NITI Aayog Launches ‘Chemical Industry: Powering India’s Participation
in Global Value Chains’
·
The domestic
chemicals market was valued at $220 billion in 2023 and is expected to grow to
around $400 to 450 billion by 2030
·
NITI Aayog
Charts Ambitious Course for India to become a Global Chemical Manufacturing
Powerhouse
·
From Potential
to Powerhouse: Transforming India’s Chemical Sector for Viksit Bharat @ 2047
·
India Eyes USD
1 Trillion Chemical Output by 2040
·
India Set to
Increase its GVC Share from 3.5% in 2023 to 5-6% by 2040 — Igniting India’s
Chemical Transformation
·
Creating Large
Employment Opportunities: 7 lakh Additional Employment by 2030
·
The feedstock
availability for petrochemical intermediates is driven by focus of Indian
players towards production of bulk (typically commodity) polymers/ chemicals.
·
India aims to
increase its share in the global chemicals value chain to approximately 5 to 6
percent by 2030.
NITI-Aayog-Chemical-industry-report.pdf
[ABS News Service/04.07.2025]
NITI Aayog
released its report "Chemical Industry: Powering India’s Participation in
Global Value Chains". This report offers an extensive analysis of India’s
chemical sector, highlighting both opportunities and challenges, and outlining
a pathway for positioning India as a key player in global chemical markets.
The global
chemical industry is undergoing a major transformation, driven by shifting
supply chains, demand for specialty and green chemicals, and heightened focus
on innovation and sustainability. India’s chemical sector, while significant in
size and GDP contribution, remains fragmented and constrained by infrastructure
gaps, regulatory inefficiencies, and low R&D intensity. India’s 3.5% share
in global chemical value chains and its chemical trade deficit at USD 31
billion in 2023, underscores its high dependence on imported feedstock and
specialty chemicals. However, with targeted reforms encompassing a
comprehensive range of fiscal and non-fiscal interventions will enable India to
have a USD 1 trillion chemical sector and achieve 12% GVC share by 2040, thus
becoming a global chemical powerhouse.
Challenges Facing India's Chemical Sector
India’s
chemical sector faces several structural challenges that constrain its global
competitiveness. A key issue is the country’s heavy reliance on imported
feedstock, which contributed to a USD 31 billion trade deficit in 2023,
stemming from limited domestic backward integration. Infrastructure gaps,
outdated industrial clusters, and high logistics costs have created a cost
disadvantage compared to global peers. Compounding this, India’s low investment
in R&D, with only 0.7% of investment against the global average of 2.3%,
hampers indigenous innovation in high-value chemicals. Regulatory delays,
especially in environmental clearances, further stifle industrial agility.
Additionally, the sector is hampered by a 30% shortfall in skilled
professionals, particularly in emerging areas such as green chemistry,
nanotechnology, and process safety.
Proposed
Interventions for Growth
NITI Aayog’s
report outlines several strategic fiscal and non-fiscal interventions aimed at
enhancing India’s global competitiveness in the chemical sector. These
initiatives listed below aim to transform aspirations into actionable progress:
1. Establish
world class Chemical Hubs in India through revamping existing clusters and
developing new ones
1.1
Establishment of empowered committee at the Central level along with creation
of a Chemical Fund under the empowered committee with a budgetary outlay for
shared infrastructure development, VGF, etc.
1.2
Administrative body at the chemical hub level, which will handle the overall
management of the hub
2. Develop
existing port infrastructure
2.1
Composition of a Chemical Committee for ports to advise on and address
infrastructural gaps in chemical trading at ports
2.2
Development of 8 high-potential clusters
3. Introduce a
Opex subsidy scheme for chemicals
3.1
Incentivize incremental production of chemical based on import bill, export
potential, single source country dependence, end-market criticality etc. The
scheme proposes for incentives on incremental sales to selected participants
for a fixed number of years
4. Develop and access technologies to enhance self-sufficiency and
foster innovation
4.1
Disbursement of R&D funds to drive innovation with enhanced collaboration
between industry and academia through creation of an interface agency in
collaboration with DCPC and DST
4.2 Acquiring
access to specific technologies available outside India through fostering MNC
partnerships
5. Fast-track
environmental clearance with transparency and accountability
5.1 Fast-track
environmental clearance with transparency and accountability – Simplify and
fast-track EC clearance process through setting up an audit committee under
DPIIT to monitor timelines and compliance and publish periodic reports and give
more autonomy to EAC
6. Securing
FTAs to support Industry growth
6.1 Targeted
FTA negotiations: Moving forward, India could negotiate FTAs that incorporate
specific provisions for the chemicals industry. This can include incorporating
industry focused protections such as tariff quotas or selective duty exemptions
on critical raw materials and petrochemical feedstocks
6.2 Awareness
and effective utilization of FTAs: Raising FTA awareness, simplifying
procedures, and easing origin proofs can help more exporters access benefits
and boost competitiveness
7. Talent and
skill upgradation in the chemical industry
7.1 Expansion
of ITIs and specialized training institutes: The expansion is essential to meet
the growing demand for skilled labor
7.2 Upgrading
faculty and teacher training: The effectiveness of vocational training
programme is directly linked to the quality of instruction
7.3
Industry-academia partnership: These collaborations can introduce industry
relevant courses in core areas like petrochemicals, polymer science, and
industrial safety
Vision for
2030
The vision for
2030 is for India to become a global chemical manufacturing powerhouse with a
5%-6% share of the global chemical value chain. The sector aims to double its
current production levels and reduce the trade deficit significantly from USD
31 billion in 2023 to reach a Net Zero trade balance in Chemicals. The
initiative will generate an additional export of USD 35-40 billion generating
around 7 lakh skilled jobs. This growth will be supported by the development of
world-class chemical clusters, advanced technology adoption, streamlined
regulatory processes, and a highly skilled workforce, positioning India among
the top global leaders in the chemical industry.
Conclusion
India has
significant potential to become a global leader in the chemical industry.
Achieving this goal requires focused efforts from the central and state
governments, as well as industry stakeholders. By addressing the existing
challenges and leveraging the proposed interventions, India can enhance its
competitiveness, attract investments, and build a robust chemical sector
capable of leading the global value chain.