Chemical Industry: Powering India's participation in Global Value Chains

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July 2025
Chemical Industry: 
Powering India’s participation 
in Global Value Chains June 2025
GROWING INDIAʼS SHARE
IN THE GLOBAL CHEMICALS VALUE CHAIN
July 2025
July 2025
Chemical Industry:
Powering India’s participation
in Global Value Chains ivChemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL ivChemical Industry: Powering India’s participation in Global Value Chains
Disclaimer
NITI Aayog conducted a study on the Chemical
Industry: Powering India’s participation in Global
Value Chains.
While due care has been exercised to prepare the
report using the data from various sources, NITI Aayog
does not confirm the authenticity of data and the
methodology to prepare the report. 
While due care has also been exercised to ensure
the accuracy of analysis and arguments supported
by existing literature, the possibility of alternate
interpretations cannot be ruled out. NITI Aayog shall
not be held responsible for the findings or opinions
expressed in the document. ™£™>&£™Ob-5™âbŒ ™£™>&£™Ob-5™âbŒ ™£™>&£™Ob-5™âbŒ ™£™>&£™Ob-5™âbŒ Chemical Industry: Powering India’s participation in Global Value ChainsixNON> CONFIDENTIAL
22
Framework to define roadmap for India’s
chemical industry
1
2
India’s chemicals landscape:
Outlook and aspiration10
Preface01
Executive Summary03
Introduction09
Conclusion74
28
Structural shifts to help expand India’s presence
in the chemicals global value chain 3
CONTENTS xChemical Industry: Powering India’s participation in Global Value Chains xChemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains1NON> CONFIDENTIAL
Over the past decade, the Government
of India has introduced a series of
transformative policies aimed at
accelerating economic growth, enhancing
competitiveness, and integrating key
sectors into Global Value Chains (GVCs).
Reforms such as the implementation
of the Goods and Services Tax (GST),
liberalization of Foreign Direct Investment
(FDI), and initiatives like “Make in India” and
“Aatmanirbhar Bharat” have significantly
contributed to improving the business
environment, bolstering manufacturing, and
fostering industrial growth. The Production-
Linked Incentive (PLI) schemes and strategic
policy interventions across multiple sectors
have further strengthened India’s position
as a global manufacturing hub.
Among these critical sectors, the
chemicals  industry stands as a pillar of
India’s industrial and economic landscape.
With a market size of approximately
$220 billion in 2023, the sector is poised
to grow exponentially, reaching around
$400 to 450 billion by 2030 and $850 to
1,000 billion by 2040.
1
India is currently
the world’s sixth-largest and Asia’s third
largest producer of chemicals, supplying
essential raw materials to industries such as
pharmaceuticals, textiles, automotive, and
agriculture. The sector’s dynamic growth
trajectory underscores its potential to play
a key role in India’s aspiration of achieving a
$5-trillion economy.
Despite its strengths, India’s participation
in the global chemicals market remains
relatively modest, accounting for only
1
https://economictimes.indiatimes.com/industry/indl-goods/svs/chem-/-fertilisers/indian-chemical-industry-to-
bevalued-at-1-trillion-by-2040/articleshow/98334280.cms
3 to 3.5 percent of global consumption in
2023. For instance, India’s petrochemical
industry has traditionally emphasized
the production of bulk, commodity-grade
polymers and chemicals, a trend reflected
in the current utilization patterns of key
feedstocks. An overwhelming share of
India’s propylene and ethylene is directed
toward polypropylene and polyethylene
production respectively—significantly
higher than global averages. Similar
disparities exist across other critical
feedstocks such as benzene and butadiene,
which are predominantly channelled
into basic derivatives rather than more
advanced, value-added chemicals.
This focus on upstream, large-volume
outputs has led to limited diversification
into specialty and high-value downstream
products, thereby constraining the sector’s
global competitiveness. To realign the
industry with international trends and
unlock its full potential, there is a growing
need for strategic interventions. With high
reliance on imports, limited feedstock
availability, infrastructural bottlenecks,
and regulatory complexities, there are
several challenges that must be addressed
to enhance India’s competitiveness and
strengthen its foothold in the global
chemicals value chain.
This report explores the current landscape,
identifies critical imbalances, and
outlines actionable pathways to foster
a more diversified and globally aligned
petrochemical value chain in India.
Preface 2Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL 2Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains3NON> CONFIDENTIAL
India’s chemicals industry is a cornerstone
of the country’s manufacturing ecosystem,
contributing approximately 7 percent to
the national gross domestic product (GDP)
and supplying essential raw materials
to critical industries such as agriculture,
pharmaceuticals, textiles, automotive, and
construction. Ranked as the sixth-largest
chemicals producer globally and third in
Asia, India holds immense potential for
expansion—provided it receives the right
strategic support from the Government.
The domestic chemicals market was valued
at $220 billion in 2023 and is expected
to grow to around $400 to 450 billion by
2030, with aspirations to reach about $850
to 1,000 billion by 2040 complemented
by the Government support. However,
despite its robust growth trajectory, India’s
participation in global chemicals value
chains (GVCs) remains limited, with its share
in global chemicals consumption standing
at 3 to 3.5 percent in 2023.
India’s chemicals industry faces several
structural constraints that hinder its
ability to scale and integrate into GVCs.
Therefore, Government intervention
is necessary for enabling the sector to
achieve its full potential. A high reliance
on imports, particularly in petrochemicals
intermediates and specialty chemicals, has
resulted in a trade deficit of approximately
$31 billion. Infrastructure limitations,
including insufficient feedstock availability,
inadequate common user facilities, and
logistics inefficiencies, further impact cost
competitiveness. Additionally, complex
regulatory frameworks, environmental
compliance hurdles, and skill shortages
present significant barriers to domestic
production and investment.
For example, the feedstock availability for
petrochemical intermediates is driven by
focus of Indian players towards production
of bulk (typically commodity) polymers/
chemicals. For instance, approximately
95% of propylene in India is converted into
polypropylene (PP), compared to just 70%
globally. Similarly, 75% of ethylene in India
is used for polyethylene (PE) production
versus 63% globally. A comparable trend
exists for other key feedstocks: around
87% of benzene (BZ) in India goes into
alkylbenzene, chlorobenzene, and cumene,
while globally only about 25% is allocated to
these chemicals, with a significantly larger
share diverted to more complex derivatives
like ethylbenzene, cumene, cyclohexane,
and nitrobenzene. In the case of butadiene
(BDE), roughly 84% in India is converted to
polybutadiene rubber (PBR) and styrene-
butadiene rubber (SBR), whereas the global
average is closer to 54% (Exhibit A). To
address this imbalance and foster a more
globally competitive sector, there is a strong
case for targeted government support—
such as Viability Gap Funding (VGF)—to
catalyze investments in downstream,
higher-value chemical manufacturing.
Executive summary 4Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
To address these challenges and position
India as a global chemicals manufacturing
hub, targeted Government interventions
are required across key strategic areas.
Expanding domestic production capacity
by developing world-class chemicals
hubs with advanced infrastructure and
seamless port connectivity is essential.
Policy reforms focused on streamlining
regulatory approvals, providing fiscal and
non-fiscal incentives, and strengthening
trade agreements can further enhance
India’s competitiveness. Increasing
investments in research and development
(R&D), particularly for high-value specialty
chemicals and green chemistry, could
foster innovation and self-sufficiency.
Furthermore, skill development initiatives
tailored to industry needs will be crucial in
building a future-ready workforce.
The Government of India has already
undertaken significant initiatives, such as
“Make in India”, “Aatmanirbhar Bharat”,
and the Production-Linked Incentive (PLI)
Scheme, to boost domestic manufacturing
and attract investments. By leveraging
these policies and implementing a
structured roadmap, India aims to increase
its share in the global chemicals value
chain to approximately 5 to 6 percent by
2030. Achieving this vision would not only
help India become a net-zero importer of
chemicals but also generate 700,000 to 1
million new employment opportunities.
With the right mix of policy interventions,
industry collaboration, and infrastructure
investments, India is well-positioned to
emerge as a leading player in the global
chemicals market. This report outlines
a comprehensive strategy to unlock the
full potential of the chemicals industry,
enabling India to drive sustainable growth,
enhance global trade participation, and
establish itself as a high-value chemicals
manufacturing powerhouse.
Exhibit A:
Feedstock Conversion Comparison: India vs Global
Feedstock Converted ToIndia (%)Global (%)
Propylene Polypropylene (PP)95% 70%
Ethylene Polyethylene (PE)75% 63%
Benzene (BZ) Alkylbenzene, Chlorobenzene, Cumene 87% 25%
Butadiene (BDE)
Polybutadiene Rubber (PBR),
Styrene-Butadiene Rubber (SBR)
84% 54%
Source: CMA Database Chemical Industry: Powering India’s participation in Global Value Chains5NON> CONFIDENTIAL
The initiatives aim to transform aspirations into actionable progress. They are as follows:
Intervention 1: Establish world-class
chemicals hubs in India
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
Intervention 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
Intervention 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
Intervention 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
Intervention 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
Intervention 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
Intervention 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 labour
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 6Chemical Industry: Powering India’s participation in Global Value Chains 6Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains7NON> CONFIDENTIAL
Proposed policy interventions and
potential impact by 2030
Develop and access technologies
to enhance self- sufficiency and
foster innovation
INTERVENTION 4
Introduce an opex subsidy for chemicals
with high import dependence, export
potential, and end-market criticality
INTERVENTION 3
Develop existing port infrastructure
for storage and handling of chemicals
INTERVENTION 2
Establish world-class
chemicals hubs in India
INTERVENTION 1
INTERVENTION 5
Fast-track environmental
clearance with transparency and
accountability
INTERVENTION 6
Securing FTAs to support
Industry growth
INTERVENTION 7
Talent and skill upgradation in the
chemical industry
700K
Additional employment
generation by 2030
5-6%
Production share in the
Global Value Chain by 2030
(from 3-3.5% in 2023)
Net zero
India trade balance in
chemicals by 2030
35-40 $ bn
Additional exports in
2030 vs 2023
220-280 $ bn
India production of
chemicals by 2030 8Chemical Industry: Powering India’s participation in Global Value Chains 8Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains9NON> CONFIDENTIAL
India’s chemicals industry is a core driver
of economic growth, contributing 7 percent
to the country’s GDP. Today, India is the
world’s sixth- and Asia’s third-largest
producer of chemicals.
2
With over 80,000
commercial products, the industry fuels
multiple sectors such as agriculture,
pharmaceuticals, textiles and automotives.
As of 2023, the Indian chemicals market
consumption stood at around $220 billion,
expected to expand to $400–450 billion by
2030 and $850–1,000 billion by 2040.
3

