India’s Chemical Industry
India’s chemical sector is at a critical juncture in 2025. The industry faces challenges but also holds immense potential to become a global powerhouse. The sector currently accounts for 3.5% of the global chemical value chain but runs a trade deficit of USD 31 billion. With strategic reforms, India aims to expand its share to 12% by 2040 and build a USD 1 trillion chemical industry.
Current Challenges in India’s Chemical Sector
India’s chemical industry is hampered by heavy dependence on imported feedstock. This reliance causes a large trade deficit and limits domestic production. Infrastructure gaps and outdated industrial clusters increase costs and reduce competitiveness. The sector suffers from low research and development investment at 0.7%, well below the global average of 2.3%. Regulatory delays, especially in environmental clearances, slow down project execution. There is also a 30% shortage of skilled professionals in emerging fields like green chemistry and nanotechnology.
Strategic Interventions for Growth
The government plans targeted reforms involving fiscal and non-fiscal measures. Establishing world-class chemical hubs will revamp existing clusters and create new ones with dedicated administrative bodies. Port infrastructure will be upgraded to support chemical trade. An operational expenditure subsidy scheme will incentivise increased production based on import dependence and export potential. R&D funding will be enhanced through industry-academia collaboration and partnerships with multinational corporations. Environmental clearances will be fast-tracked with greater transparency and accountability. Free Trade Agreements (FTAs) will be negotiated with specific provisions for the chemical sector to ease access to raw materials and markets. Skill development will be prioritised by expanding technical institutes and encouraging industry-academia partnerships.
Infrastructure and Regulatory Reforms
Improving infrastructure is essential to reduce logistics costs and enhance global competitiveness. The creation of empowered committees at central and hub levels will oversee infrastructure and cluster development. Port authorities will form specialised committees to address chemical handling and trading. Regulatory reforms aim to simplify environmental clearance processes by establishing audit committees to monitor compliance and timelines. These steps will improve industrial agility and attract investment.
Technology and Innovation Focus
Innovation is critical for moving up the value chain. Increased funding for R&D will encourage indigenous development of high-value chemicals. Collaboration between industry and academic institutions will be strengthened through a dedicated interface agency. Access to global technologies will be facilitated by partnerships with multinational companies. Emphasis on green chemistry and sustainable processes will align the sector with global trends towards sustainability.
Vision for 2030 and Beyond
By 2030, India aims to hold 5-6% of the global chemical value chain and double production capacity. The trade deficit is expected to reduce to zero, with exports increasing by USD 35-40 billion. The sector will generate approximately 700,000 skilled jobs. This transformation will be driven by modern clusters, advanced technology, streamlined regulations, and a skilled workforce. India is set to emerge as a leading global chemical manufacturing hub.
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