Chemical industry in India

The chemical industry is one of India's oldest industries and contributes to many other sectors by providing raw materials. The industry is expected to have a market value of $304 billion by 2025.

The size of India's chemical industry was about $178 billion in 2021. The sector contributes 2.1% to India's GDP and it is the third largest chemical industry in Asia. The sector is important for India's exports, almost 34% of all export revenues come from the chemical industry.

India is making great strides in becoming cleaner and more environmentally conscious. In this branch, too, there are therefore great opportunities 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 & development of the chemical industry, has reduced import duties on various products and is further offering 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. In addition, 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.

Market statistics on the Indian chemical sector

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 that includes more than 80,000 commercial products.
The value of exports from India was $19 billion in fiscal year 2018-19. Globally, the country ranks 14th in terms of chemicals exports and 8th in terms of imports.
India's total chemical and petrochemical production was 903,002 MT and 1,877,907 MT respectively in 2021. This is an increase of 8.5% compared to 2020.

The sector (including fertilizers and pharmaceuticals) is expected to be worth $304 billion in 2024-25 and will grow at a rate of 9.3% in the coming years.

Demand for petrochemicals in India is expected to grow by 5% between 2019 and 2023.

The Indian agrochemical market is expected to grow at a rate of about 15% to 17%. The Indian agrochemical market reached a value of nearly $6 billion in 2022 and is expected to reach a value of nearly $10 billion by 2028.
The total market size of specialty chemicals is around $32 billion in 2023 and is expected to reach $64 billion by 2025.

Covid-19 Impact

Subsectors of the Indian chemical industry, such as specialty and fine chemicals, chemicals for agriculture, and chemicals produced for the pharmaceutical industry, were only marginally affected by the pandemic due to their importance.

In addition, demand for disinfectants, alcohol-based wipes, chemical-based surface cleaners and other cleaning products increased due to Covid-19, which saved the industry from a severe downturn in activity.

Before the pandemic outbreak, there was already a visible shift from China to India of chemical production activities due to increasing political tensions and rising, Chinese prices. This will only increase in the coming period, as companies spread their operations to avoid further supply chain problems.

Growth drivers of the chemical sector in India

The Indian chemical industry employs more than 2 million people.
Export demand and dependence on the domestic market are key drivers of chemical industry growth.
The chemical industry is seeing annual growth of 15% to 20%. It is expected to be worth $304 billion by 2025.
The specialty chemicals market is about $32 billion and is expected to continue growing at about 12% per year.
The government aims to increase the chemical industry's share of GDP to at least 25% by 2025.