While the industry has shown a consistent
growth trajectory, addressing a few
challenges could help bolster momentum
and further unlock its potential. Limited
feedstock availability, lack of adequate
infrastructure, regulatory concerns and
shortage of skilled talent are some areas
that could benefit from closer attention.
2
https://www.ibef.org/industry/chemical-industry-india
3
IHS Markit, UN Comtrade, ITC Trademap
Strategic initiatives, including sustainability
efforts and backward integration,
are essential for enhancing market
attractiveness and cost-competitiveness
to position India’ chemicals industry as a
global challenger.
The Indian government could to play a
significant role in achieving the industry’s
goals. This report outlines the journey of the
Indian chemicals industry so far, proposes
a roadmap to achieve its aspirations, and
focuses on seven specific areas where
policy interventions could transform the
industry. By addressing these critical areas,
India’s chemicals industry can not only
achieve its growth targets but also emerge
as a global leader in the chemicals sector,
contributing significantly to the nation’s
vision of becoming a $5 trillion economy.
Introduction:
Unlocking the
potential of India’s
chemicals industry India’s
chemicals
landscape:
Outlook and
aspiration
01 Chemical Industry: Powering India’s participation in Global Value Chains11NON> CONFIDENTIAL
India’s participation in the global chemicals
market is on the rise. The country accounted
for 3 to 3.5 percent of global chemicals
consumption in 2023, a figure expected to
rise to 10 to 12 percent by 2040 (Exhibit 1).
With strong tailwinds driving growth, this
sector presents significant opportunities
for expansion.
However, as a net importer of chemicals
with a trade deficit of around $31 billion
4
,
4
ITC Trade Map, Chapters 28. 29, 32, 38, 39, and 40
India faces a complex challenge. The high
import requirements for the country point
to a shortfall in domestic production and
the urgent need to improve domestic
manufacturing capabilities. By strategically
addressing gaps in domestic capacity, India
has the potential to transform its chemicals
industry and move towards becoming a net
zero importer by 2030, positioning itself as a
key player in the global market.
Current consumption and trade balance
Petrochemicals, specialty and inorganic
chemicals are the three key categories
in India’s chemicals industry by market
consumption size (Exhibit 1).
Petrochemicals: These chemicals are
derived from petroleum and natural gas
through a refinement process and are
also known as petroleum distillates. The
segment includes polymers, synthetic
fibers, performance plastics and others.
The category is further divided into
building blocks (ethylene, propylene,
benzene, butadiene, etc.), intermediates–
terephthalic acid (PTA), styrene, vinyl
chloride monomer (VCM), phenol, etc.–and
end-products i.e. high density polyethylene
(HDPE), linear low density polyethylene
(LLDPE), polyvinyl chloride (PVC), among
others. Petrochemicals forms the biggest
chemicals segment, with consumption of
$65 to 75 billion (Exhibit 1). The production
- consumption gap in these has remained
negative over the years.
Specialty chemicals: Chemicals with high
value but low production volume are
considered specialty chemicals, such as
paints and coating, dyes, agrochemicals,
surfactants, textile chemicals, to name
a few. They facilitate function-specific
products tailored for industries like
pharmaceuticals, agriculture, and personal
care, driving innovation and customization.
Specialty chemicals are a highly research
and development-intensive category,
accounting for over 50 percent of the total
chemical exports from India. This category
constitutes around $40 to 45 billion of
market consumption.
Inorganic chemicals: Fundamental to
India’s industrial base, these chemicals
provide essential materials for applications
in construction, water treatment and
electronics, among other sectors.
Inorganic chemicals are a broad category
of compounds that do not contain carbon-
hydrogen bonds but encompass a variety
of substances such as metals, salts and
minerals. These chemicals find application
in numerous industries, including
agriculture (ammonia in fertilizers),
manufacturing (hydrogen peroxide
for surface treatment of metals), food
processing (sodium hydroxide) and many
more. The market for these chemicals is
driven by their diverse applications and
the availability of raw materials. Inorganics
make up $15 to 20 billion of the total
market consumption.
Other “non-core” chemicals categories
include fertilizers, pharmaceutical products
(vaccines, injectables, OSDs, etc., such as
Meloxicam capsules, poliomyelitis vaccine
and Atazanavir tablets) and medical devices
(e.g., medical impregnated wadding, gauze,
bandages, dressings and surgical gut string)
per the industry division 21 of National
Industrial Classification (NIC) and personal-
care consumer products (e.g., shampoo,
hair oil, toothpastes, soaps and detergent)
per the industry division 20 of NIC. Together,
they contribute around $90 billion in
market consumption. 12Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Tailwinds for consumption growth
5
GDP projections
India’s share in the chemicals global value
chain (GVC) is expected to reach $400 to
450 billion by 2030, with an estimated
compound annual growth rate (CAGR)
of 10 to 11 percent. Some macro factors
expected to contribute to the growth and
global competitiveness of India’s chemicals
industry include rising disposable incomes,
growing urbanization, shifting consumer
preferences, and a reshaping of the global
supply chain, among  others.
A crucial trend is the rise in disposable
incomes in India, expected to contribute $1.5
trillion in household consumption growth
by 2030
5
. Expected to become the world’s
third largest economy by that year, India
is expected to see around 140 million new
households enter the consuming class, with
each household earning over $10,000 a year
A snapshot of India’s chemicals market
India chemicals market consumption
$ bn
1
Includes fertilizers, pharma products (vaccines, injectables, OSDs etc. e.g. Meloxicam capsules, Poliomyelistis vaccine,
Atazanvir tablets etc.) and medical devices (e.g. medical impregnated wadding, gauze, bandages, dressings, surgical
gut string etc.) as per the industry division 21 of NIC. Also includes personal care consumer products (e.g. Shampoo,
hair oil, toothpastes, soaps & detergent etc.) as per the Industry division 20 of NIC
2
Excluding others as % of Global Chem
Source: IHS Markit, UN Comtrade, ITC Trade Map
600
700
500
800
400
900
300
1,000
200
1,100
100
0
2023
80-90
15-20
60-70
140-150
~35
~20
120-130
2030
190-200
80-90
375-425
~55
250-300
65-75
2040
30-40
40-45
~220
400-450
850-1,000
+9.6% p.a.
5-6% 10-12%3.5%India
Chem
2
CAGR, percent
2023- 30 2030-40
~11% 8-10%Specialty
~11% 8-9%Inorganic
~11% 10-11%Pet-Chem
~7-8% 5-6%Fertilizers
3-3.5x
8-9% ~8%Others
Exhibit 1 Chemical Industry: Powering India’s participation in Global Value Chains13NON> CONFIDENTIAL
(Exhibit 2). This transition is set to create
substantial demand for chemical products.
Additionally, urbanization and evolving
consumer preferences for sustainable
and health-conscious options could drive
demand for specialty chemicals and
innovative solutions. Another tailwind is
the supply-chain disruptions seen in recent
years that highlighted the vulnerabilities
within these networks.
From a once-in-a-generation pandemic to
geopolitical crises and natural disasters,
various disruptions are prompting global
companies to diversify their supply chains.
This presents an opportunity for India to
emerge as an ideal trade partner, leveraging
its manufacturing base and boosting its
export capabilities.
India’s position as a net importer of chemicals
In 2023, India imported chemicals worth
$75 billion compared to exports worth
$44 billion, accounting for a trade deficit
of around $31 billion (Exhibit 3). Back
in the year 2000, India had a net zero
trade balance. Rising imports of plastics,
inorganics and chemicals have since caused
a growing deficit over time. Heavy domestic
reliance on petrochemicals, too, contributes
substantially to the trade imbalance.
India imports its highest volume of
chemicals from China (30 to 35 percent).
The United States, Southeast Asia, South
Korea, Japan, Saudi Arabia, Germany, UAE,
Kuwait and Italy are other significant import
partners for chemicals in India (Exhibit 4).
China is also an export partner for
chemicals, accounting for 5 percent
of India’s total export value. The other
significant export partners include the
United States, Southeast Asia, Brazil,
UAE, Germany, Netherlands, Saudi Arabia,
Belgium and Japan.
Growing chemicals production for India and the world
The growth in incomes fueling a rise in consumption in India
1,752
2,153
2,265
3,346
2015201920222030
Nominal per capita income, $ # of households by annual income bracket
1
, mn
Per capita incomes are
expected to increase
Rising household incomes expected to lead a ~1.5 trillion
growth in HH consumption by 2030
41
165
134
165
134
7
55
130
122
145
>$25K
$10–25K
$5–10K
+5%
+2%
+5%
Yearly HH income
$3–5K
$1–3K
100 mn+
1
affluent
Indians
addressable in
2030
India’s share of
global consumption
could rise from
current 3% to 11%
by 2047
1
Assuming 2 addressable people in household in >$25K segment and 20% of households addressable in the >$10K segment
(2 addressable people in household)
Source: GDP (projections, data and per capita) – EIU 2010 $constant prices, EIU
Exhibit 2 14Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Exhibit 3
India’s growing trade deficit since 2000s
Includes HS chapters inorganic chemicals, specialty chemicals, plastics and rubber
Exhibit 3
Import Export
Source: UN Comtrade
$ billion2023202020102000
India75 4444 3729204 4 ~(31)
Inorganic
chemicals
10 36 24 21 0 ~(7)
Organic
chemicals -
petrochemicals
27 1918 1912 92 2 ~(8)
Paints, dyes,
inks etc.
4 32 31200 ~(1)
Other specialty
chemicals
7 74 42200 ~(1)
Plastics and
articles thereof
23711 77 311
~(15)
Rubber and
articles thereof
4 42 33 200
1
Net export, 2023
14Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains15NON> CONFIDENTIAL
To meet growing demand and consumption
of chemicals in India, it will be vital to
ramp up domestic chemicals production
capabilities. This could help India more than
double its share in the chemicals GVC and
become a net zero importer. In the process
the industry could create 700,000 to 1
million new jobs by the end of this decade.
India aims to substantially expand its
participation in the global chemicals
market, targeting a 5 to 6 percent share
of the chemicals GVC by 2030 (Exhibit 5).
In 2023, India produced chemicals valued
at approximately $110 billion
6
. By 2030,
India’s chemicals market consumption
is expected to reach around $250 to 300
6
Excluding non-core chemicals
billion, or around 5 to 6 percent of global
consumption. Meeting this demand would
require India to double its chemicals
production to a range of $220 and 280 billion
by 2030.
Becoming a net zero importer
Exports powered by specialty chemicals
worth $20 to 25 billion (in net exports),
balanced by imports of petrochemicals
and inorganics, could help India become
a net zero importer by 2030 (Exhibit 6).
Consumption CAGR would need to increase
by 10 to 11 percent, while production CAGR
would need to increase by about 14 percent
to achieve this aspiration.
India’s top EXIM partners
1
Includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and
Vietnam
2
Includes Oman, Qatar, France, Jordan, UK, Belgium, etc.
3
Includes Bangladesh, Turkey, Italy, UK, Korea, Russia, etc.
Source: ITC Trade Map
Import value (2023), %
Top import partners
Export value (2023), %
Top export partners
United States
15
SE Asia
9
Taiwan,
China
5
Brazil
5
UAE
5
Germany
4
Nether-
lands
3
Saudi
Arabia
3
Belgium
3
Japan
3
Others
3
45
Taiwan, China
34
SE Asia
1
13
United
States
9
South
Korea
6
Japan
6
Saudi
Arabia
5
Germany
3
UAE
2Kuwait 2
Italy
1
Others
2
19
$~75 bn$~44 bn
Exhibit 4
5-6%
production
share of the
chemicals  GVC
Attaining 16Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
By increasing specialty chemical exports
to around $45 billion, driven by dyes
and pigments, paints and coatings,
agrochemicals, and flavors and fragrances,
focused initiatives could significantly
improve domestic production capabilities.
The inorganic chemicals segment could
contribute a further $5 to $10 billion in
exports, while the petrochemicals segment
could expand exports from $21 billion to
$26 billion. These strategic aspirations are
essential to growing India’s share of the
global chemicals market and decreasing its
reliance on imports.
India’s potential to grow its share in the chemicals global value chain
2023
250-300
110-130
3,100– 3,500
5,000– 5,500
2030
Global chemicals consumption
1
(excluding non-core chemicals), $ bn
~4%
10–11%
CAGR nominal (%)
2023–30
India Global
India chemicals landscape
2023
1 Including Petro Chemicals, Specialty Chemicals and Inorganic Chemicals
Source: DCPC Statistics 2022; Table 44 - Employment in Chemicals and Chemical products (Industry Division 20, NIC-2008)
from the FY 2014-15 to FY 2019-20
India’s
production
share in GVC, %
3-3.5% 5-6%
India trade
balance, $ bn
(20-30)
Net importer
~0
Net zero
2030
% consumption 80-90% ~100%
India
production,
$ bn
100-110 220-280 ~14%
Total sectoral
employment,
mn
0.9-1 ~1.6
+0.7 Mn
8-9%
CAGR nominal
(%) 2023–30
Exhibit 5 Chemical Industry: Powering India’s participation in Global Value Chains17NON> CONFIDENTIAL
Reaching these milestones calls for a
blueprint that prioritizes the right strategic
interventions and investments. Not only
could this set India on track for its 2030
aspiration, but it could also unlock the
momentum for India to become a $850
billion to $1 trillion chemicals industry
by  2040.
The Indian chemicals industry benefits
from competitive advantages such as rising
domestic consumption, supportive policies
and strong manufacturing capabilities.
However, challenges like infrastructure
gaps, regulatory hurdles and the need for
technological advancements need to be
addressed to fully realize its aspirations.
Achieving these ambitions will require a
structured and strategic approach. The next
step is to outline a comprehensive roadmap
that identifies measures to overcome
barriers and capitalize on opportunities. This
includes fostering targeted investments,
enabling policy interventions, and building
an innovation-driven ecosystem to position
India as a leader in the global chemicals
value chain.
The potential growth of Indian exports toward net zero importer status
India chemicals trade
balance
1
, $ bnIndia chemicals segment-wise exports and imports, $ bn
1
Excludes fertilizers, pharma end-products and consumer products; includes pharma intermediate chemicals
Source: IHS Markit, ITC Trade Map, McKinsey Global Institute
Segment Exports Segment importsXX%CAGRxxTrade surplus
22
45
22
30
44
75
60
65
40
53
100
118
(23-24) (0-5)
2023 2030
Overall export (across Specialty,
Inorganic and Petrochemicals)
Exports from other categories
Overall import (across Specialty,
Inorganic and Petrochemicals)
Imports from other categories
Specialty chemicals Inorganic chemicals Petrochemicals
(5-6)(16-17) (15-20)(5-10)(1-2) 20-25
202330202330 202330202324202330202330
15%
4%
7%
15%
5%
5%
18
45
24
1
7
4
10
4
21
6
25
Exhibit 6 18Chemical Industry: Powering India’s participation in Global Value Chains
Case study: The growth story of China’s chemicals industry
7
UN Comtrade
8
Secondar y upgrading refers to the refining of crude oil to break down heav y, less valuable oil fractions into lighter, more valuable
products like gasoline and diesel
China has grown its share in global chemicals
production five-fold since the year 2000, from
6 percent to 33 to 35 percent (Exhibit 7). A
robust petrochemicals and plastics production
trajectory growth stems from strategic
investments in vital infrastructure, research
and development (R&D), and harnessing its
unique competitive advantage over the rest of
the world
7
.
Today, the country’s chemicals industry
constitutes approximately 23 percent of global
exports and 12 percent of global imports
(Exhibit 8). China maintains this export
dominance while balancing a high domestic
demand of 75 to 80 percent. It has evolved from
being a net importer in 2010 to becoming a net
exporter across categories.
This transformation over two decades began
with a phase of massive overinvestment and
oversupply, led by state-owned enterprises
(SOEs) and a thrust on establishing small
to medium-scale production. For example,
one of the largest oil and petrochemicals
companies in the world was established during
this period by integrating operations from
refinery to cracker. The industry relied heavily
on advanced foreign technologies to improve
domestic capabilities. China began localized
development of an important chemical
feedstock, ethylene, around the year 2000.
This was followed by a phase of consolidation,
with the eventual entry of multinational
corporations. Joint ventures (JVs) emerged to
leverage the advantages of local feedstocks
with advanced foreign technologies. China
became the lastest consumer of ethylene.
Prominent companies brought in international
technology and licenses to enable local
production of complex product profiles.
After 2015, the opening of the domestic market
led to the rise of private enterprises and the
development of domestic technologies. The
scale of operations shifted as companies
deeply benefitted from the Chinese
government’s petrochemical policy reforms
aimed at driving secondary upgrading
8
.
The government focused on updating
the chemicals industry with international
technology by leveraging matured local
upstream capabilities. This led to a rise in
privately-owned companies in the country.
Most of these were either non-integrated but
supported by stable and strong feedstock, or
fully integrated from refinery to cracker for
large to giant scale production.
6
24
34
33
2000
2010
2020
2022
China
Production of chemicals in China between 2000 and 2022Exhibit 7
Source: IHS Global insight; CRISIL report; World Bank; China Chemical Company Database
%
18Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains19
Since 2020, MNCs have increasingly entered
China’s chemicals market to establish their
base on a sole proprietorship basis. The
opening of the Chinese market to MNCs was a
significant move that inspired confidence in
the location and encouraged major companies
(such as the European multinational to
make large-scale investments in China. The
MNCs brought in self-owned technologies or
developed advanced technologies.
27%
28%
24%
22%
16%
16%
13%
12%
4%
7%
7%
9%
23%
16%
14%
15%
23%
18%
17%
16%
1%
2%
3%
3%
6%
12%
21%
23%
2020
2000~0.3
0.8–0.9
1.0–1.1
1.4–1.5
2010
2023
US Middle East
2
EuropeNorth Asia (excluding China)India
4
OthersChina
42%
37%
36%
34%
10%
9%
8%
8%
5%
7%
7%
8%
21%
14%
16%
15%
14%
14%
15%
18%
1%
3%
4%
5%
6%
15%
14%
12%
2010
2020
2000~0.3
0.8–0.9
1.0–1.1
1.4–1.52023
Global exports
1
, $ tn
Global imports
1
, $ tn
1
Excludes trade among European countries
2
Includes all 50 countries in Europe (27 in EU, United Kingdom, Russia, and others)
3
Includes United Arab Emirates, Bahrain, Iran, Iraq, Cyprus, Egypt, Israel, Jordan, Kuwait,
Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, Turkey, Yemen
4
Includes Japan, Mongolia, Korea (Rep.), Korea (DPR)
Source: UN Comtrade
Split of global chemicals exports and imports across geographies
Exhibit 8
Chemical Industry: Powering India’s participation in Global Value Chains19 20Chemical Industry: Powering India’s participation in Global Value Chains
The competitive advantages of the Chinese
supply chain
The supply chain in China is uniquely
competitive, mainly due to its advantageous
capital expenditure (Capex) structure, which is
around 70 percent of the Capex in
western countries.
For MNCs on the lookout for the most cost-
efficient location to build their factories,
China has emerged as a prime location
for investments in recent decades. A few
fundamental drivers contribute to the
China advantage:
—In China, labor (which comprises 44 percent
of overall cost) costs 20 to 40 percent of the
cost of labor in the US.
—China boasts 2 to 3 times higher labor
productivity compared to other regions,
resulting in a more cost-efficient supply
chain, with higher output in less time.
—The supplier network in China is one of the
most competitive in the world. Constant
price battles to gain contracts for key
components and materials drive down
material costs, ultimately benefiting firms
based in China.
—China is one of the few regions in the world
to offer an end-to-end domestic supply
chain option to investors to set up their
operations. Chinese firms can access
required materials and services locally,
reducing import costs and supply chain
bottlenecks for operational efficiency.
While the chemicals industry in China has
been steadily growing, it has also experienced
some uncertainties due to the economic
uncertainity of the past few years, including
China’s economic slowdown. Geopolitical
tensions remain, and many countries have
imposed some restrictions on trade with
China, such as the US’s decision to escalate
import tariffs by up to 25 percent in 2018,
Germany’s declaration of “de-risking” from
China by diversifying supply chains away from
the country, the European Union’s Green Deal
9
National Development and Reform Commission, China
Industrial Plan placing tariffs on the imports of
titanium dioxide, and more.
The role of the government
China’s 14th Five Year Plan
9
, drafted in 2020
during the COVID-19 pandemic, emphasized
self-sufficiency and set ambitious targets
for the chemicals and petroleum industries,
including the development of new materials.
The planned targets aim for:
—70 percent self-sufficiency in
engineering plastics
—90 percent self-sufficiency in specialty
rubbers and elastomers
—85 percent self-sufficiency in high-
performance fibers
—75 percent self-sufficiency in all new
chemical materials
To achieve these targets, the government has
encouraged the development of advanced
technologies such as highly selective catalysts,
highly efficient purification processes,
and carbon capture, utilization and storage
solutions (CCUS).
In addition, China’s government has set
decisive environmental policies and goals for
2025 with the Industrial Green Development
Plan, to increase the share of renewables to 33
percent of generated energy, reduce carbon
emissions by 2.6 gigatons, control domestic
crude oil processing and reduce energy
consumption of key products such as ethylene.
It aims to hit peak carbon emissions by 2030
with an accelerated path to net zero emissions
and a transition roadmap for process
decarbonization in key industries. The country
has signed the net zero emissions pledge to
eliminate greenhouse gas (GHG) emissions
by 2060. It will focus on carbon-neutral
production and carbon capture along the value
chain, using more of renewable electricity and
green feedstock among other such initiatives.
To attain self-sufficiency and net zero goals,
the Chinese government has helped with
supportive policymaking and the easing of
20Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains211
Assuming Yuan to USD conversion ratio of 0.14
Source: Bureau of Statistics
Significant increase in chemicals industry CAPEX
$ bn
1
Recent MNC investment in China (examples)
$ bn
10
~1
10
7
6
3
8
12
2015201820202021202220232010
220-230
220-230
220-230
260-270
320-330
360-370
90-100
The growth of foreign investments in China
Exhibit 9
Covesto
BASF
Exxon Mobil
Shell / NOOC
Sinodec
Saudi
Aramco
Sabic
Fujian
energy group
NorincoSabic
Bora
Petro-
chem
Iyondell-
basell
trade restrictions, which have in turn brought
greater foreign investment to the industry.
Supportive policymaking
Proactive policies, such as establishing
industrial parks and clusters, have significantly
contributed to the country’s competitiveness
by reducing manufacturing and logistical
costs for Chinese firms. The infrastructure in
these clusters adheres to modern standards of
wastewater treatment, energy efficiency and
other regulatory requirements. This eases the
compliance burden on individual companies.
Additionally, these clusters minimize
transportation costs between firms
operating in the same sector, further
enhancing efficiency.
Easing of trade restrictions
Over the past few years, China has steadily
eased restrictions on market access. The
number of restrictions in free trade zones
dropped from 190 in 2013 to just 27 in 2021.
The rising number of new free trade zones,
from 1 in 2013 to 21 in 2022, has also helped
build China’s image as a global player. These
zones are designed to attract foreign direct
investment by reducing barriers and improving
market access.
Growth of investments in China
The country has seen a significant rise of
capex within the chemicals industry, from
~$100 bn in 2010 to ~$370 bn in 2023 (Exhibit
9). Many major MNCs have made substantial
investments in the Chinese chemicals market,
highlighting the strategic importance of China
in their global footprint.
All these efforts have been part of a concerted
approach to leverage the best of China’s
competitive advantages and resources, along
with a strategy to invite foreign investment
into the country. This approach has led China’s
chemicals industry to a leadership position
globally – an exemplary transformation from
its small share back in the year 2000.
Chemical Industry: Powering India’s participation in Global Value Chains21 Framework
to define
roadmap
for India’s
chemical
industry
02 Chemical Industry: Powering India’s participation in Global Value Chains23NON> CONFIDENTIAL
Building on the industry’s outlook
and potential, this section outlines
the methodology used to identify key
chemical segments for prioritization and
categorizes them into strategic focus areas.
By leveraging India’s existing strengths
and addressing critical challenges, this
roadmap aims to position the country as a
competitive global leader in the
chemicals industry.
Methodology for developing the  roadmap for chemical industry
Identification of chemicals to be
prioritized for government interventions
An extensive list of chemicals (across
petrochemicals, specialty chemicals, and
inorganic chemicals) was examined to serve
as the foundation of this analysis. These
categories were selected based on their
potential for growth and development, as
well as their significance in contributing
to the industry as a whole. The parameters
encompass various aspects such as net
exports by India, India’s share in global
trade, potential for value addition by India,
availability of technology and processes,
extent of imports from a single source,
significance of end-markets, accessibility of
required feedstock within India, and so on.
Categorization of identified chemicals
across four pillars
To develop a roadmap towards achieving
the aspiration of a 5 to 6 percent production
share in the chemicals GVC by 2030, it
is imperative to focus on four distinct
pillars (Exhibit 10). The first two focus on
supernormal growth for segments that
can raise India’s standing in the export
market and on sunrise segments where
India can establish a presence. The other
two focus on bridging gaps through an
emphasis on easing production bottlenecks
and unlocking technology access for
accelerated production.
Tapping into the export market
The first pillar highlights the need to
capitalize on India’s existing comparative
advantage and production capabilities
in certain segments. Focusing on these
strengths can enable India to effectively
tap into export markets, boosting its
international competitiveness and
solidifying its position as a major player
in the global chemicals industry. This
approach leverages India’s potential for
growth and profitability by catering to the
rising global demand for chemicals such as
paints and coatings, polyester fiber, carbon
black, and more.
Growing sunrise sectors
The second pillar highlights the importance
of developing emerging or sunrise segments
within the chemicals industry. Focusing
on these segments can enable India to
capitalize on new market opportunities,
drive innovation and diversify its product
portfolio. The objective is to identify and
support the growth of segments that
are now nascent but could become core
contributors to the chemicals industry with
the right policy interventions for growth.
Segments identified for this pillar are
battery chemicals and electronic chemicals.
Solving for production competitiveness
The third pillar involves identifying and
resolving issues that hinder the industry’s
ability to compete effectively in the global
market. By improving feedstock access,
large-scale production processes and cost
efficiency, India could emerge as a cost-
competitive manufacturer of chemicals
segments such as ethylene-vinyl acetate
(EVA), styrene, phenol and nylon 6.
Unlocking technology access
The focus of the final pillar is on acquiring
and adopting new technologies required
to stay at the forefront of the industry.
This includes gaining access to advanced
manufacturing processes, investment
in R&D capabilities and upskilling
the workforce to adopt cutting-edge
technologies. Segments identified for
this pillar are toluene diisocyanate (TDI)/
methylene diphenyl diisocyanate (MDI),
acetic acid and titanium dioxide. 24Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Policy support required across seven dimensions for
identified chemicals
A thorough evaluation was conducted
to determine the necessary policy
support that can enable these prioritized
chemicals to facilitate the growth of India’s
chemicals industry. Each intervention was
assessed on potential impact, feasibility
of implementation, and extent of industry
backing. Encompassing seven key
parameters, these interventions represent
effective and strategic steps that have
the potential to significantly impact the
production of the identified chemicals.
These seven dimensions are: Development
of infrastructure (e.g., development of port
infrastructure for the chemicals industry),
financial interventions (e.g., introduction
of production-linked incentives (Opex
subsidy) for the chemicals industry), R&D
interventions (e.g., setting up of an R&D
fund for targeted development), talent
and skill upgradation (e.g., upskilling
labor specifically for the chemicals
industry), international cooperations
(e.g., revision of free trade agreements
to support the chemicals industry), ease
of doing business (e.g., simplification
of environmental clearance regulations
along with maintenance of accountability
and transparency) and institutional
interventions (e.g., simplification of process
across regulatory and
governmental bodies).
Development of infrastructure
Optimal infrastructure is a critical starting
point to set up any industry for success.
Government support could be Policy
support required enabler for infrastructure
development through two kinds
of initiatives:
—Establishing world-class chemical
hubs in India through cluster-based
development under Petroleum,
Chemicals, and Petrochemical
Investment Regions  (Chemical hubs).
—Improving infrastructure at strategically
important ports (e.g., Dahej and
Paradip) for the storage and handling of
hazardous chemicals and gases.
The 4 pillars for the chemicals industry’s 2030 aspiration
Promoting supernormal growth
Bridging gaps
India’s 2030 aspiration
5-6% share in the chemical’s global value chain | Net zero trade balance
Tap into export
markets
Grow sunrise
segments
Solve for production
competitiveness
Unlock
Technology access
Exhibit 10 Chemical Industry: Powering India’s participation in Global Value Chains25NON> CONFIDENTIAL
Financial support
Lack of funding can significantly impede
large-scale growth and development.
Supportive financial policies could thus
prove to be a crucial unlock for chemicals
manufacturing in India. These supportive
policies could include:
—Introducing production-linked incentive
(Opex subsidy) schemes to support
incremental production of chemicals
(based on the import bill) such as
styrene, acetic acid, EVA, agrochemicals,
dyes and pigments, and titanium
dioxide. This could promote domestic
manufacturing, reduce imports and
improve global competitiveness. This
intervention has proved impactful
in other industries such as
fruits and vegetables, and
electronics manufacturing.
R&D and technology investments
Continuous research and development
is essential for any industry to innovate,
upgrade, and make new discoveries. For the
chemicals industry, R&D is a critical lever
to explore additional possibilities, optimize
production techniques, adapt environment-
friendly processes and develop sustainable
products. This requires strategic investment
to promote and embed R&D where
it matters most.
Supportive policy initiatives
could include:
—Developing indigenous technologies
and unlocking prioritized technologies
to foster innovation and self-sufficiency:
The creation of an R&D fund under
private and public sector collaboration
can help focus attention on R&D required
to manufacture “new” products,
develop technologies in sustainable
and green chemistries (that could
10
https://indbiz.gov.in/india-can-become-us40-trillion-economy-by-2047-if-the-working-population-is-employed-cii/
help India proactively match carbon
border adjustment mechanism (CBAM)
requirements), develop technologies
for applications tailored for India, and
to develop domestic technologies for
high-value products for which Indian
manufacturers don’t have ready access
to international technologies. MNCs
could also get involved in important
areas to work in a targeted manner
toward select, prioritized  technologies.
Talent and skill upgradation
A skilled workforce capable of meeting
evolving needs is crucial for the long-term
success of any industry. For the chemicals
industry, this could be possible through
policy support aimed at:
—Establishing Industrial Training
Institutes (ITIs) close to chemical belts
via a public-private
partnership (PPP) model.
—Launching industry-specific courses
with clear mapping of critical roles (e.g.,
operator, technician, etc.) and shop-
floor apprenticeship programs with
the support of chemical zone industrial
associations. Ensuring that the updated
curricula of universities and the ITIs
remain in sync with the latest industry
developments and needs. This will
empower the graduating students with
the relevant knowledge and skill base.
—Attracting and retaining talent through
supportive mechanisms such as
10-year income tax breaks for Indians
working abroad, and other welcome
advantages. While India will make
up around 20 percent of the world’s
working-age population by 2047 owing
to its demographic dividend, it will be
important to keep the talent in India
10
. 26Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
International cooperation
Government policies could also promote
international cooperation that paves
the way for meaningful knowledge and
technology exchange partnerships with
leading chemicals producers in the world,
through some of the following initiatives:
—Encouraging partnerships with MNCs on
specific technology development for
the country.
—Revising existing free-trade agreements
(FTAs) to ease partnerships for robust
and dynamic trade relations with more
countries and companies.
Ease of doing business
Over the past decade, India has considerably
eased the regulatory burden for business
operations by streamlining regulations,
digitizing processes, and improving
infrastructure. Its efforts in this domain
have been widely recognized, and the
country is now being seen as a more
attractive business destination. India’s
ranking in the World Bank’s Doing Business
report, which, until 2020
11
, ranked countries
on their regulatory environment’s
supportiveness for business operations,
steadily improved over the years. From
ranking 142
nd
of 190 economies in 2014,
India reached the 63
rd
position in 2020
through a focused effort to be a more
conducive business destination.
In tandem with encouraging foreign
investment and presence in India,
government policies could further attend
to ease of doing business for the chemicals
industry in India through a few impactful
interventions, such as:
—Simplifying and fast-tracking
environmental clearance (EC) processes.
It would help to club the Expert Appraisal
Committee (EAC) and Environmental
11
https://www.worldbank.org/en/news/statement/2021/09/16/world-bank-group-to-discontinue-doing-business-report
Impact assessment authority (EIAA) into
a single committee for faster approvals.
Companies could be allowed to initiate
civil construction activities on site at the
developer’s risk, if a public hearing is not
required. There could be a provision for
a “deemed EC” if clearance is delayed
beyond 270 days. Companies could
also work faster if ECs were eased for
capacity enhancements or product
mix changes.
—Accelerate approvals for priority
segments, such as chemicals that are
part of a potential Opex subsidy scheme,
aiming for clearance within a 30- or
60-day period.
Institutional interventions
At the institutional level, policies could
embed processes and standards that
accelerate production to global quality,
through interventions such as aligning
Indian chemicals export standards with
global export standards and expediting
Bureau of Indian Standards certification
for more chemicals. Towards this, the
government could support the setting up of
50 to 60 world-class laboratories across the
country for standardized quality and testing
of chemicals.
In addition, the government could
encourage the drafting of a national 02C
blueprint that captures the country’s
overall strategy on fuel, bulk and specialty
products. It could also streamline processes
across regulatory bodies and governing
ministries to help fast-track environmental
clearances that may be held up due to
multiple check-points across
these entities.
Seven focused initiatives or structural shifts
to address these focus areas form the crux
of this report. They are explained in greater
detail in Section 3. Chemical Industry: Powering India’s participation in Global Value Chains27NON> CONFIDENTIAL Chemical Industry: Powering India’s participation in Global Value Chains27 Structural
shifts to
help expand
India’s
presence
in the
chemicals
global value
chain
03 Chemical Industry: Powering India’s participation in Global Value Chains29NON> CONFIDENTIAL
Introduction
Having explored a suitable framework to develop a strategy for advancing India’s chemicals industry, this
chapter focuses to the measures required to translate those ambitions into reality. The data collected to
support these measures results from multiple stakeholder conversations with representation from industry
players, industry bodies, academia, relevant government departments and field visits. While the roadmap
outlined strategic goals and opportunities, achieving them require targeted support that address both
immediate challenges andlong-term enablers.
By aligning efforts across stakeholders and tackling systemic inefficiencies, India can not only scale its global
presence but also create a resilient and competitive chemicals ecosystem. Together, these initiatives aim to
transform aspirations into actionable progress.
List of recommended Interventions
Intervention 3:
Introduce a Opex
subsidy scheme for
chemicals
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
3.1
Intervention 4:
Develop and access
technologies to
enhance self-
sufficiency and
foster innovation
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
4.1
Acquiring access to specific technologies available outside India
through fostering MNC partnerships
4.2
Intervention 5:
Fast-track
environmental
clearance with
transparency and
accountability
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
5.1
Intervention 6:
Securing FTAs to
support Industry
growth
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
6.1
Awareness and effective utilization of FTAs: Raising FTA awareness,
simplifying procedures, and easing origin proofs can help more
exporters access benefits and boost competitiveness
6.2
Intervention 7:
Talent and skill
upgradation in the
chemical industry
Expansion of ITIs and specialized training institutes: The expansion is
essential to meet the growing demand for skilled labour
7.1
Upgrading faculty and teacher training: The effectiveness of
vocational training programme is directly linked to the quality of
instruction
7.2
Industry-academia partnership: These collaborations can introduce
industry-relevant courses in core areas like petrochemicals, polymer
science, and industrial safety
7.3
Intervention 2:
Develop existing
port infrastructure
Composition of a Chemical Committee for ports to advise on and
address infrastructural gaps in chemical trading at ports
2.1
Development of 8 high-potential clusters2.2
1.1Establishment 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.
Administrative body at the chemical hub level, which will handle the
overall management of the hub
1.2
Intervention 1:
Establish world-
class chemicals
hubs in India 30Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
List of recommended Interventions
Intervention 3:
Introduce a Opex
subsidy scheme for
chemicals
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
3.1
Intervention 4:
Develop and access
technologies to
enhance self-
sufficiency and
foster innovation
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
4.1
Acquiring access to specific technologies available outside India
through fostering MNC partnerships
4.2
Intervention 5:
Fast-track
environmental
clearance with
transparency and
accountability
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
5.1
Intervention 6:
Securing FTAs to
support Industry
growth
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
6.1
Awareness and effective utilization of FTAs: Raising FTA awareness,
simplifying procedures, and easing origin proofs can help more
exporters access benefits and boost competitiveness
6.2
Intervention 7:
Talent and skill
upgradation in the
chemical industry
Expansion of ITIs and specialized training institutes: The expansion is
essential to meet the growing demand for skilled labour
7.1
Upgrading faculty and teacher training: The effectiveness of
vocational training programme is directly linked to the quality of
instruction
7.2
Industry-academia partnership: These collaborations can introduce
industry-relevant courses in core areas like petrochemicals, polymer
science, and industrial safety
7.3
Intervention 2:
Develop existing
port infrastructure
Composition of a Chemical Committee for ports to advise on and
address infrastructural gaps in chemical trading at ports
2.1
Development of 8 high-potential clusters2.2
1.1Establishment 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.
Administrative body at the chemical hub level, which will handle the
overall management of the hub
1.2
Intervention 1:
Establish world-
class chemicals
hubs in India Chemical Industry: Powering India’s participation in Global Value Chains31NON> CONFIDENTIAL
Initiative 1: Establish world-class chemicals hubs in India
12
https://www.sg101.gov.sg/resources/connexionsg/til-jurong-island/
13
https://www.basf.com/in/en/who-we-are/organization/locations/europe/german-sites/ludwigshafen
14
https://middleastfreezone.com/En/Jubail-Industrial-City
15
https://chemicals.gov.in/sites/default/files/Policies/PCPIRPolicy.pdf
16
The Cuddalore and Nagapat tinam cluster is on hold at present.
17
https://chemicals.gov.in/sites/default/files/Policies/PCPIRPolicy.pdf
To enhance the effectiveness and global
competitiveness of India’s chemical
industry, a revised governance and
operational framework for Chemical
Parks has been proposed by the Indian
government through DCPC. This new
structure emphasizes centralized
coordination, state-level autonomy, and
seamless integration of stakeholders,
with clearly defined accountability and
responsibilities. India can adopt practices
from successful global chemical parks such
as Jurong in Singapore, which contributes
to around 3% of Singapore’s GDP
12
,
and employs thousands of people. The
Ludwigshafen Chemical Park in Germany,
one of the largest in the world, generates
approximately €20 billion in annual revenue
(as of 2020)
13
. In Saudi Arabia, the Jubail
Industrial City is a prime example, housing
over 100 companies and producing about
7 per cent of the world’s petrochemicals
14
,
generating thousands of jobs. By adopting
best practices from these global examples,
India can replicate their success and
significantly improve the performance and
competitiveness of its own
chemical industry.
The current scenario
Introduced through a policy resolution in
2007, India’s
15
Mega-Chemical Industrial
Estates, now known as Petroleum,
Chemicals, and Petrochemicals Investment
Regions (chemical hubs), are special
economic zones in India aimed at facilitating
the production of petrochemicals and
petroleum through strategic investments
and infrastructure development. India
has four approved chemical hubs, in
Visakhapatnam (Andhra Pradesh), Dahej
(Gujarat), Paradip (Odisha), and Cuddalore
and Nagapattinam
16
(Tamil Nadu).
Institutional framework for Indian chemical hub
17
Policy Framework
In the policy for the Petroleum, Chemicals
and Petrochemicals Investment Region
(chemical hub), initially designed in 2007
and after several amendments over the
years, a High-Powered Committee was
proposed as the central coordinating
authority and Management body at the
chemical hub level.
Led by the Department of Chemicals and
Petrochemicals (DCPC), chaired by the
Cabinet Secretary and including senior
officials from central ministries, the High-
powered committee aimed to oversee
chemical hub proposals, monitor project
implementation, and ensure regulatory
compliance. At the chemical hub level,
Management Boards, potentially in the form
of Special Purpose Vehicles (SPVs), were
to handle master planning, infrastructure
development, and investment facilitation.
The composition, leadership and
responsibilities of High-Powered Committee
and Management Boards were designed to
be as follows:
The High-Powered Committee
Composition and Leadership:
—Chaired by the Cabinet Secretary, the
committee includes senior officials from
central ministries and departments
—The Secretary of DCPC will serve as the
Convenor, ensuring alignment with
national chemical industry objectives 32Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
—Additional members can be co-opted as
needed, and Chief Secretaries of state
governments may be invited for region-
specific deliberations
Responsibilities:
—Strategic Oversight: Evaluate and
approve chemical hub proposals to
ensure alignment with industrial and
environmental standards
—Implementation Monitoring: Oversee
project progress, address bottlenecks,
and coordinate with state-level bodies
for streamlined development
—Regulatory Integration: Facilitate
environmental clearances and ensure
regulatory compliance by working across
ministries and stakeholders
Management Boards for each
chemical hubs
Composition and Leadership:
—The Management Board may take
the form of an SPV headed by a CEO,
ensuring streamlined decision-making
—It will include representatives from
developers, co-developers, and anchor
tenants, fostering collaboration among
public and private stakeholders
Responsibilities:
—Master Planning: Develop and enforce
a detailed Master Plan to guide
infrastructure development, land use,
and resource allocation
—Infrastructure Development: Oversee
the establishment of shared utilities,
transportation networks, and residential
facilities to support industrial growth
—Investment Facilitation: Identify and
promote investment opportunities,
streamline approvals, and foster
partnerships between anchor tenants
and downstream industries
—Operational Coordination: Ensure
compliance with environmental
18
DoCPC Annual Repor t and website ht tps://chemicals.gov.in/pcpir, JTC website, press search, Team Analysis
19
https://investodisha.gov.in/Application/uploadDocuments/Content/Petroleum_Chemicals_Petrochemicals_Investment_
Region.pdf
standards, resolve disputes, and provide
operational support to investors
However, this structure was not effectively
implemented on the ground. The chemical
hub policy has faced gaps between policy
formulation and on-ground implementation.
Among chemical hubs, only Gujarat
witnessed a dedicated chemical hub level
management board being formed.
Overview of India’s Petroleum, Chemicals,
and Petrochemicals Investment Regions
(chemical hubs)
The development of India’s chemical hubs
has faced several challenges, including
operating difficulties, contractual issues,
and reluctance from international chemical
companies to enter ventures without
majority shareholding. Addressing these
challenges is crucial for realizing the
full potential of the chemical hubs and
developing a world-class chemical industry
in India.
Gujarat chemical hub (Dahej)
18
: The Gujarat
chemical hub in Dahej covers 465 square
kilometers and is India’s most active and
successful chemical hub. It hosts the largest
petrochemical plant in India, operated
by OPaL, and has attracted over ₹1.2 lakh
crore in investments, creating employment
opportunity to thousands of people. With
respect to the current institutional structure
at Gujarat chemical hub, the Gujarat
Petroleum, Chemicals and Petrochemicals
Special Investment RDA (GPCPSIRDA)
is responsible for the overall planning,
execution, and regulatory functions.
However, while the region has made
significant strides, there is still a need to
further enhance coordination and optimize
infrastructure development to maintain and
accelerate growth.
Odisha chemical hub (Paradip):
19
The
Odisha chemical hub in Paradip spans
275 square kilometers and has attracted
over ₹50,000 crore in investments. With
respect to the current institutional structure Chemical Industry: Powering India’s participation in Global Value Chains33NON> CONFIDENTIAL
at Odisha chemical hub, the Odisha
Industrial Infrastructure Development
Corporation (IDCO) oversees infrastructure
development, land allocation, and
investment facilitation. However, IDCO
operates across multiple industries, not
exclusively within chemicals, which can
impact the focused growth of the chemical
hub. Additionally, the Industrial Promotion
and Investment Corporation of Odisha
(IPICOL) acts as the single point of contact
for all industrial investments in the state.
To further drive success, there is a need for
a more dedicated focus on the chemicals
sector within the chemical hub framework.
Andhra Pradesh chemical hub
20

