The chemical industry in India

Chemical industry in India

India is the sixth largest chemical producing country in the world and the third largest producer in Asia. It is also among the top three base chemical producing countries worldwide.

The country’s chemical market is worth about 220 billion dollars and is expected to reach 850 billion to 1 trillion dollars by 2040.

India is making a big push to become more environmentally conscious. Therefore, there are also great opportunities in this sector for foreign companies with sustainable solutions. In this sector, the Indian government allows 100% Foreign Direct Investment (FDI), which makes the sector interesting to invest in.

In addition, the government is investing in research and development of the chemical industry, has reduced import duties on various products and further offers financial subsidies through the “Make in India” campaign.

India has a large pool of skilled and low-cost labor in the sector, which foreign companies can take advantage of if they make the move to India. Moreover, the polymer and agrochemical industries offer huge growth opportunities.

Overall, the chemical industry in India is a good investment opportunity as there is great growth potential.

Snapshot of India’s chemical industry

The chemical industry accounts for about 2.1% of India’s GDP and 3.4% of the global chemical industry.
It is a very diverse industry comprising more than 80,000 commercial products.
Exports of chemicals and chemical products (excluding pharmaceuticals and fertilizers) contributed nearly 11% of total exports in FY2022-23.
The total production of chemical and petrochemical products in India was 903,002 MT and 1,877,907 MT respectively in 2023. This is an increase of 8.5% compared to 2022.
The sector (including fertilizers and pharmaceuticals) is expected to be worth $304 billion by 2024-25, growing at a CAGR of 9.3%.
The demand for petrochemicals in India is expected to grow by 5% between 2020 and 2025.
The Indian agrochemical market is expected to grow at A CAGR of 15% to 17%.
The Indian agrochemical market reached 6 billion dollars in 2022 and is expected to reach nearly 10 billion dollars by 2028.
The total market size of specialty chemicals was around 32 billion dollars in 2023 and is expected to reach 64 billion dollars by 2025.

Our expert

Deepmala Datta Head of Business Development

Growth drivers of the chemical sector in India

India’s proximity to the Middle East, the world’s source of petrochemical resources, allows it to benefit from economies of scale.
Export demand and dependence of the domestic market are major drivers of chemical industry growth.
The specialty chemicals market is worth about 32 billion dollars and is expected to continue to grow at a CAGR of 12%.
The government aims to increase the chemical industry’s share of GDP to at least 25% by 2025.
The Indian government has set up special Production Linked Incentives (PLI), incentives, for the manufacture of advanced cell chemistry batteries. Also, companies in this sector benefit from ‘Make in India’ benefits if they manufacture in the country.