India Chemical Sector Industry Analysis Report | Scrolls
- Editor
- Sep 1
- 3 min read
by KarNivesh | 31 August, 2025
India’s chemical industry is at a pivotal stage, emerging as a global growth hub due to strong policy support, favorable demographics, and rising global demand. It is the sixth-largest chemical producer in the world and the third-largest in Asia, contributing nearly 7% to India’s GDP and employing over 2 million people.
Currently valued at ₹20.75 lakh crores (≈₹20.75 trillion) in 2024, the sector is expected to grow to ₹24.9 lakh crores in 2025 and an ambitious ₹83 lakh crores by 2040. This represents a 9.3% CAGR, positioning India as a chemical manufacturing powerhouse.
Structure and Segments
The industry is highly diversified with over 80,000 commercial products. Its breakdown is:
Basic & Petrochemicals (45%)
Specialty Chemicals (25%)
Pharmaceuticals (15%)
Agrochemicals (10%)
Others (5%)
Specialty chemicals are the fastest-growing, projected at 12% CAGR, driven by pharmaceuticals, agrochemicals, and advanced materials.
Market Size and Global Role
The market expanded from ₹18.26 lakh crores (2023) to ₹20.75 lakh crores (2024). Projections suggest ₹31.79 lakh crores by 2030 and ₹83 lakh crores by 2040.
Domestic demand is a major driver, expected to rise to ₹70.5–83 lakh crores (≈₹70.5–83 trillion) by 2040. This will make India account for over 20% of incremental global chemical consumption. Exports are also expanding, with 2024 exports reaching ₹1.82 lakh crores (≈₹1.82 trillion) to 175+ countries.
Key Players
Reliance Industries – Leader in petrochemicals, with revenues above ₹2 lakh crores annually.
Pidilite Industries – Specialty chemicals and adhesives, market cap ₹1.55 lakh crores.
Solar Industries – Explosives and defense chemicals, market cap ₹1.25 lakh crores.
SRF Limited – Fluorochemicals and textiles, market cap ₹84,078 crores.
Other players include Tata Chemicals, Deepak Nitrite, Gujarat Fluorochemicals, BASF India, UPL Limited, and several rising specialty chemical firms.
Policy and Investment Support
The government has introduced PLI schemes, PCPIRs, and Plastic Parks to attract investment. PCPIRs alone are projected to draw ₹7.63 lakh crores and create 33 lakh jobs.
FDI inflows since 2000 total ₹1.91 lakh crores (≈$22.87 billion). In FY2022–23, the sector received ₹14,662 crores (≈$1,850 million), showing strong foreign interest. Private sector investments are projected at ₹8 lakh crores by 2025, while major petrochemical players plan expansions worth ₹3.73 lakh crores (≈$45 billion).
Strengths and Challenges
Strengths: Competitive costs, skilled workforce, strong domestic demand (70% consumed locally), and policy incentives.
Weaknesses: Import dependence for raw materials, low R&D (0.7% of sales vs global 2.3%), and capacity underutilization (30–40%).
Opportunities: China+1 diversification, specialty chemicals, green chemistry, and growing exports.
Threats: Chinese competition, raw material price volatility, regulatory delays, and workforce shortages.
Future Outlook
By 2040, India’s chemical sector aims to capture 12% global market share, driven by specialty chemicals and agrochemicals. Export potential is high, with specialty chemical exports projected to jump tenfold to ₹1.75 lakh crores (≈$21 billion) by 2040.
Sustainability, digitalization, and innovation will be critical growth levers, supported by Industry 4.0 adoption and green chemistry initiatives. With the right policies, India is on track to become a global leader in chemicals manufacturing, transforming from an import-dependent market into an export-oriented hub.
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