(Visakhapatnam to Kakinada)
21
: The chemical
hub spanning 640 square kilometers
between Visakhapatnam and Kakinada has
attracted ₹20,000 crore in investments.
Despite its strategic coastal location, the
region lacks a finalized anchor tenant
and faces significant challenges in land
acquisition, regulatory clearances, and
logistical support. The Andhra Pradesh
Industrial Infrastructure Corporation
(APIIC) is the nodal agency for managing the
implementation of the chemical hub, but
it also oversees a range of industries, not
specifically focusing on the development
of the chemical hub. Strengthening
20
INDIA Por t Infrastructure: Chemicals repor t by J.M. Baxi , Maritime India Vision 2030 repor t, team analysis
21
Envoronment Clearance repor t for Development of VK-PCPIR at Visakhapatnam & East Godavari Districts, Andhra Pradesh
22
DoCPC Annual Repor t and website ht tps://chemicals.gov.in/pcpir, JTC website, press search, Team Analysis
infrastructure and regulatory processes,
as well as securing anchor tenants, will be
essential for realizing the region’s
full potential.
Tamil Nadu chemical hub (Cuddalore and
Nagapattinam)
22
: The Tamil Nadu chemical
hub, covering Cuddalore and Nagapattinam,
is strategically located near major ports
and has the advantage of European
company presence to fuel industrial growth.
However, the region faces challenges
in environmental sustainability, local
community engagement, and infrastructure
development. Despite its significant
potential, addressing these concerns,
enhancing connectivity, and fostering
stronger local industry support are key areas
that require improvement to attract further
investments and maximize the region’s
industrial capabilities.
In conclusion, while the chemical hubs in
Gujarat, Odisha, Andhra Pradesh, and Tamil
Nadu have made some progress in attracting
investments and creating jobs, there are
still critical areas that need further attention
to fully realize their potential. To maintain
global competitiveness, these regions would
need to improve infrastructure, streamline
regulatory processes, prioritise sectoral
growth, and address environmental and
community issues. 34Chemical Industry: Powering India’s participation in Global Value Chains
Case study: Jurong Chemical Park
Jurong Island in Singapore has emerged as a
global leader in the chemical industry, ranking
among the top 10 hubs worldwide in terms
of chemical exports. With an impressive $40
billion investment to enhance its production
capacity, Jurong Island has attracted more
than 100 chemical companies. This case
study explores the factors contributing to the
success of Jurong Chemical Park (Exhibit 11).
1. High production capacity and strong
feedstock integration: Jurong Island boasts
a substantial cracker capacity of 4 MMTPA
for ethylene and 2.5 MMTPA for propylene,
ensuring efficient petrochemical
production and a steady supply of raw
materials for downstream industries. The
robust integration with anchor tenants
guarantees a reliable and consistent
feedstock supply, minimizing disruptions
and ensuring smooth operations
2. Well-developed shared infrastructure: The
island features well-developed shared
infrastructure, including utilities and
logistics that lower operational costs and
enhance overall efficiency. Companies
benefit from common facilities for power,
water, and waste management, reducing
redundancy and fostering a
collaborative environment
3. Excellent strategic connectivity and
logistics support: Jurong Island’s strategic
connectivity through ports, railways,
and road networks ensures the seamless
transportation of raw materials and
finished products. The island’s proximity to
major shipping routes and its state-of-the-
art port facilities enable efficient import
and export operations, making it a vital
hub for global chemical trade. Additionally,
Jurong Island has two logistics parks
that offer comprehensive logistics and
supply chain support, further streamlining
operations for chemical companies
4. Effective governance and proactive role of
the government: Effective governance and
streamlined regulatory processes create
a conducive business environment, with
clear guidelines and efficient approval
processes that minimize bureaucratic
delays. The Singaporean government,
which owns Jurong Island and supports
third-party service providers for utilities,
storage, and maintenance, ensures
continuous improvement and maintenance
of infrastructure and services to meet the
needs of the chemical companies
5. Sustainability initiatives and future potential:
Jurong Island has been identified as a
potential site for Carbon Capture and
Storage (CCS). This aligns with global
sustainability goals and positions Jurong
Island as a forward-thinking hub in the
chemical industry. The potential for CCS,
along with other sustainability initiatives,
underscores Jurong Island’s commitment
to environmental stewardship and
sustainable industrial practices
These strategic advantages collectively
create a conducive environment for chemical
companies to thrive, making Jurong Island a
benchmark of success in the global
chemical industry.
Lessons for India from Jurong’s
success story
A comparison of chemical hubs in India
with Jurong Island, across investments,
infrastructure, and operations (Exhibit 12),
highlights the potential for Indian chemical
hubs to boost competitiveness and offers
useful lessons for the way forward.
Jurong Island serves as a prime example of
successful, world-class and cluster-based
infrastructure development. With substantial
investment in high cracker capacity, it
efficiently produces essential petrochemicals
like ethylene and propylene, ensuring a reliable
feedstock supply through strong integration
with anchor tenants.
NON-CONFIDENTIAL
34Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains35
The chemical park’s well-developed shared
infrastructure—encompassing utilities,
logistics, and waste management—lowers
operational costs and fosters collaboration
among stakeholders. Jurong’s proactive
governance structure streamlines
decision-making and compliance, while its
strategic location and connectivity through
comprehensive transport networks enhances
the movement of raw materials and
finished products.
Indian chemical hubs, when considered
against the backdrop of Jurong’s success
story, have potential for higher production
and performance. Prioritising high cracker
capacity, integrated feedstock supply, and
shared infrastructure can lead to successful
chemicals clusters like Jurong Island, while
also increasing India’s chemical
production quantities.
A snapshot of the chemical park at Jurong Island, Singapore
Jurong Rock CavernJRCLNG TerminalSLNG
RefiningCrackingSpecialty ChemicalsSupporting industriesUtilitiesPetrochemicals
Checkpoint
Synthetic
Rubber
Corridor
High-purity
Ethylene
oxide
corridor
Jurong
Island
Pulau
Bukom
Jurong
Island
Highwa
y
Seraya Ave
Seraya Rd
Sakra View
Saira Rd
Sakra Ave
Jurong Island Highway
MerlimauPesek
Chawan
Seraya
Merbau
ExxonMobil
Sakra
Banyan
Tembusu
Angsana
Tembusu Ave
Tembusu Cres
B anyan Rd
Tembusu Dr
Banyan Rd
Meranti Rd
JRC
JRC
JURONG ISLAND
Shell
PULAU BUKOM
Petrochemical
corporation of
Singapore
Tembusu Rd
Key Statistics
~$40bn
Investments madeEmployment generated
24K+
Energy and chemical companies
100+32km
2

