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Strengthening Chemical Industry in India

Posted 04 Jul 2025

1 min read

NITI Aayog recently released ‘Chemical Industry: Powering India’s Participation in Global Value Chains’ report providing an extensive analysis of India’s chemical sector.

  • It highlights that fiscal and non-fiscal interventions will lead to a USD 1 trillion chemical sector and achieve 12% GVC share by 2040.
    • Currently India’s share in global chemical value chains is 3.5%. (India is 6th largest chemicals producer globally)

Challenges of Chemical Industry

  • Heavy reliance on imported feedstock: This contributed to a USD 31 billion trade deficit in 2023, stemming from limited domestic backward integration.
  • Low investment in R&D:  0.7% of investment against the global average of 2.3%, hampers indigenous innovation in high-value chemicals.
  • Skill Shortage: 30% shortfall in skilled professionals.
  • Other Challenges: Infrastructure limitations, Logistics inefficiencies, Complex regulatory frameworks etc.

Way Ahead

  • Targeted government support such as Viability Gap Funding (VGF) to catalyze investments
  • Establish world-class chemicals hubs in India and Introduce an opex (Operational Expenditure) subsidy for chemicals with high import dependence, export potential, and end-market criticality 
  • Fast-track environmental clearance and Securing FTAs to support Industry growth.
  • Tags :
  • Global Value Chains
  • Chemical Industry
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