these bottlenecks is critical for the sustained growth of the Indian chemical industry.

Strategic Roadmap

To address these issues, NITI Aayog has proposed seven interventions, including:

  • Developing chemical clusters and hubs
  • Enhancing port infrastructure
  • Providing Opex subsidies for high-impact chemicals
  • Promoting indigenous R&D and technology
  • Simplifying environmental clearances
  • Negotiating chemicals-focused FTAs
  • Building talent pipelines for chemical engineering and R&D

If implemented effectively, these measures could transform the Indian chemical industry into a global powerhouse.

Expected Outcomes by 2030

By the end of this decade, India’s chemical production is projected to reach $220–280 billion, with exports growing by $35–40 billion. Furthermore, the industry is expected to create 700,000 to 1 million new jobs and increase its share of the global chemicals market from 3.5% to 5–6%.

Takeaway

In conclusion, the Indian chemical industry is at a historic inflexion point. On one hand, supportive policies, sustainability initiatives, and strong private sector participation are accelerating growth. On the other hand, addressing infrastructure, regulatory, and talent-related gaps will be essential to fully unlock potential. Ultimately, with global supply chains realigning and India doubling down on green manufacturing, the Indian chemical industry is poised to emerge as a world leader in speciality chemicals and sustainable solutions.

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