Area of Jurong Island
Source: IHS Markit, JTA website, BT Infographics, https://www.businesstimes.com.sg /companies-markets/energy-
commodities/jurong-island-singapores-chemicals-hub
Exhibit 11
NON- CONFIDENTIAL
Chemical Industry: Powering India’s participation in Global Value Chains35 36Chemical Industry: Powering India’s participation in Global Value Chains
Overview of Jurong Island Chemical Park, Singapore and India's PCPIRs
High progress Medium progress Limited progress Challenges with PCPIRs
RemarksDahej Paradip Vizag Cuddalore -
Nagapattinam
Jurong
Infra-
structure
Master Plan
status
Preparation
of plan under
process
Studies
completed,
master plan
to be
finalized
Not started
Develop-
ment &
master plan
sanctioned
Completed
InvestmentInvestments
made~INR 50K Cr.
~INR 20K
Cr.
~INR 10K Cr.
~INR 1.2L
Cr.
~INR 3L Cr.
Anchor tenant
and major
investors
HPCL, GAIL,
Petronet,
Haldia etc.
NA
OPaL
(anchor),
Reliance,
BASF, ABG
IOCL (anchor),
IFFCO,
Paradeep
Phosphates
Exxon
Mobil, Shell,
SPC,
Chevron
etc.
Utilities &
shared
infrastructure
Medium Low Low LowHigh
OperationsFeedstock
availability via
anchor
Low Low NA NAHigh
Area (sq. km)
275 640 25646532
Cracker
capacity
Not finalized
Not
finalized
Cracker: 1.7
MMTPA
Refinery: 15
MMTPA,
cracker
being set-up
Cracker: 6.5
MMTPA
Connectivity
(E.g. Ports)Adequate
(Ports,
Railways,
Roads)
Adequate
(Ports,
Railways,
Roads)
Adequate
(Ports,
Railways,
Roads)
Excellent
(DMIC,
Freight
Corridor)
Excellent
Cracker capacity per
unit investment and
area is low in India as
compared to
chemical parks
globally
Few global players
have made
investments in Indian
PCPIRs
Low access to shared
infra-structure
increases capex
substantially
impacting project IRR
Anchor tenants in
India do not provide
adequate feedstock
to producers
downstream
Nagapattinam PCPIR
project has been put
on hold due to
environmental
concerns
Environmental
clearance
Draft report
submitted,
awaiting
hearing at
the Districts
Studies
completed,
hearing to
be
conducted
EC/CRZ
clearance
for full
PCPIR
Clearance
provided
after
relocating
endangered
species
No progress
Source: DoCPC Annual Report and website https://chemicals.gov.in/pcpir, JTC website
On-hold
Exhibit 12
NON-CONFIDENTIAL
36Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains37NON> CONFIDENTIAL
Bridging the gaps to build world-class chemical hubs
Future chemical hubs: stakeholder roles
and entities
Key changes to the institutional framework
are essential to drive sustainable growth,
improve infrastructure, and attract both
domestic and international investments.
Following are the proposed entities with
clearly defined roles and responsibilities
along with enablers for them to perform
their functions effectively (Exhibit 13):
1.1 Empowered committee at central level:
—Proposed objectives:
• A central empowered committee,
chaired by secretary of Department
of Chemicals and Petrochemicals
and representation from Ministry
of Finance, Ministry of Petroleum,
NITI Aayog, etc., can oversee the
strategic direction and policymaking
for all chemical hubs across India.
This committee can ensure that the
development of chemical hubs aligns
with national priorities, fostering
a coordinated approach between
central and state governments as well
as promote private petrochemical
complexes. The committee’s
mandate could include setting
clear objectives, defining growth
strategies, and ensuring that each
chemical hub meets the necessary
standards for global competitiveness.
The committee can also play a
role in streamlining the regulatory
environment, thereby reducing delays
in approvals and facilitating faster
time-to-market
for investors.
—Proposed responsibilities:
• Awarding Incentives – Identify and
award financial or non-financial
incentives: This could focus on
identifying the right mix of incentives,
both financial (such as tax breaks,
subsidies) and non-financial (like
infrastructure support or skill
development programs), to attract
and retain investors by lowering
operational costs or enhancing the
value proposition
• Tracking KPIs – Identify KPIs to track
development of each chemical hub:
Key performance indicators (KPIs)
can be used to monitor the progress
of each Petroleum, Chemicals, and
Petrochemicals Investment Region
(chemical hub), focusing on metrics
like investment inflow, project
completion rates, job creation, and
environmental sustainability, to ensure
the successful implementation and
growth of the initiative
—Key enablers:
• GVC Chemical fund for infrastructure
development: A GVC Chemical fund
could be established to provide
financial support for infrastructure
development and other key initiatives
within the chemical hub. This fund can
ensure that necessary investments
are made to address critical
infrastructure needs and can offer
financial backing for projects that
support the long-term sustainability
of the parks. State governments
will assist in land procurement and
handle dispute resolution at the local
level. This collaborative approach
between the central government,
state governments, and private sector
investors is essential for ensuring that
chemical hubs receive the necessary
support to meet their operational
challenges and contribute to India’s
standing in the global
chemicals market
• Streamlined approval processes:
Special authority within the committee
to handle fast-tracked approvals
(including environmental
clearances etc.) with focus on
sustainability 38Chemical Industry: Powering India’s participation in Global Value ChainsNON-CONFIDENTIAL
1.2 Administrative body at the chemical
hub level:
—Proposed objectives: Each chemical hub
can be governed by a local administrative
body, which will handle the day-to-day
operations and management of the
park. This body would be responsible
for crucial tasks such as investment
screening, land management, and
coordination with service providers.
It can also be tasked with liaising with
central empowered committee and state
government to achieve its mandate
—Proposed responsibilities:
• Marketing – Attract investors to set
up plants: This involves promoting
the region as a prime investment
destination, highlighting its
competitive advantages like
infrastructure, skilled labor, and
incentives, while engaging investors
through targeted campaigns, digital
channels, and industry events to
generate interest in setting up
manufacturing plants
• Investment screening: Evaluate
investment opportunities based on
key factors such as size, type, lease
duration, land productivity, and
proposal credibility to ensure they
align with business objectives
• Land sales: Ensure that land is sold
with preapproved building plans and
suitable for specific industrial uses or
concepts (e.g., biomedical research), in
compliance with planning regulations
• Lease management: Provide
comprehensive assistance with
regulatory issues related to leasing,
including subletting, transfers, name
changes, and environmental matters
• Management of shared facilities:
Develop an operating model for shared
infrastructure, including the creation
of a special purpose vehicle (SPV) with
private co-investment and onboarding
of service providers
»SPV and co-investments: Establish
an SPV structure that involves
co-investment from private entities
and the chemical hub entity to fund
and manage shared facilities
»Contractual service providers: Engage
and onboard third-party service
providers through contractual
agreements to support the operation
and maintenance of
shared infrastructure
»Environmental Clearance: Providing
pre-approved environmental
clearances for factories being set
up to ease and speed up the set up
process
—Key enablers:
• Access to financing of development of
chemical hubs through GVC Chemical
fund in SPV or other financing model
(including equity/debt financing): A
GVC Chemical fund within the SPV
model, offering equity/debt financing
or combination of both, serves as
a crucial enabler for securing the
necessary capital to drive development
projects forward
• Support from state government for land
procurement and dispute management:
State government assistance in land
procurement and dispute resolution
acts as a key enabler, ensuring smooth
access to land and addressing any
legal challenges that may hinder
project progress
• Regular check-ins with empowered
committee to address issues and
concerns: Regular engagement
with the empowered committee
ensures ongoing oversight and timely
resolution of issues, enabling the entity
to stay aligned with its objectives and
maintain project momentum
Anchor tenants:
—Key stakeholders will also include anchor
tenants—typically large refineries and
petrochemical companies—which will Chemical Industry: Powering India’s participation in Global Value Chains39NON> CONFIDENTIAL
form the backbone of each chemical
hub, providing essential feedstock for
downstream industries. These anchor
tenants will work in close collaboration
with downstream producers of specialty
chemicals, petrochemical intermediates,
and end products. The involvement of
private players is critical for ensuring
that the parks are economically viable
and attract the right investments.
Infrastructure and Services at the
chemical hubs
—Utilities and Services: The chemical hub
would need to have reliable utilities and
essential services to support
industrial operations
• Waste Management Systems: Provide
sustainable solutions for effluent
treatment and waste disposal to meet
environmental compliance. Waste
disposal to be handled inside the
chemical parks. Deep sea discharge
standards to be at par with global
standards
• Safety Mechanisms: Ensure robust
safety protocols, including emergency
response systems, industrial fire
safety, and health monitoring facilities
• Laboratories and Testing Facilities:
Enable product testing, quality control,
and R&D activities
—Specialized infrastructure for small
enterprises (Access to common facilities
like warehouses, testing centers, and
co-working spaces, canteens etc.):
Affordable utilities and infrastructure
tailored to their specific needs are
critical to foster innovation and promote
the inclusion of smaller players in
the ecosystem
—Residential infrastructure: To support
the workforce, well-planned residential
infrastructure can be developed
• Housing facilities for employees across
all levels, from senior management to
operational staff
• Amenities such as schools, healthcare
facilities, recreational centers, and
shopping areas to improve the quality
of life
—Ports and logistics: Efficient transport
and logistics are vital for ensuring
seamless supply chain operations.
• Collaborative Efforts: Partnerships
with the Ministry of Ports, Shipping &
Waterways, state governments, and
private players would be key to:
»Develop port facilities with
adequate storage, loading, and
unloading capacity
»Improve connectivity between
chemical hub and key trade routes
through roads, railways,
and waterways 40Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Current and proposed institutional framework of Indian PCPIRs
Chemical manufacturing
companies
Anchor tenant (refineries
and cracker companies)
Shared infra development
companies
High-powered committee
(Chaired by the Cabinet
Secretary)
Management board
(constituted by the state
government for each PCPIR)
Pain points faced:
Infrequent meetings
leading to limited
decision making on
infrastructure and
development issues
Pain points faced:
Only Gujarat
constituted a
management board
(GPCPSIRDA)
dedicated to
PCPIRs, however,
not located in Dahej
Other PCPIRs
(including Odisha,
Andhra Pradesh
failed to implement
dedicated
management board
leading to several
bottlenecks and
development
issues)
Existing Institutionalframework of Indian PCPIRs Proposed Institutionalframework
Creation of Central trust fund under the Steering
committee along with implementation of current
PCPIR policy across all existing PCPIRs
PCPIR-level body
responsible for
managerial roles
within the PCPIR
(incl. anchor tenant,
chemical cos. etc.)
Steering committee (with
Dept. of Chem. & Petrochem.
as nodal agency)
Central body for
strategic decision
making across all
PCPIRs with sole
focus on chemicals
Central trust fund for
PCPIR development (under
Steering committee)
Trust fund for
infrastructural
development of
PCPIRs
Chemical manufacturing
companies
Anchor tenant (refineries
and cracker companies)
Shared infra development
companies
Service providersNew proposed entities / committees
Empowered committee under
central government (Chaired
by Secretary of DCPC)
State government (incl. GIDC,
MIDC, etc.)
Others (e.g., Industry
bodies, Consultants etc.)
GVC Chemical fund for
Chemical hub development
Administrative body
at Chemical hub level
Utilities and
services
Laboratories and
Testing Facilities
Waste
management
Logistics and
transport
Ports
Safety and
security
Shared Infra-
structure for Small
Enterprises
Residential
infrastructure
Anchor tenant
(refineries and cracker
companies)
Chemical Companies
(Petchem
intermediates &
End-products)
Downstream
Companies (producing
Specialty chemicals
and others)
Shared Infra
Companies
Clearly defined stakeholder roles for effective chemical hub governance
Administrative body at PCPIR
level (e.g., SPV with state and
central investment)
Exhibit 13 Chemical Industry: Powering India’s participation in Global Value Chains41NON> CONFIDENTIAL
Looking forward: Implementing the cluster-based approach for
infrastructure development
By concentrating resources and expertise
within defined geographic areas, the
cluster-based model facilitates the sharing
of infrastructure, reduces costs, and
accelerates innovation.
Revamping existing PCPIRs
The first pathway focuses on revitalizing
India’s existing chemical hubs, such as
those in Gujarat, Odisha, and Andhra
Pradesh (Exhibit 14). These regions have
already made significant progress in
establishing infrastructure, attracting
anchor tenants, and laying the groundwork
for chemical industry development.
However, they face challenges related to
infrastructure quality, financial incentives,
and regulatory complexities. By addressing
these issues, particularly the development
of shared utilities, streamlining investment
processes, and offering more competitive
financial incentives, these parks can be
optimized for higher productivity and
growth. The key advantage of this pathway
is that it leverages existing infrastructure,
allowing for faster time-to-market and
cost-effective expansion. This makes it
easier to attract new investments and scale
up operations without the delays and high
costs associated with setting up entirely
new regions. For instance, Gujarat’s well-
established chemical hub has already
attracted substantial investments but
could further benefit from improvements in
infrastructure connectivity and regulatory
efficiency. Similarly, following immediate
investments could be considered to be
made in the existing chemical hubs:
—Increase cracker capacity and improve
shared infrastructure at Dahej and
Paradip: Enhancing cracker capacity
at Dahej and Paradip is crucial to meet
the growing demand for petrochemical
products and improving operational
efficiency. Dahej, which already hosts
the largest petrochemical plant in
India, can further solidify its position
by expanding its cracker capacity, thus
ensuring a steady supply of ethylene and
propylene for downstream industries.
Improving shared infrastructure
such as utilities, logistics, and waste
management systems at both sites
can reduce operational costs, enhance
efficiency, and attract more investments
—Finalize an anchor tenant,
address feedstock availability,
and fix connectivity at Vizag: The
Vishakhapatnam-Kakinada chemical
hub needs a finalized anchor tenant
to drive investment and development.
Identifying and securing a major industry
player can provide a stable foundation
and attract ancillary industries to the
region. Ensuring a reliable supply of
feedstock is another critical factor;
this can be addressed by establishing
secure and efficient supply chains and
partnerships with feedstock providers.
Additionally, improving connectivity
through better transportation networks,
such as roads, railways, and ports,
will facilitate easier movement of raw
materials and finished products, making
the region more attractive to investors
—Restart projects at Cuddalore-
Nagapattinam with improved
environmental clearances and
better infrastructure planning: The
Cuddalore-Nagapattinam chemical
hub has significant potential but
requires a restart of stalled projects
with a focus on obtaining improved
environmental clearances. Ensuring
compliance with environmental
regulations will not only facilitate
project approvals but also enhance
the region’s sustainability credentials.
Better infrastructure planning, including
upgrading transportation networks,
utilities, and industrial facilities, is
essential to support new and existing
projects. A holistic approach that
considers environmental impact,
community engagement, and industrial
requirements can rejuvenate the region
and attract new investments 42Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Developing new clusters
The second pathway proposes the
creation of new chemical clusters, which
would be developed from the ground up,
tailored to the needs of the industry, and
selected based on regional advantages
such as proximity to raw material sources,
transportation networks, and potential
market access. This approach allows for
greater control over the development
process, enabling a tailored infrastructure
plan that could meet the specific needs of
anchor tenants, downstream industries,
and related sectors. While this approach
requires a more intensive setup—
including land acquisition, infrastructure
development, and long-term investment—
the potential for establishing cutting-edge
facilities with state-of-the-art technology
and sustainable practices could make
these new clusters highly competitive in
the global market. The creation of such
clusters would also enable India to diversify
its chemical manufacturing capacity and
cater to a broader range of products, from
petrochemicals to specialty chemicals.
Potential locations for these new clusters
include Maharashtra, Karnataka, West
Bengal, Kerala, Haryana, Uttar Pradesh,
Madhya Pradesh, and Rajasthan (Exhibit
15). These areas would need to be evaluated
based on various factors, including area
size, refining capacity, proximity to the
nearest port, and the port’s size. The
evaluation must also consider potential
challenges, such as high population density
and limited end-industries.
When considering potential locations for
new clusters, several districts across India
emerge as potential candidates (Exhibit 15).
However, each location presents unique
challenges that must be addressed. The
final decision can be made after thorough
discussions with stakeholders. Some of the
potential locations are as follows:
Western India:
—Sagar: Boasting a refining capacity
of 7,800 KMT, Sagar also faces issues
related to restricted land and
dense population.
Southern India:
—Dakshina Kannada: With a refining
capacity of 15,000 KMT, this district
has significant potential. The primary
challenge here is the limited number of
end-users, which could affect
market viability.
—Ernakulam: While Ernakulam’s refining
capacity stands at 15,500 KMT, like
Dakshina Kannada it suffers from a
scarcity of end-users.
Northern India:
—Panipat: These districts have
considerable refining capacities but
face high logistics costs and a lack of
end-use industries. Additionally, waste
management presents a
significant challenge.
Eastern India:
—Haldia is a potential site with substantial
refining capacity. However, it is hindered
by high population density and a
shortage of end-use industries.
—By focusing on integrated planning,
ensuring adequate cracker capacity,
feedstock availability, and shared
infrastructure from the outset, India
could develop efficient and world-
class chemicals clusters for greater
production volumes. Chemical Industry: Powering India’s participation in Global Value Chains43NON> CONFIDENTIAL
The newly defined governance model,
with empowered committee at the central
level and administrative body at the state
level, could eliminate any ambiguity and
overlaps by clearly defining the role of all
stakeholders, from anchor tenants and
chemical companies to service providers
within the chemical hub ecosystem.
Location of PCPIRs and major refineries in India
Odisha PCPIR (Paradeep)
Andhra Pradesh PCPIR
(Vishkhapatnam – Kakinada)
Tamil Nadu PCPIR (on hold)
(Cuddlore-Nagapattinum)
Gujarat PCPIR
Bengaluru
Chennai
Gurgaon
Hyderabad
Kochi
Kolkata
Mumbai
New Delhi
Noida
Pune
Mormugao
Chennai
Haldia
Kamarajar
New Manglore
Vizag
Paradip
VO Chidambaranar
Cochin
Digboi
Guwahati
Koyali
Barauni
Mathura
Panipat
Bongaigaon
Bina
Numaligarh
Tatipaka
Mangalore
GGSR
Jamnagar
Vadinar
JNPT
Vadhavan (in progress)
Deendayal
Kolkata
1
Major ports in India sourced from Marine Insight
PCPIR
Major port
1
Refineries
Major city
Exhibit 14 44Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIALEvaluating potential locations for creation of new chemical clusters
Distance
from closest
major port (KM)District
S
Sttaattee
Refining
capacity
(KMT)
Size of
the port
(MMT)
Area
(sq. KM)
R
Reeffiinneerryy
West
Source: Expert interviews
South <50 (New Mangalore
Port)
Dakshina
Kannada
Karnataka 15,000 ~804,866Mangalore
(ONGC)
North
~1200 (Jawaharlal
Nehru Port Trust)
SagarMadhya
Pradesh
7,800 ~2010,252Bina
(Bharat
Petroleum)
<50
(Cochin Port)
ErnakulamKerala 15,500 ~803,068Kochi
(Bharat
Petroleum)
East <50
(Haldia Dock
Complex)
Purba
Medinipur
West Bengal 8,000 ~504,736Haldia
(Indian Oil)
~1150
(Kandla Port)
PanipatHaryana 15,000 ~2701,268Panipat
(Indian Oil)
~450
(Kandla Port)
Balotra,
Barmer
Rajasthan 9,000
(upcoming)
~27010,551Barmer
(Hindustan
Petroleum)
Exhibit 15 Chemical Industry: Powering India’s participation in Global Value Chains45NON> CONFIDENTIAL
Initiative 2: Develop existing port infrastructure
23
https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/Air%20pollution/Maritime%20India%20
vision%202030.pdf
Chemicals storage and handling plays
a crucial role in increasing the sector’s
overall efficiency. Building world-class port
infrastructure at high-potential chemicals
clusters in India could transform logistics
for the industry. This initiative could help
overcome the insufficiencies of storage
capacity, handling capacity, mechanization
and last-mile connectivity that the industry
grapples with at present.
Developing existing port infrastructure in
a targeted manner, with state-of-the-art
storage and material handling facilities
for critical substances (such as ammonia,
ethylene, propylene and natural gas)
could enhance the industry’s
supply-chain efficiency.
Infrastructure requirements across the chemicals port
logistics value chain
India’s existing port infrastructure shows
promise alongside other leading maritime
nations like the US and China. A significant
maritime sector situated along India’s
7500-km
23
long coastline, it offers a vast
network of navigable waterways for
chemicals supply chain management. In
fact, two of India’s ports rank among the
top 402 ports globally. With state-of-the-
art storage and material handling facilities
for critical substances (such as ammonia,
ethylene, propylene and natural gas), port
infrastructure development could help
Indian chemicals businesses scale new
heights in bolstering self-reliant growth. The
value chain for trading liquid and gaseous
chemicals through ports is as
follows (Exhibit 16):
Inbound logistics for chemicals include
directing the cargo to onsite storage
containers from a variety of sources,
Value chain for transport of liquid and gaseous chemicals at ports
1
32
Ocean freighter
Ocean Barge
A refinery
An external
pipeline from
another facility
1
Road tanker
Pumped via pipeline to
another storage facility
Rail gantry
Direct to customers
Ocean freighter
Ocean freighter
Inbound logisitics
facilitate chemicals
supply usually via refinery
Product then
distributed via
a manifold to
onsite storage
tanks
Product tested
then pumped by
outbound logistics
1
Source: Chemicals weekly, industry interactions
Exhibit 16 46Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
including refineries, ocean freighters,
ocean barges and external pipelines.
Infrastructure includes cranes, compressors
and vacuum systems to guarantee the safe
and efficient unloading of goods. Safety
measures like spill-containment pallets (for
hazardous materials) and gas detectors
(in case of leaks) are critical at this stage to
guard against environmental risks.
The storage and testing phase utilizes
chemicals storage containers with
secondary containment provisions
and specialized warehouses that are
temperature and humidity controlled to
appropriately and safely house hazardous
24
https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/Air%20pollution/Maritime%20India%20
vision%202030.pdf#:~:text=India%20comprises%20a%20significant%20size%20maritime%20sector,and%20a%20
vast%20network%20of%20navigable%20waterways.&text=The%2012%20Major%20Indian%20Ports%20handled%20
nearly,overall%20cargo%20traffic%20over%20last%205%20years.
25
CRISIL – Study of por ts sector in India
26
https://sagarmala.gov.in/sites/default/files/NPP%20executive%20summary.pdf
27
CRISIL – Study of por ts sector in India
materials. Infrastructure at this stage
includes ventilated storage units, safety
equipment and storage cabinets for
flammable liquids.
The primary goal of outbound logistics
is to ensure the safe transportation of
substances to their final destinations.
The port infrastructure includes loading
equipment, transport tankers, gas-cylinder
handling equipment and emergency
response kits that facilitate the safe transfer
of chemicals to a variety of destinations via
road tankers, pipelines, rail gantries and
ocean vessels.
A look at India’s port/terminal operations
India comprises 12 major and over
24

200 non-major ports across its vast
coastline. The private sector participates
in the operations of these ports alongside
the government through concession
agreements for specific projects, berths
or terminals. Top private sector players
manage 70 to 75 percent of overall traffic
across Indian ports, moving commodities
ranging from containers, dry bulk, and liquid
and gas cargo, to coal and iron ore.
In recent years, India’s Union Ministry
of Ports, Shipping and Waterways has
prioritized the upgradation of ports
through multiple initiatives for port-led
industrialization in the country. The
Sagarmala Programme
25
, launched in
2015, aims to reduce logistics costs for
export-import and domestic trade through
developing coastal economic zones (CEZs)
for efficient transportation. The National
Sagarmala Apex Committee (NSAC)
26

sets the strategic direction and policies
for port development, integrating inputs
from various stakeholders, including
representatives from the Ministry of
Shipping. The framework distinguishes
between major port trusts, which are
government-managed, and private
terminals, emphasizing the importance of
collaboration between public and private
sectors in port operations.
The Maritime India Vision 2030
27
, launched
in 2021, sets out over 150 initiatives to
enhance the Indian maritime sector through
coordinated development across all
aspects of the maritime sector. Chemicals
is one of 12 industries identified as a
focus area for major ports. The initiative
includes developing dedicated terminals
for chemicals handling and enhancing
connectivity between ports and chemicals
manufacturing hubs for lower
shipping costs.
While these initiatives are expected to
make a big difference to port infrastructure
in the country, at present the chemicals
industry struggles with some pain points
that impact chemicals trade and logistics
efficiency. These constraints are significant,
particularly when compared to major global
ports, such as Antwerp in Belgium (Exhibit
18). Some of the pain-points faced by
chemical industry players are as follows: Chemical Industry: Powering India’s participation in Global Value Chains47NON> CONFIDENTIALBenchmarking Indian ports against Antwerp, a leading global port
Source: Ministry of ports, shipping and water ways, annual reports of Paradip and Kandal ports
Paradip
Jawahar Lal Nehru Port
Visakapatnam
Mumbai
Chennai
Haldia Dock Complex
New Manglore
Kamrajar
V.O.Chidambaranar
Cochin
Mormugao
Kolkata Dock System
Deendayal (Kandla)
135
84
74
64
49
49
41
44
38
35
17
16
138
Port-wise cargo traffic handled, MMTPA (2022-23)
Exhibit 17
—Insufficient handling capacity: Indian
ports do not have enough dedicated
berths and handling capacity, compared
to global standards. To draw a parallel
between one of Europe’s biggest ports
and India’s top two major ports (Exhibit
17), for example, from 2022 to 2023
28
,
Antwerp handled total traffic of 286
MMT, whereas Kandla handled 138
MMT, and Paradip handled 135 MMT. As
the industry grows steadily, demand
increases organically. In order to
sustain and encourage this rising level
of demand, India’s port infrastructure
requires significant support in upgrading
their handling capabilities in the
global arena
—Lack of required storage capacity: Limited
tankage for specialized chemicals
creates bottlenecks and delays. Antwerp
has a total liquid bulk storage capacity of
9.6 MMT and 6.15 million
29
square meters
of covered storage. In contrast, Kandla
has a storage capacity of 3 to 4 MMT, and
Paradip has a storage capacity of 4 to 5
28
Ministr y of Por ts, Shipping and water ways, Annual repor ts of Paradip and Kandal por ts, press search, team analysis
29
ibid
30
https://www.portofantwerpbruges.com/en/business/transport
MMT, with warehouses and open storage
of 4 million square meters and 3 million
square meters respectively
—Limited mechanization: Limited logistics
budgets restrict the development of
mechanization and handling capabilities
at Indian ports, particularly for chemical
trade. The lack of access to advanced,
state-of-the-art equipment significantly
delays operations and hampers the
ability to achieve high output within a
given timeframe. As a result, chemical
handling often relies on manual
processes, which are not only less
efficient but also pose potential
safety risks
— Inadequate last-mile connectivity: India
lacks sufficient road, rail, and pipeline
connectivity between its port areas and
key industrial hubs and consumption
centers. In contrast, the Port of Antwerp
is strategically located
30
within a
500-kilometer radius of approximately
60 percent of the European
consumer market 48Chemical Industry: Powering India’s participation in Global Value Chains
Case study of a leading global port: Port of Antwerp, Belgium
Antwerp port, a major global port for
chemicals, offers extensive infrastructure and
connectivity within Europe and beyond
(Exhibit 18). With over 1,000 kilometers of 48
different product pipelines and a maritime
throughput of 90.6 MMT of liquid bulk, the port
is designed to attract and manage
heavy traffic.
Its success rests on three core factors:
—Extensive and growing infrastructure:
Antwerp has a network of major tank
storage and handling providers, and
an extensive pipeline network for
different products. By 2026, the port’s
interconnected, open-access hydrogen
backbone will be operational. The port
authority is also working on expanding its
existing ammonia and methanol capacity,
supplementing this with other
hydrogen carriers.
Exhibit 19
Source: Port of Antwerp (Facts and Figures 2023) report
Faroe Islands
Spain
France
Germany
Norway
Bulgaria
Greece
Cyprus
Turkey
Malta
Italy
Serbia
Croatia
Poland
Hungary
Romania
Ukraine
Belarus
Lithuania
Latvia
EstoniaSweden
Czech
Republic
Austria
Moldova
Republic of Macedonia
Montenegro
Bosnia and Herzegovina
Slovakia
Denmark
Netherlands
Belgium
Liechtenstein
Monaco
Andorra
Gibraltar
Luxembourg
Slovenia
Isle of Man
Switzerland
Ireland
Portugal
Kosovo
Albania
~1K km
Pipelines in
Antwerp port
area
48
Different
product
pipelines
13.5
Million TEU
90.6
MMT Maritime
throughput of
liquid bulk
0.8M m
3
Storage
capacity of
polymers
Key Statistics
Snapshot of Antwerp port, Belgium
Exhibit 18
NON-CONFIDENTIAL
48Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains49
Developing the existing port infrastructure for chemicals
The strategic development of port
infrastructure in India could focus on
enhancing operational capacity at high-
potential port clusters for the
chemicals sector.
Based on existing infrastructure and
proximity to chemicals markets, the efforts
could look at eight such clusters: Gujarat,
North Maharashtra, South Maharashtra &
Goa, Karnataka, West Bengal & Odisha, North
Andhra Pradesh, South Andhra Pradesh &
North Tamil Nadu, and South Tamil Nadu
and Kerala (Exhibit 19). The government’s
support could drive high-impact
infrastructure development that optimizes
the potential of these clusters and bridges
existing gaps.
For this, setting up a committee on port
infrastructure for chemicals for creation
and upgradation of infrastructure for
movement and handling of chemicals could
be considered.
2.1 Composition of the committee
Such a committee would have
representatives from the Union Ministry
of Ports, Shipping and Waterways and
the Department of Chemicals and
Petrochemicals. The committee would also
seek advice from public and private terminal
operators, industry members, and safety
and copliance experts.
Key objectives of the committee
The committee can focus on several
strategic objectives to enhance the port
infrastructure for the chemicals sector:
—Enhance operational capacity and
efficiency: The primary goal is to improve
the operational capacity of high-
potential port clusters, ensuring they can
handle increased volumes of chemical
products efficiently. This includes
streamlining logistical processes to
improve efficiency and reduce costs
associated with the transportation and
storage of chemicals, thereby enhancing
the overall supply chain
—Optimize infrastructural needs for
chemical industry: Develop and optimize
the necessary infrastructure to support
the chemical industry, including the
creation of dedicated storage zones,
enhanced pipeline connectivity, and
modernized handling facilities
—Ensure safety, compliance, and promote
environmental sustainability: Establish
and maintain high safety standards
and ensure compliance with all
relevant regulations to protect workers,
communities, and the environment.
Additionally, implement measures to
minimize the environmental impact of
chemical handling and transportation,
such as reducing emissions, managing
waste effectively, and adopting
green technologies
—Multimodal gateway to the European
hinterland: Antwerp boasts of great
connectivity via rail, inland navigation,
road, shortsea and pipeline routes, along
with proximity to the European consumer
market (60 percent of which is within a
500-kilometer radius).
—Digital and circular innovation hub: The
port uses Internet of Things, data analytics
and automation to feed into a digital
platform for real-time data sharing. This
helps optimize logistics. Antwerp port also
collaborates with industry stakeholders to
develop closed-loop systems that reduce
waste and incorporate
eco-friendly practices.
NON- CONFIDENTIAL
Chemical Industry: Powering India’s participation in Global Value Chains49 50Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Success KPIs of the committee
The success of the committee’s initiatives
can be measured through a set of Key
Performance Indicators (KPIs) that reflect
improvements in operational efficiency,
service quality, and environmental
sustainability:
—Logistical efficiency and cost reduction:
Metrics such as turnaround time at ports,
storage costs per ton of chemicals, and
transport lead time can be used to assess
improvements in logistical efficiency
and cost-effectiveness
—Service quality: Indicators like the on-time
delivery rate and customer satisfaction
scores can help measure the quality of
services provided to the
chemical industry
—Environmental impact: Measures
including emission reduction levels,
waste management efficiency, and the
adoption of sustainable practices can
be tracked to ensure that environmental
sustainability goals are being met Chemical Industry: Powering India’s participation in Global Value Chains51NON> CONFIDENTIAL2.2 Targeted development of port infrastructure at eight high-potential clusters
Kolkata
Haldia
Dharma
Paradip
Visakhapatnam
Kakinada
Krishnapatnam
Kattupalli
Kamarajar
Chennai
Karaikal
VO Chidambaranar
Vizhinjam
(In progress)
Cochin
New Manglore
Mormugao
Jaigad
Mumbai
JNPT
Vadhavan
(In progress)
Dahej
HaziraPipavav
Sikka
Deendayal (Kandla)
Mundra
1
2
3
4
8
7
6
5
450-460
220-230 (~50%)
140-150
45-50 (~30%)
70-80
~1 (<5%)
30-40
25-30 (>80%)
Gujarat
cluster
North MH
cluster
South MH &
Goa cluster
Karnataka
cluster1234
180-190
40-45 (~20%)
80-90
15-20 (~20%)
170-180
20-25 (~15%)
70-80
20-25 (~30%)
West Bengal &
Odisha cluster
North AP
cluster
South AP &
North TN cluster
South TN &
Kerala cluster5678
Source: INDIA Port Infrastructure: Chemicals report by J.M. Baxi , Maritime India Vision 2030 report
Major ports Non-major portsXX MMTPATotal traffic handled by major ports
in the cluster in 2022-23
XX MMTPALiquid bulk (and % of total) handled
by major ports in the cluster in
2022- 23
High potential
cluster
Exhibit 19 52Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL 52
Initiative 3: Introduce a Opex subsidy scheme for chemicals
31
ITC Trade map
Designed to boost domestic manufacturing
and global competitiveness, (Opex subsidy)
scheme for the chemicals industry could be
a crucial unlock. Opex subsidy’s incentivize
local production, contribute to reducing
supply chain vulnerabilities, and
boost competitiveness.
By raising chemicals manufacturing
volumes in the country, Opex subsidy’s
could foster import substitution for
chemicals with high import bills, such
as petrochemicals, and reduce India’s
chemicals dependence on a single import
partner, especially for specialty chemicals
along with unlocking export potential. This
initiative aims to develop global leaders from
India who can use advanced technologies,
accelerate growth, and establish India as a
global hub for chemical manufacture.
3.1 Implementing the Opex subsidy scheme to bridge gaps in the
chemicals industry
The chemicals industry requires a
significant production boost to facilitate
import substitution and reduce single-
source dependency. India’s imports of
$75 billion
31
cover the bulk of domestic
demand for essential chemicals, with
many of these imports coming from just a
few supplier countries. Additionally, India
would need to tap into the global export
market in areas where its share in global
trade is low. By increasing production
capacity and enhancing product quality,
Proposed structure of Opex subsidy for chemicals industry
Objective of the Opex subsidy Details of the incentive Beneficiaries
The aim of this initiative is to
bolster India's manufacturing
capabilities within the chemical
industry by stimulating
investment and boosting
production facilitating:
•Diversification of products
towards high-value chemical
goods
•Developing global leaders
from India who can expand in
size and scale by leveraging
advanced technologies,
thereby integrating into and
enhancing global value chains
Incremental sales over base
year: The scheme proposes for
incentives on incremental sales to
selected participants for a period
of 5 years at the rate of 10% for
Year 1, 9% for Year 2, 8% for Year
3, 7% Year 4, 6% for Year 5
Grouped based on end-usage:
Chemicals within these groups
to be identified for Capex/Opex
support or combination of both
•Group 1: Agrochemical
intermediates
•Group 2: Pharmaceutical
intermediates
•Group 3: Battery and
electronic chemicals
•Group 4: Dyes and Pigments
•Group 5: Petrochemicals
•Group 6: Multiple uses
INR 65,000 Cr
Additional investment over 5 years
stimulated by scheme incentives
INR 3L Cr
Additional turnover over 5 years
stimulated by scheme incentives
Exhibit 20 Chemical Industry: Powering India’s participation in Global Value Chains53NON> CONFIDENTIAL
India can become a competitive player in
the international market, particularly in
segments like specialty chemicals, where
it currently has a minimal presence. To
implement the Opex subsidy scheme, two
objectives would need to be addressed:
import substitution to reduce single-source
dependency and targeting the global
export market.
The objectives of the Opex subsidy scheme
are as follows (Exhibit 21):
Substituting imports by reducing single-
source dependency
The heavy reliance on specific countries,
for critical chemical imports like
petrochemicals, intermediates and
specialty chemicals exposes the Indian
market to potential risks. These risks
include possible supply chain disruptions,
price volatility and geopolitical tensions,
which could significantly impact industries
reliant on chemical inputs, such as
pharmaceuticals, textiles,
and agriculture.
Targeting global export market
India would need to expand its footprint
in the global export market, particularly in
areas where its current share is low. This
involves increasing production capacity,
improving product quality, and adhering
to international standards. By focusing
on high-demand segments like specialty
chemicals, agrochemicals, and advanced
intermediates, India can position itself
as a key supplier in the global market.
This approach will increase India’s export
revenues while reducing its trade deficit and
strengthening its global
economic positioning.
The approach for identification of chemicals
for Opex subsidy is as follows:
Identification of Chemicals for Import
Substitution
The process to identify chemicals for
import substitution focuses on reducing
dependency on imports and enhancing
domestic production capabilities. Here is a
detailed breakdown:
1. Initial Screening at 8-digit HS Code Level:
Criteria used for screening are as follows:
—Imports greater than INR 1,000 crore
in FY24
—Growth rate of imports greater than 0%
over the last three years (FY22-24)
—Single-source dependency greater
than 30%
2. At transaction level data (to identify
chemicals included in “others” category)
—Imports greater than INR 1,000 crore
in FY24
—Production in India as % of total
consumption < 30% (in FY24)
3. Final List Compilation:
—Output: A list of 16 chemicals after
consideration of the criticality of the
end-market
Identification of Chemicals for
Export Growth
The process to identify chemicals for export
growth involves several steps, focusing
on analyzing export data and global trade
dynamics. Here is a detailed breakdown:
1. Initial Screening at 6-digit HS Code Level:
Criteria used for screening are as follows:
—Global trade value for the chemical
exceeds INR 41,500 crore in FY24
—Exports greater than INR 1,000 crore
in FY24
—India’s share in global trade is less than
10% over the last three years (FY21-24)
2. Detailed Analysis at 8-digit HS Code Level:
—Objective: Identify specific chemicals
included in broader “others” categories
at the 6-digit level
—Outcome: A refined list of chemicals that
meet the export growth criteria. 54Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
3. Filtering Based on
Domestic Manufacturing:
—Output: A list of 3 chemicals after
consideration of the primary end-use
and the growth rate of the
end-use market.
The identification process for both
export growth and import substitution
involves a multi-step approach, starting
with broad data analysis at the 6-digit
or 8-digit HS code level and refining
the list based on specific criteria such
as export/import values, growth rates,
market share, and dependency factors.
This structured approach ensures that
the chemicals selected for incentives are
strategically important for enhancing export
performance and reducing
import dependency.
Process followed to identify chemicals to be included as part of the incentive scheme
Exhibit 22Exhibit 21
1
HS codes with non-chemical categories also excluded
Source: : ITC trade map, press search, team analysis
List of chemicals
for Opex subsidy
Step 1
Step 2
Step 3
Identification of
chemicals through
filtering funnel
Chapters
28, 29, 32, 38, 39, 40
# of HS
codes
Identification of
chemicals for export
growth
Identification of
chemicals for import
substitution
# of HS
codes
~40Exports > INR 1,000
Cr (in FY23)
~75Growth rate of imports > 0%
(in last 3 years – FY22-24)
1
~20India’s share in global
trade <10% (in last 3
years – FY21-24)
1
~50Single-source
dependency > 30%
~100Global trade > INR
41,500 Cr (in FY23)
~120Imports > INR 1,000 Cr (in
FY23)
Step 2: At 8-digit HS code (to
identify chemicals included in
“others” category)
Step 2: At transaction level data (to
identify chemicals included in
“others” category)
11Exports > INR 1,000 Cr
(in FY24)
37Imports > INR 1,000 Cr
(in FY24)
Step 1: At 6-digit HS code~1060Step 1: At 8-digit HS code~2160
3Primary end- use, Growth
rate of end-use market
16End-market criticality
Step 3: List of chemicals Step 3: List of chemicals
28Production in India as % of total
consumption < 30% (in FY24)
Identification of
other strategically
important chemicals
Identification of strategically important
chemicals and chemical groups not
included through the filtering process
EXIM data
1
2At 6-digit level
At 8-digit level
18
105*
*Chemicals included (at 8
-digit HS code) within the chemical groups (at 6-digit HS code) identified for Opex are
attached in the Appendix.The list represents all 8-digit HS codes within the chemical group. It does not necessarily
include the chemicals eligible for the Opex subsidy Chemical Industry: Powering India’s participation in Global Value Chains55NON> CONFIDENTIAL
Initiative 4: Develop and access technologies to
enhance self-sufficiency and foster innovation
32
CapitalIQ; Stakeholder consultations
To transform India’s chemical industry into
a global leader, boosting self-sufficiency
and innovation is essential. In 2023,
the annual spend of Indian chemicals
companies on R&D was around 0.7
percent of revenues
32
, whereas that of
global chemicals companies was around
2.3 percent of revenues. By establishing
robust R&D funding mechanisms, India can
significantly enhance domestic innovation
and indigenous technology development.
Additionally, forming strategic partnerships
with multinational corporations can unlock
access to advanced global technologies.
These initiatives will not only elevate R&D
standards but also reduce reliance on
imports, driving sustainable growth and
improving competitiveness on the
global stage.
Furthermore, technological advancements
are crucial to address pressing industry
challenges, such as increasing PET recycling
capacity in response to growing plastic
waste concerns and stricter government
regulations aligned with the nation’s 2050
sustainability goals. As consumer demand
for advanced products such as electronics,
hygiene items, and apparel rises, fueled
by high-growth economies and changing
consumption patterns, opportunities
for innovation in specialty chemicals will
expand. With accelerated urbanization and
an aging population in industrial countries,
new markets are emerging for artificial
implants, biomimetic materials, flexible
wearable devices, sensors, nutraceuticals,
and food additives. To capitalize on these
growth opportunities, India’s chemical
industry must prioritize innovation and
R&D investments to meet evolving market
demands and drive global competitiveness.
Challenges that block innovation
India’s R&D spending trails that of its
global peers, limiting the potential scope
of innovation and research to continuously
improve and enhance the chemical sector.
The innovation gap between India and the
rest of the globe may eventually lower the
grade of chemicals manufactured in India.
This could take India further away from,
instead of towards, its goal of a net zero
importer status.
—Funding constraints: Small and mid-sized
companies in the chemicals sector often
struggle to secure adequate funding
for long-term R&D initiatives. These
companies, unlike larger corporations,
typically have limited access to capital,
which results in a preference for short-
term financial gains over investment
in innovation. As a result, they may
struggle to fund even the initial stages
of R&D projects, thus stalling progress
in developing new technologies. This
creates an uneven landscape, where
only larger players can afford to sustain
meaningful R&D efforts.
—Limited collaboration between industry
and academia: Insufficient collaboration
between the chemical industry and
academic institutions remains a major
challenge. The disconnection between
research and practical application
results in missed opportunities for
turning academic breakthroughs
into market-ready innovations.
Without closer ties, the translation
of research into commercialization
becomes difficult, limiting the overall
effectiveness of R&D funding.
—Lack of forums for diverse stakeholder
engagement: There is a lack of structured
forums that bring together diverse
stakeholders (industry leaders, 56Chemical Industry: Powering India’s participation in Global Value ChainsNON-CONFIDENTIAL
academic researchers, and regulators,
etc.) which further exacerbates the
disconnect between technological
advances and real-world market
needs. For example, the Annual GPCA
33

Forum is the flagship event of the
Gulf Petrochemicals and Chemicals
Association (GPCA). It serves as a
platform where industry professionals
from around the world convene to
share knowledge, exchange ideas, and
build valuable networks. By fostering
an environment of collaboration and
dialogue, the Annual GPCA Forum has
established itself as the central hub for
leadership and strategic discussions
in the chemical and petrochemical
industry, both regionally and globally.
Similarly, the Helsinki Chemicals Forum
(HCF)
34
is an independent, non-profit
forum founded by the Finnish Fair
Foundation and the City of Helsinki,
dedicated to promoting chemicals
safety and chemicals management
globally. This event unites international
33
https://www.gpca.org.ae/events/18th-annual-gpca-forum/
34
https://helsinkichemicalsforum.messukeskus.com/
35
https://www.indianchemicalcouncil.com/
36
For latest available year or annualized over a budgeted period
37
20% (~2000 Cr) announced in 2023-24; initial announcement of ~28% over 5 years of overall budget of ~50,000 Cr
authorities, industry leaders, politicians,
academics, NGOs, journalists, and
experts in chemical safety management,
fostering groundbreaking ideas
and collaborations.
—Shortage of skilled R&D talent: The
chemical industry in India faces
a shortage of skilled researchers
and technicians, particularly in
specialized fields like nanotechnology,
biotechnology, and sustainable
chemistry. With a 30 percent shortfall in
skilled R&D talent, the industry is limited
in its capacity to innovate and scale new
technologies
35
. This shortage is further
compounded by the growing demand
for expertise in emerging areas, creating
intense competition for a limited pool
of qualified professionals. The lack of
skilled talent can delay project timelines
and reduce the potential impact of R&D
funding, as highly specialized expertise
is crucial to the success of many
advanced technological developments.
Unlocking innovation in Indian chemicals industry
India’s chemicals industry has a
two-fold objective:
—Objective 1: Develop indigenous
technologies for manufacturing high-
value products where Indian companies
do not have access to
global technologies
• Approach: Disbursement of R&D funds
to drive innovation with enhanced
collaboration between industry
and academia
—Objective 2: Acquire access to specific
technologies available with select
players outside India
• Approach: Foster MNC partnerships
on areas of importance and targeted
towards select technologies
4.1 Disbursement of R&D funds to drive
innovation with enhanced collaboration
between industry and academia
The R&D fund constitutes budgetary
support for boosting indigenous technology
development and innovation. With
the help of this fund, Indian chemicals
manufacturers can refine output quality
and supply chain management practices,
by training personnel and upgrading local
equipment and infrastructure. The annual
budget of $150 million
36
to $200 million
37
is
said to be set aside from the R&D fund, for
dedicated chemicals research. With funding
availability no longer a constraint, the focus
can now shift to ensuring efficient allocation
and utilization of these funds to plug gaps in
the technical know-how of Indian chemicals Chemical Industry: Powering India’s participation in Global Value Chains57NON> CONFIDENTIAL
companies aiming to manufacture high-
value products.
The disbursement strategy for the R&D
fund can be focused on in three innovation
principles, emphasizing the development of:
—Sustainability-led Innovations: Supporting
projects that drive sustainable
development in the chemicals industry
include funding for green chemistries,
carbon capture, utilization, and storage
(CCUS) technologies, as well as circular
economy initiatives. Such projects are
crucial for reducing the environmental
footprint of India’s industrial sector
while ensuring long-term sustainability.
For example, advancing CCUS
technologies can help Indian industries
meet global emissions standards, while
circular economy solutions can promote
the recycling and reusing of materials,
reducing dependence on
finite resources.
—Process improvement-led innovations:
Enhancing existing chemical processes
through advanced technologies
such as new reactors and separation
techniques are critical for increasing
the efficiency and cost-effectiveness
of chemical production, particularly in
energy-intensive sectors. For instance,
innovations in separation technologies
can reduce the use of harmful chemicals
or energy in critical industrial processes.
It would enable Indian industries to
achieve better resource utilization and
lower operating costs. This principle
aligns with the global push towards more
efficient and cleaner industrial practices.
—New molecule development: The
development of new molecules
is essential for expanding India’s
capabilities in advanced chemicals and
materials. These projects are aimed
at creating novel compounds with
specific industrial applications, such as
high-performance polymers, specialty
chemicals, and bioplastics. Further,
38
https://www.business-standard.com/industry/news/india-s-pharma-exports-expected-to-remain-strong-amid-global-
slowdown-124100900585_1.html
India’s pharmaceuticals exports are
strong and steadily growing thanks to
new chemical entities (NCEs) targeting
healthcare and medical research. As per
export trends, Indian pharmaceutical,
biotech and bulk drug exports expanded
to double-digits from 2023 to 2024
alone. The NCEs bolster the development
of therapeutic drugs for treating cancer,
HIV, tuberculosis and diabetes.
38

Supporting the development of new
molecules can help India reduce its
dependency on imported chemicals and
establish a more self-reliant chemical
sector. The creation of such products will
not only serve domestic industries but
also provide new market
opportunities globally.
Efficient governance and fund
disbursement mechanisms could be
pivotal in boosting self-sufficiency and
R&D upgrades. For this purpose, carefully
designed mechanisms can ensure
transparency, accountability and alignment
with national innovation goals. These key
design choices could include:(Exhibit 22)
Identifying governing mechanisms:
A critical first step is identifying the
governing entity. A neutral agency staffed
with technical experts can facilitate
objective decision-making and prevent
delays in fund allocation. While existing
institutions like the Department of Science
and Technology (DST) or the Anusandhan
National Research Foundation (ANRF)
bring substantial experience in managing
R&D initiatives, sector-specific insights
from the Department of Chemicals and
Petrochemicals (DCPC) are also valuable.
A hybrid model—establishing an interface
agency that combines DST’s technical
oversight with DCPC’s industry expertise—
emerges as a potential practical solution.
This approach would facilitate streamlined
fund management and ensure alignment
with sectoral and national innovation goals. 58Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Categorization of projects to be funded:
Project evaluation and selection can be
based on criteria including innovation,
commercial feasibility, impact and specific
R&D and technology requirements.
Identifying and organizing categories
of projects funded by the R&D initiative
could play a big role in defining its impact.
Comprehensive funding covering the full
technology readiness spectrum (4/5 to 9)
would support transformative projects
from ideation to market readiness, ideal
for groundbreaking areas such as new
molecule development. Further, targeted
funding for the middle to later stages of
development (TRL-4/5 to TRL-9) would focus
on accelerating the commercialization
of validated concepts, bridging the gap
between research and practical application.
Prioritization would include sustainability-
led projects, such as green chemistries,
Carbon Capture, Utilization, and Storage
(CCUS), and circular economy innovations,
alongside initiatives leveraging IoT, AI and
machine learning for
process optimization.
Investments in advanced reactors,
separation technologies and similar
improvements could further bolster
industrial competitiveness. The
Department
39
of Biotechnology (DBT)
in India, for instance, uses similar
criteria to select projects for funding in
biotechnology, focusing on innovation,
market potential, and technological
feasibility. Internationally
40
, South Korea’s
Ministry of Science and ICT uses a rigorous
selection process for funding technological
innovations, particularly in high-tech
industries like chemicals and advanced
materials. Their focus on commercializing
research outcomes has helped South
Korea become a global leader in specialty
chemicals and materials technology.
39
https://www.indiascienceandtechnology.gov.in/covid-19-the-pandemic/department-biotechnology-dbt-govt-india
40
https://www.oecd.org/en/publications/korean-focus-areas_f91f3b75-en/a-global-powerhouse-in-science-and-
technology_61cbd1ad-en.html
41
https://nif.org.in/aboutnif#:~:text=NIF%20has%20proved%20that%20Indian,ideas/innovations%20on%20the%20same.
42
https://www.daad-argentina.org/files/2022/10/RIG-Industrie_barrierefrei.pdf
43
https://www.nist.gov/oam
44
https://nap.nationalacademies.org/read/18448/chapter/13
By explicitly catering to the modernization
needs of Micro, Small, and Medium
Enterprises (MSMEs), which form the
backbone of India’s industrial sector,
the fund could enable them to adopt and
scale innovative technologies. This would
ensure their participation in the national
innovation drive. This inclusivity fosters a
broad-based industrial transformation, with
benefits extending to smaller players often
constrained by limited resources.
MSMEs in India involved in the production
of agrochemicals or specialty chemicals
can be supported to adopt more efficient,
sustainable technologies, such as those for
waste reduction or energy optimization.
The National Innovation Foundation (NIF)
41

in India already supports grassroots
innovations by MSMEs, enabling them to
scale through better access to technology.
Similarly, countries like Germany
42
provide
support for small chemical producers
through their German Federation of
Industrial Research Associations (AiF),
which offer funding for innovative projects
within small and medium-sized enterprises.
Targeted beneficiaries: Joining forces
between academia and industry:
Many countries have adopted balanced
approaches to support both industries and
academic research. For instance, in the
United States, the Advanced Manufacturing
National Program Office (AMNPO)
43
under
the Department of Energy funds both
industry-led initiatives and academic
research projects to ensure a robust
pipeline from basic research to practical
implementation. Additionally, Germany’s
44

Fraunhofer Society integrates industry
partners with academic research centers,
ensuring a continuous flow of innovation
from the lab to the marketplace.
To facilitate these partnerships in the Indian
chemicals industry, a targeted approach is Chemical Industry: Powering India’s participation in Global Value Chains59NON> CONFIDENTIAL
necessary. First, the creation of a dedicated
interface agency, led jointly by the DCPC
and the DST, can play a crucial role in
streamlining the collaboration process.
This agency would act as a liaison, ensuring
the efficient allocation of funds and the
monitoring of project outcomes. In addition,
a co-development model for R&D projects
could be encouraged, where a percentage of
the R&D funds are specifically allocated to
joint projects. These projects would require
clear deliverables and milestones to be
agreed upon by both academic institutions
and industry players. To further incentivize
collaboration, the provision of tax benefits
and performance-based grants could
motivate both sectors to actively engage in
joint initiatives. Lastly, capacity building is
essential for successful collaborations, and
academia could be supported with industry-
relevant training programs and access to
state-of-the-art infrastructure to ensure
readiness for these joint projects.
This comprehensive approach will foster
innovation, accelerate technology
commercialization, and strengthen the link
between research and industry in India’s
chemicals industry.
Responsibilities of the funding entity
For maximum impact and smooth
functioning, this R&D funding body
would have three core responsibilities:
strategic planning and design, the effective
disbursement of funds, and finally the
ongoing tracking of progress to ensure
transparency and success parameters
are met.
Strategic planning and design
—Strategic planning: The strategic planning
process can focus on defining long-
term research agendas and priorities
that align with both national goals and
global technological trends. This ensures
that R&D efforts are not only forward-
Key design choices in the disbursement of R&D fund
Identifying the governing entity for R&D fund disbursementA
Rationale for selection
Neutral agency staffed with experts for
technical decision-making
Allows for a streamlined process without delays
Creation of an interface agency / council
in collaboration with DST and DCPC
Disbursement and allocation of the
fund to be done by DST
1
Types of projects
Sustainability-
led including green chemistries,
CCUSs (Carbon Capture, Utilization and
Storage), Circular economy etc.
Process improvement-led through advanced
reactors, separation technology etc.
New molecule development
Categories of project to be fundedB
Early-stage validation and
commercialization (TRL-4/5 to TRL- 9)
Targeted funding to support the
transition from validated concepts to
market-ready products
1
Funding for MSMEs
Provide financial support for
innovative technology application
program promoting modernization and
innovation at MSMEs
2
BeneficiariesC
Industry players1
Universities and research institutions2
Exhibit 22 60Chemical Industry: Powering India’s participation in Global Value ChainsNON-CONFIDENTIAL
thinking but also relevant to the evolving
needs of the industry and the
global market.
—Building partnerships: To enhance the
impact and reach of R&D initiatives, the
plan could emphasize on building strong
collaborations with research institutions,
private sector players, and international
organizations. These partnerships
would provide access to additional
resources, expertise, and cutting-edge
technologies, enabling more effective
and innovative solutions.
Fund allocation and disbursement
—Fund allocation by DST in consultation with
the interfacing agency: Fund allocation
by the Department of Science and
Technology (DST), in consultation with
the interfacing agency, could be carried
out based on pre-defined criteria,
such as complete grants,
cost-sharing models, loans, or
milestone-based disbursements.
—Project evaluation and selection: In terms
of project evaluation and selection,
projects would be chosen based on a
set of criteria, including innovation,
commercial feasibility, potential impact,
and the specific R&D and
technological requirements.
Reporting and monitoring
—Monitoring and evaluation: A robust
monitoring and evaluation system can
be established to continuously assess
the progress and outcomes of funded
projects. This would ensure that projects
are on track, meeting milestones, and
delivering value in terms of technological
advancements, economic impact, and
alignment with broader goals.
—Reporting: Regular updates and
detailed reports would be provided to
stakeholders, keeping them informed
about the status, progress, and impact of
funded projects. Transparent reporting,
in turn, fosters accountability, facilitates
timely interventions when necessary,
and ensures that all parties involved are
aligned with the project’s objectives
and outcomes.
Specific KPIs could help to gauge the fund’s
overall success on its responsibilities:
—Funds raised
—Funds disbursed
—Number of projects commercialized
—Revenue generated through
commercialized projects
—Number of patents issued
4.2 Acquiring access to specific
technologies available outside India
While the previous approach would focus
on developing self-sufficiency for global
technologies not easily accessible, some
technologies may be accessible beyond
India through select players. To be able to
use and adopt these technologies, Indian
companies may need partnerships with
multinational corporations (MNCs) that are
well versed in these.
Unlocking the specific technologies for at
least 11 products could be a strong starting
point in this direction (Exhibit 23). India’s
limited access to methanol carbonylation
technology, for example, and the
commercial inviability of the acetaldehyde
oxidation route due to ethanol prices make
partnerships with global leaders fruitful for
acetic acid production.
The government could support attracting
MNC investments to India for these
prioritized product segments. A targeted
approach could entail the following:
—Incentivizing collaborations and joint
ventures by providing tax breaks,
grants, or subsidies for efforts to bring
in specific technologies of national
importance. MNCs could benefit
from the access to India’s attractive
domestic market, while Indian chemicals
companies could gain access to these
technologies, with both parties receiving
financial incentives. Doing this may
take some time, as identifying the right,
willing entities to participate in such
a collaboration, and ensuring their goals
CONFIDENTIAL Chemical Industry: Powering India’s participation in Global Value Chains61NON> CONFIDENTIAL
are aligned, could be a
time-consuming process.
—Providing financial and regulatory
incentives for MNC investments
could raise India’s attractiveness as
an investment destination. These
incentives could include low-interest
loans or support on capital cost, as well
as simplified regulatory requirements.
MNCs could benefit from the ability to
retain full autonomy and control over
operations. This might be the fastest
route to unlock new technologies
—Subsidizing licenses for prioritized
technologies would be unlikely to impact
licensors while being a boon for domestic
companies. They could now afford new
technologies where the licensors
are available.
The KPIs to gauge the success of this could
focus on two outcomes: the number of
chemicals unlocked through technology
access and the number of MNCs that invest
in India for the prioritized technologies.
With efficient implementation, this two-
pronged approach could help the Indian
chemicals industry break new ground.
The lack of continuous upgradation and
improvement could give way to a culture
of constant, dynamic innovation in much
needed areas. This could generate a greater
self-sufficiency in India’s chemicals
industry, and establish a global reputation
as an innovator of products
and technologies.
Select products for technology partnerships
Prioritized segment Key challenge
5Limited to players having access to adiponitrile technologyNylon 6,6
6Limited investment and innovation capabilities in building application-
oriented high-tech compounds like PEEK, HPPA, etc.
Specialty polymers
1Limited access to the 'methanol carbonylation’ tech while the 'acetaldehyde
oxidation' route is not commercially viable owing to ethanol prices
Acetic acid
2Requires integrated play into acrylic acid; technology limited to the Western
consolidated market and Chinese players
SAP
3Concentrated technology with limited playersPC resin
4Limited players with tech know-how; requires phosgenation licenseMDI and TDI
7Limited access to low-cost raw materials (like P, Br, Sb, etc.) for integrated
play coupled with little to no investment in manufacturing high
performance additives
Plastic additives
(incl. flame
retardants)
8Limited technology in fermentation, bio-processing and
application development
Food & nutraceutical
ingredients
9Domestic restrictions for private players on mining restricts competitive
play against global integrated players
Titanium dioxide
10Non-existent domestic market coupled with high R&D investmentsBattery chemicals
Extremely small domestic market coupled with high R&D investmentsElectronic chemicals11
Non-exhasutive
Exhibit 23
Non exhaustive 62Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Initiative 5: Fast-track environmental clearance
with transparency and accountability
45
https://cag.gov.in/en/audit-report/details/27540
46
https://www.americanchemistry.com/chemistry-in-america/news-trends/blog-post/2023/opinion-improve-epa-s-new-
chemicals-program-or-risk-more-innovation-offshoring
47
https://environment.ec.europa.eu/law-and-governance/environmental-assessments/environmental-impact-assessment_
en
The environmental clearance (EC) process
is a critical step at the pre-construction
stage for chemical manufacturing projects.
Despite its goal to balance industrial growth
with environmental safeguards, India’s EC
process has become a major challenge. The
prescribed timeline for obtaining EC is 255
days, yet 90%
45
of projects face delays, with
an average delay of 196 days. Consequently,
the total average time to receive EC extends
to nearly two years, substantially higher
than in other countries. For example, in the
United States, the National Environmental
Policy Act (NEPA) process for major projects
typically takes about 1 year
46
although some
complex projects can take longer. In the
European Union, the Environmental Impact
Assessment (EIA)
47
process generally takes
around 12 to 18 months, depending on the
complexity and scope of the project.
These delays in India are primarily due
to prolonged public consultations,
documentation inconsistencies, and
insufficient resources among regulatory
bodies. The extended timeline significantly
inflates project costs and disrupts
industrial development, creating financial
uncertainties for industries, especially
those handling hazardous materials like
chemicals. This situation deters foreign
investment and hinders the growth of the
manufacturing sector.
Accelerating the EC process could be one
of the factors that improves India’s ease
of doing business ranking, facilitating
the swift establishment and operation of
new chemical production facilities, and
ultimately boosting the country’s industrial
output and economic growth.
Decoding the EC process
The rigor of an EC check is essential to
guard against possible environmental
damage from a manufacturing plant and
ensure that proposed projects adhere to
environmental safeguards. To receive an
EC certification, chemicals companies
need to meet certain requirements such
as an environmental impact assessment,
consulting with local communities and
stakeholders, risk assessment and
hazard waste management practices,
complying with national standards and
regulations, and sustainability measures
like green initiatives that support a larger
environmental management
plan (Exhibit 24).
The EC certification process is a step-
by-step journey that every large-scale
industrial project, especially in chemicals
manufacturing, must navigate in order
to move from concept to construction.
It ensures that industrial projects not
only meet regulatory standards but also
contribute positively to India’s industrial
ecosystem while safeguarding
environmental integrity.
Application submission
The process begins with the project
proponent submitting a formal application
for EC to the regulatory authorities, along
with a pre-feasibility report that outlines the
project’s potential environmental impact.
This application also includes documents
such as project location maps, site plans,
and details on resource requirements like
land, water, and  energy. Chemical Industry: Powering India’s participation in Global Value Chains63NON> CONFIDENTIAL
Screening for category classification
48
The submitted application undergoes a
screening process, where projects are
classified based on potential
environmental impact.
Category A projects, with larger potential
impacts, are reviewed by the central-level
Expert Appraisal Committee (EAC).
Category B projects are reviewed at the
state level by the State Expert Appraisal
Committee (SEAC). Category B is further
divided into B1 (requires Environmental
Impact Assessment (EIA)) and B2 (does not
require EIA). If  categorized as A or B1, the
project must prepare an Environmental
Impact Assessment report based on scoping
Terms of Reference (ToR) provided by
the committee.
Public consultation by the pollution
control board
The public consultation process consists of
a public hearing carried out by the Pollution
Control Board (PCB) and a written response
period. During this phase, the project details
and EIA findings are presented to the local
community. The public is invited to voice
concerns, offer suggestions and provide
feedback, which is then documented and
incorporated into the final EIA report.
Scrutiny of the final EIA report
The project proponent submits the final
EIA report, which includes data from the
public consultation process and outlines
any revisions to environmental safeguards.
The report is scrutinized by the EAC, which
48
https://www.cseindia.org/environmental-clearance---the-process-403
examines the accuracy, feasibility and
comprehensiveness of the mitigation
measures outlined in the Environmental
Management Plan (EMP).
Appraisal by EAC based on the EIA Report
and public consultation
The EAC performs a detailed appraisal of
the final EIA report, taking into account
both the environmental assessment and
the public consultation feedback. This
appraisal involves a rigorous examination of
environmental risks, proposed controls and
the project’s alignment with
environmental regulations.
Placing of EAC’s recommendation to EIAA
Following the appraisal, the EAC compiles
its recommendation for or against granting
clearance. This recommendation, along
with supporting documents, is submitted
to the Environmental Impact Assessment
Authority (EIAA) for a final decision.
Decision by the EIAA
The EIAA reviews the EAC’s recommendation
and makes the final decision to either grant
or reject EC for the project. If clearance is
granted, it is usually issued with specific
conditions for ongoing environmental
management and monitoring. The project
must comply with these conditions and
report regularly to maintain its certification
status. In case of a rejection, the EAC may
recommend that EIAA reconsider, and that
decision would be final.
Challenges faced by chemicals industrial projects in the
EC process
In India, obtaining EC approvals for a new
manufacturing plant is complicated by
disproportionately long processing times,
complex clearance requirements, and
overlapping regulatory scrutiny at both
the state and central levels. These delays
inflate project costs and hurt India’s global
perception as a manufacturing destination.
Presently, about 89 percent of projects
in the chemicals industry are delayed at
different stages of the EC grant procedure.
On average, proponents wait for around 255
days for an EC decision after submitting
their application. Of these, 194 days account
for average delay periods. Some delays have
even recorded 1005 days (Exhibit 24). 64Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
A closer look at the various stages in the
EC application process highlights that the
screening and classification stages, as
well as EAC appraisal, are the most time-
consuming stages with delays, requiring
about 60 days each. The public consultation
engagement along with response collation
takes about 45 days to process. The
EIAA’s decision requires another 60-day
wait. In the event of a reconsideration
recommendation, the wait time increases by
another 90 days.
Long approval timelines drive up project
prices because companies must retain
resources and secure land while waiting
for the EC. These delays may discourage
foreign and domestic investment, since
potential backers view regulatory delays as
an obstacle to timely returns. Additionally, in
a rapidly evolving global market, such delays
hinder a company’s ability to capitalize on
immediate demand, especially for specialty
and high-value chemicals.
The time taken at various stages of the EC certification process
Steps in EC processDuration
Submission of application (Form 1)
Grant of EC with
conditions
Rejection of EC with
reasonsTotal time:
~255 days
Screening into category A / B1 or B2
Scoping terms of reference for the EIA report
1

Public consultation to be carried out by the PCB
(comprises public hearing and response in writing)
Appraisal by EAC based on the EIA report and the
outcome of the public consultation process
Decision by the EIAA
Reconsider recommendation by EAC (if rejected by
EIAA) and final decision by EIAA
Scrutiny of the final EIA Report
Placing of EAC’s recommendation to EIAA
NA
60 days
45 days
60 days
45 days
90 days
30 days
15 days
1
Category B2 projects are exempted from further process
Source: Client Inputs, Expert Insights, CAG Report, 2016 https://cag.gov.in/en/audit-report/details/27540
89%
Percent of projects for
which grant of EC was
delayed
194 days
Average delay in grant
of final EC for a project
1,005 days
Maximum delay
observed in grant of EC
to a project
Exhibit 24 Chemical Industry: Powering India’s participation in Global Value Chains65NON> CONFIDENTIAL
5.1 Accelerating the EC certification
A thrust on faster, more efficient decision
making at various stages could simplify and
fast-track the EC process in India. Following
ideas could be considered (Exhibit 25):
—Set up a dedicated committee under the
Ministry of Commerce and Industries
to oversee and monitor EC timelines.
This could add valuable oversight and
expedite the process at the public
consultation stage. The committee
could work alongside the Ministry of
Environment, Forest and Climate Change
(MoEFCC) to ensure adherence to
specific timeframes, identify bottlenecks
and coordinate with relevant authorities
for faster resolution. It could also publish
quarterly reports to track performance
and delays.
—Give autonomy to the EAC to make
the final decision or allow companies
to proceed with a deemed EC. At the
final decision-making stage, which
is primarily the responsibility of the
Environmental Impact Assessment
Authority (EIAA), the EAC could make the
final decision, instead, without needing
additional EIAA validation, eliminating
a duplicative step and facilitating
accelerated decisions and saving about
45 days. Another alternative could be
to move forward with a provisional EC,
which is a deemed clearance pending
final approval.
—Permit companies to commence
certain construction activities onsite
at their own risk while awaiting final EC
approval. This permission could apply to
companies planning civil construction,
in cases of capital expansion or where
the product mix is changing and a
public hearing is not required. This
could help streamline project timelines
and prevent capital stagnation. This
phased approach, introduced at the
EAC appraisal stage, would allow for
preparatory work, such as building basic
infrastructure, pending full clearance.
Companies could start preliminary
work around 120 days earlier than in the
normal waiting period, and hit the ground
running once the EC certificate
is granted.
—There would be clear guidelines and
limitations on approved pre-clearance
activities to protect the environment.
While companies could go ahead with
preparations at their own risk, this
measure could promote flexibility
and significantly accelerate project
completion timelines, allowing
companies to respond swiftly to
market demands.
—Pre-environment clearance to be
taken by chemical parks for industries;
chemical parks to have capacity to
collect environment data
—In case of no increase in pollution load
due to product mix changes, fresh EC
may not be required
Implementing a quicker EC
certification process
These suggestions aim to achieve a six-
month EC process by 2026, ensuring that
fewer than 10% of projects experience
delays in EC certification. Exhibit 25 shows
a possible roadmap for implementing these
alternate suggestions.
Easing the EC process could enhance the
supportive regulatory environment without
compromising the environment. This
initiative contributes significantly to the
policy steps for improving competitiveness,
investment, and sustainable growth in
India’s chemicals industry. 66Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Implementing the fast-tracked process for EC
Suggestion 3:
Allow companies to initiate
civil construction ) in cases
of capital expansion /
change of product mix and
where public hearing is not
required.
Draft approval criteria and exclusions (category A/B1/B2 projects)
e.g., where public hearing is not required and in cases of capacity
expansion, etc.
Draft allowed activities
Suggestion 1:
Set up audit committee to
monitor timelines and publish
quarterly reports on
performance and delays.
Draft committee design (no. of members, qualifications, etc.)
Draft roles & responsibilities (key tasks like audit reports, ensuring
compliance, etc.)
Suggestion 2:
Option 1: Clubbing the two
committees to cut down on
time required.
Draft committee design (no. of EACs at state and center, no. of
members, representation from regulatory authority)
Draft roles & responsibilities (meeting frequency, prescribed
timelines, etc.)
Draft approval criteria and exclusions (category of projects like
capacity expansion, change in product mix, etc.)
Draft allowed activities with deemed EC (e.g., civil construction, etc.)
Option 2: Provision of a
deemed EC in case of
delayed EIAA decision.
Dec’24Jun’25Dec’25
Suggestion under review
by MoEF
Policy design
Implementation (including
release of amendment note)
Exhibit 25 Chemical Industry: Powering India’s participation in Global Value Chains67NON> CONFIDENTIAL
Initiative 6: Securing FTAs to support industry growth
49
https://www.newindianexpress.com/nation/2024/Mar/10/explained-indias-recent-push-in-free-trade-agreements-ftas-
signings-types-and-benefits
50
https://prsindia.org/policy/report-summaries/demand-and-availability-of-petrochemicals
51
UN Comtrade, team analysis
India’s reliance on chemical imports
continues to expand, with the gap
between imports and domestic production
forecasted to widen significantly. The
existing Free Trade Agreements (FTAs) and
discussions about new ones, particularly
with Middle Eastern countries, have brought
both opportunities and challenges for
the Indian chemicals industry. FTAs are
designed to boost trade, reduce barriers
and expand markets, but their impact on
India’s cost competitiveness in chemicals
has rendered mixed results. Currently, India
has signed FTAs with 14 countries, including
the UAE and Australia, and has more under
negotiation, potentially broadening its
preferential trade network to over 120
countries once concluded
49
.
The chemicals and petrochemicals sectors,
which contribute to more than two million
50

jobs and are crucial to India’s economic
output, have not benefited uniformly from
these agreements. For instance, zero-duty
imports under some FTAs have led to an
increase in cheaper chemical imports,
further stressing the domestic production
landscape. This impact is evident in the high
demand for petrochemical intermediates
and specialty chemicals, sectors where India
has yet to achieve cost parity with major
exporters due to limited domestic feedstock
availability and production capabilities.
Gaps and challenges
FTAs have created a mixed landscape for the
chemicals industry, with roadblocks that
complicate growth and competitiveness.
As India seeks to integrate more deeply
into global trade networks, FTAs have often
exposed domestic players to
significant hurdles.
Cost competitiveness and import surge
India’s chemical imports reached nearly
51

$75 billion in FY 2023, with China, Saudi
Arabia, and the United States as major
suppliers. Import dependency has
worsened under FTAs, with zero-duty
concessions allowing low-cost chemical
imports, particularly from Asia-Pacific FTA
partners, to flood the Indian market. This
influx impacts local companies by putting
pressure on production costs, as they
struggle to compete with cheaper imports
from countries with stronger infrastructure
and access to affordable feedstock.
Consequently, Indian producers face
difficulties in maintaining profitability and
expanding production, as cheaper imports
often claim a larger share of the
domestic market.
Limited protection for sensitive sectors
FTAs often include sensitive product lists,
which allow some sectors protection
through tariffs. However, India’s sensitive
lists do not adequately shield critical
segments within the chemicals industry
(i.e. petrochemical intermediates and
specialty chemicals) from zero-duty
imports. This exposure undermines local
industries and prevents the growth of
domestic manufacturing capacity. The
lack of tariff protections also dissuades
potential investors in high-growth sectors,
like specialty chemicals, which have
seen rising demand globally but remain
underdeveloped  domestically. 68Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
Impact on value-added manufacturing
FTAs inadvertently promote raw
material imports over local value-added
manufacturing expansion, which, in
turn, curtails job creation and economic
development. Although India exported
around $44 billion
52
worth of chemicals in
FY 2024, much of this was in lower-value
segments, limiting opportunities for more
advanced and specialized manufacturing.
India’s chemicals industry has significant
potential for downstream processing and
creating specialized products. However,
the ease of importing finished products
at low tariffs under FTAs discourages
domestic companies from investing in
advanced manufacturing technologies and
infrastructure. This challenge has prevented
India from fully capitalizing on global supply
chain opportunities.
Inadequate feedstock and
infrastructure support
FTAs have intensified India’s dependence
on imported feedstock, as most domestic
producers lack access to competitively-
priced raw materials. Many partner
countries within FTAs, particularly in the
52
https://indianexpress.com/article/cities/ahmedabad/ftas-that-unduly-favour-imports-in-petrochemical-and-chemical-
sectors-to-be-reviewed-says-mos-9524449/
Middle East, have a natural advantage
in petrochemical production due to
abundant and cost-effective resources.
This creates a cost imbalance that hinders
the development of India’s own chemicals
supply chain. While FTAs can drive trade,
India’s lack of basic feedstock infrastructure
means that the industry remains exposed
to global supply chain risks, further
constraining growth.
Overlooked industry-specific needs in
FTA  negotiations
FTAs typically focus on broader economic
interests without adequately addressing
the specific needs of the chemicals sector,
which demands a nuanced approach. For
example, despite India’s need for support
in specialty chemicals and intermediates,
many agreements lack provisions that
would incentivize domestic production or
ensure access to necessary technologies
and investments. Policymakers have
yet to fully integrate sector-specific
clauses that would protect and promote
chemicals, petrochemicals and specialty
manufacturing, limiting the long-term
strategic benefits of FTAs for the industry.
Fostering balanced growth from future FTAs
The trade imbalances that FTAs have created in the Indian chemicals industry highlight
the need for targeted support to protect and develop the sector. The following initiatives
could help India build a more resilient and competitive chemicals industry within the global
market.
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. At the same time,
it would also be retaining tariffs on imported
finished products to protect domestic
manufacturers. Tailored FTA provisions
would allow India to safeguard its chemical
industry from cost disadvantages. Chemical Industry: Powering India’s participation in Global Value Chains69NON> CONFIDENTIAL
6.2 Awareness and effective utilization
of FTAs
Many exporters, particularly smaller
companies, are unaware of the benefits
and procedures associated with utilizing
FTAs effectively. Improving the awareness
and accessibility of FTA provisions could
enhance their utility and ensure that
exporters are able to take full advantage
of tariff reductions. Simplifying the
administrative process, especially around
proving the origin of exports (an essential
requirement for preferential tariff
treatment), could lower costs and improve
compliance, enabling more companies to
benefit from FTA provisions. A government-
led initiative focusing on awareness and
streamlined procedures could further
empower exporters to access foreign
53
IHS Markit, UN Comtrade, ITC Trade Map, Press search, Team analysis
54
ibid
markets more easily, boosting their capacity
to compete in the global arena.
The current challenges faced by the
Indian chemicals industry also present an
opportunity for India to recalibrate its FTA
strategy. Projections for the chemicals
sector show that India’s chemical exports
could grow by 10 to 12
53
percent annually
if the right measures are implemented,
particularly in areas like specialty chemicals
and petrochemical intermediates. India’s
chemicals industry is expected to reach
a market value of $450 billion
54
by 2030,
growing from approximately $200 billion
in 2020. These projections highlight
the significant opportunity for India to
leverage FTAs more effectively and foster a
competitive and self-reliant
chemicals industry. 70Chemical Industry: Powering India’s participation in Global Value Chains
Case study: The Indo-Japanese Free Trade Agreement
The Comprehensive Economic Partnership
Agreement (CEPA) between Japan and India,
signed in FY11, has played a prominent role in
shaping trade relations, particularly affecting
India’s trade balance in the chemicals sector.
Since the agreement, Japan’s exports to India
have nearly doubled, reaching $16.49 billion
in FY23 from $8.62 billion in FY11. However,
India’s exports to Japan have seen limited
growth, increasing only slightly from $5.09
billion in FY11 to $5.46 billion in FY23, leading
to a more pronounced trade imbalance. This
imbalance is notably reflected in the chemicals
sector, where India’s import-to-export ratio
with Japan has worsened—from 3.0 at the
agreement’s inception to 3.7 by FY23. These
trends suggest that the FTA has largely
benefited Japan’s industries while posing
challenges for Indian exporters, particularly
those in the chemicals
sector (Exhibit 26).
One of the primary factors contributing to
these trends is the FTA’s rules of origin (ROOs)
and product-specific norms, which define
the eligibility for preferential tariffs. Many of
these stipulations favor Japanese industries,
creating barriers for Indian chemical exports.
India’s Ministry of Commerce and Industry
has advocated for a revision of these rules,
aiming to make them more favorable for
Indian industries, including MSMEs, which
often struggle to meet Japan’s strict technical
standards. A proposed review of the CEPA’s
terms may focus on easing these standards
and rebalancing the trade dynamics to ensure
that the chemicals industry, among others, can
better capitalize on export opportunities
to Japan.
The Japan-India FTA illustrates how FTAs can
impact the chemicals industry by creating
asymmetrical trade benefits. Recognizing
these patterns, India’s approach to upcoming
FTAs should be informed by a strategic
framework that mitigates risks to vulnerable
sectors while fostering equitable
trade relationships.100
200
300
0
+25% p.a.
1

20162020201220042008
0
20
40
60
80
2024
+9% p.a.
1
Chemicals trade between Japan and India
US$ mn
Inorganic chemicalsPaints, dyes, inks etc. Plastics and articles
Organic chemicals - PetrochemicalsRubber and articlesOther specialty chemicals
India?stradebalancewithJapan
(Overall & chemicals), $ bn
1
For top traded category - Imports from Japan CAGR of 25 percent for Inorganic chemicals and Exports from India CAGR of
9% for organic chemicals
Source: UN Comtrade; ITC Trade map
Increased imports accompany export growth after signing of FTA
Exhibit 26
FY11 FY23
11.2 18.8Imports from JapanA
5.6 5.1Exports to JapanB
1.4 4.4Chemical imports from Japan D
0.5 1.2Chemical exports to Japan E
3.0 3.7Ratio (D/E)F
2.0 3.7Ratio (A/B)C
70Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains71NON> CONFIDENTIAL
Initiative 7: Talent and skill upgradation
in the chemicals industry
55
https://www.niti.gov.in/sites/default/files/2023-02/ITI_Report_02022023_0.pdf
56
https://chemicals.gov.in/sites/default/files/Reports/Statistics_at_a_Glance-2023.pdf
57
https://www.niti.gov.in/sites/default/files/2023-02/ITI_Report_02022023_0.pdf
58
IHS Markit, UN Comtrade, ITC Trade Map, Press search, Team analysis
India’s immense potential to drive economic
growth and enhance India’s share in the
global value chain faces some significant
challenges in workforce readiness. A major
talent and skills gap exists within the sector,
creating a pressing barrier to scaling up
operations, meeting production targets and
fostering innovation. As the demand for
skilled workers continues to surge—with
projections indicating a substantial annual
need—the current vocational training
infrastructure remains insufficient to fill
this gap.
Current scenario
Industrial Training Institutes (ITIs), a primary
source of vocational education, fall short
in offering the industry-specific courses
required to support the Indian chemicals
industry. Only about 8
55
to 10 percent of ITI
programs cater to this industry’s unique
needs, with companies struggling to find
adequately trained talent. Furthermore, with
a gross enrolment rate of just 55 percent,
the capacity of ITIs to produce skilled
graduates is limited, making workforce
expansion and upskilling a priority.
The revenue growth in India’s chemicals
industry has been supported by a favorable
Compound Annual Growth Rate (CAGR) of
around 7.7 percent
56
for chemicals exports
between 2018 and 2023 . However, while
revenues have increased, challenges
remain in profitability and operational
efficiency due to high production costs
and skill shortages, particularly in technical
and process-specific roles. These gaps
contribute to attrition and misalignment,
affecting the sector’s ability to sustain long-
term growth
and competitiveness.
Gaps and challenges in leveling up
workforce capabilities
The Indian chemicals industry, although
expanding rapidly, faces critical challenges
related to talent development and skill
upgradation that impact its ability to
compete globally. These challenges are
multi-faceted and encompass education,
training infrastructure, industry-specific
skill requirements, and alignment between
educational institutions and industry
demands.
—Mismatch between industry needs and
training programs: Since a relatively
smaller number of ITI programs align with
the chemical industry’s specific needs, it
has left a gap in critical skill areas such as
process engineering, quality control and
safety standards. This mismatch results
in a shortage of skilled workers ready to
take on specialized roles in chemicals
manufacturing, R&D and operations,
which are essential for efficiency and
innovation in the sector.
—Insufficient enrolment in vocational
training: The gross enrolment rate in ITIs
is about 55 percent
57
, which significantly
limits the number of graduates entering
the chemicals industry with relevant
skills. Additionally, current curricula
often focus on general manufacturing
skills rather than sector-specific
competencies, creating a large pool of
workers who lack
specialized training.
—Lack of advanced training facilities:
India’s training infrastructure for
advanced chemicals skills, such as those
required for specialty chemicals and
petrochemicals, is underdeveloped.
While the sector aims to reach about
$450 billion
58
by 2030, the current 72Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
training setup is insufficient to meet
the projected workforce demand, which
will continue to grow as the industry
expands
59
. Furthermore, limitations in
training facilities for emerging areas
like green chemistry and sustainable
processes prevent the industry from
fully adapting to global trends.
—Attrition and skill retention challenges:
Due to limited career development
opportunities and upskilling programs,
the chemicals industry faces high
attrition rates, especially for advanced
technical skill sets. The gap in career
growth initiatives and professional
development programs not only leads to
workforce churn but also weakens the
sector’s ability to retain experienced
personnel who can drive
operational efficiency.
—Regional and socioeconomic barriers:
The chemicals industry’s concentrated
foothold in states like Gujarat and
Maharashtra often leads to a local talent
shortage, while workers from other
regions encounter difficulties with
relocation. The socioeconomic factors,
including limited access to quality
vocational training in rural and semi-
urban areas, further exacerbate the skill
gap, creating barriers to entry for a large
segment of the population.
The path to a skilled workforce
India can draw several lessons from
the UK’s approach to overcoming their
workforce-related hurdles in the logistics
sector. To effectively address the skill gap in
India’s chemicals industry, a multifaceted
59
https://chemicals.gov.in/latest-news/indias-booming-chemical-and-petrochemical-industry-understanding-industry-
landscape
60
https://www.niti.gov.in/sites/default/files/2023-02/ITI_Report_02022023_0.pdf
61
ibid
62
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2100845#:~:text=Pradhan%20Mantri%20Kaushal%20Vikas%20
Yojana%204.0%3A,15%2D59%20years%20of%20age.
approach is required, integrating policy
reforms, infrastructure expansion and
strategic collaborations.
7.1 Expansion of ITIs and specialized
training institutes
The expansion of Industrial Training
Institutes (ITIs) and specialized chemicals
training institutes is essential to meet
the growing demand for skilled labor.
Currently, the number of ITIs offering
courses relevant to the chemicals sector is
limited, (amounting to only 8 to 10 percent
of ITIs providing industry-specific courses).
Skill India
60
Mission aims to increase the
number of these institutes, particularly in
chemicals manufacturing hubs such as
Gujarat, Maharashtra and Tamil Nadu. With
over 14,000
61
ITIs in the country, scaling up
their reach and aligning their courses to the
chemicals industry’s requirements is key to
improving both accessibility and
enrolment rates.
The government has also launched the
Pradhan Mantri Kaushal Vikas Yojana
(PMKVY)
62
to promote vocational training,
which can boost much-needed industry-
specific training as well as address the
shortage of skilled personnel in quality
control, R&D and operations.
Furthermore, expanding the Public-Private
Partnership model is key in upgrading
the existing training infrastructure and
ensuring it meets industry standards. The
PPP model enables private industry players
to take an active role in modernizing ITIs,
set up centers of excellence, and develop
specialized courses. Chemical Industry: Powering India’s participation in Global Value Chains73NON> CONFIDENTIAL
The National Policy on Skill Development
and Entrepreneurship highlights the
importance of the PPP model to improve
vocational training infrastructure. The
Ministry of Chemicals and Fertilizers,
through collaboration with the private
sector, has been working to develop centers
of excellence in key sectors of the chemicals
industry, which will offer specialized
training in emerging areas including
sustainable manufacturing processes,
automation and safety management
63
.
7.2 Upgrading faculty and teacher
training
The effectiveness of vocational training
programs is directly linked to the quality
of instruction. A critical intervention is the
upskilling of faculty at ITIs and polytechnic
institutes. The Ministry of Skill Development
and Entrepreneurship (MSDE)
64
has
recognized this need and launched
programs to improve the competencies
of instructors, especially in rural and
semi-urban areas. This initiative includes
regular training for instructors on the latest
technologies in the chemicals sector and
industry practices. Such upskilling
ensures that students receive practical,
industry-relevant training.
In 2021
65
, the NSDC focused on improving
faculty quality by providing up-to-date
training on both technical and soft skills
required by industry. The long-term impact
of upskilling faculty will be a more robust,
well-equipped workforce that meets
industry standards.
7.3 Industry-academia partnerships
Strengthening partnerships between
the chemical industry and educational
institutions is another critical initiative.
63
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2053796
64
https://www.msde.gov.in/#:~:text=Welcome%20to%20Ministry%20of%20Skill,of%20a%20’Skilled%20India’.
65
https://www.msde.gov.in/en/organizations/nsdf#:~:text=NSDC%20acts%20as%20a%20catalyst%20in%20skill,31st%20
March%202021%2C%20NSDF%20has%20released%20Rs.
66
https://pib.gov.in/PressNoteDetails.aspx?NoteId=152129&ModuleId=3&reg=3&lang=1
67
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1804813#:~:text=India%20has%2015L+%20schools%20
These collaborations can introduce
industry-relevant courses in core areas
like petrochemicals, polymer science and
industrial safety. For example, the National
Apprenticeship Promotion Scheme (NAPS)
66

has provided opportunities for about
32.38 lakh apprentices across industries.
Apprenticeships and on-the-job training
opportunities for students will help them
gain practical experience while pursuing
their education, making them more
employable upon graduation.
Programs like the Atal Innovation Mission
(AIM)
67
, a government initiative to foster
innovation and entrepreneurship in sectors
like this one, encourage collaborations
between educational institutions and
the chemicals industry. The Department
of Chemicals and Petrochemicals has
advocated for closer alignment between
academia and industry to ensure that the
curricula in colleges and ITIs are regularly
updated to meet the changing demands of
the chemicals sector.
Despite strong sector growth, shortages
in skilled labor—particularly in critical
areas like R&D, operations and quality
control—remain a major obstacle.
Expanding ITIs, upskilling faculty and
fostering a collaborative approach by
the industry and academia are vital to
bridging these gaps. Policy support that
focus on targeted training programs and
stronger partnerships between industry
and education systems can play a key role
in equipping India’s workforce with the
necessary skills as well. This approach can
drive greater efficiency, innovation and
competitiveness, positioning the chemicals
industry to lead in both the domestic and
global markets. 74Chemical Industry: Powering India’s participation in Global Value ChainsNON>CONFIDENTIAL
India, today, stands at a critical juncture
in its industrial progression, with the
chemicals sector offering a transformative
opportunity to catalyse the nation’s
journey toward a $5-trillion economy and
beyond. This report has articulated a clear,
actionable roadmap to elevate India’s
share in the global chemicals value chain
from a modest 3-3.5 percent in 2023 to an
ambitious 5-6 percent by 2030 and 10-12
percent by 2040. Achieving this vision
will require a concerted national effort
across policy formulation, infrastructure
development, technology acquisition, and
international cooperation.
Anchored in four strategic growth themes
and seven policy interventions, the roadmap
provides a comprehensive pathway to
overcome current constraints and unlock
the industry’s latent potential. The four
key unlock themes outlined are: First,
Export Market Expansion which focuses
on strengthening high-potential segments
such as agrochemicals, dyes, pigments,
to tap into growing international demand.
Second, investment in Sunrise Sectors
including battery and electronic chemicals
that seeks to position India at the forefront
of emerging technologies. Third, efforts
to Improve Production Competitiveness
emphasize enhancing domestic capabilities
in key segments like PVC, VAM, EVA, and
Nylon-6. Finally, the strategy aims to Aid
Technology Access by targeting import-
dependent products such as acetic acid,
MDI/TDI, PC resins, and plastic additives,
thereby reducing reliance on external
sources and fostering self-reliance.
Building on these growth themes, the
strategy is further supported by seven
targeted policy pillars: PCPIR, Ports, Opex
support, R&D, ease of doing business, talent,
and international cooperation. These were
identified through extensive stakeholder
consultations, including a roundtable with
over 30 CXOs and representatives from key
ministries. The resulting policy roadmap
proposes a targeted mix of fiscal and
non-fiscal measures to strengthen India’s
chemical sector. By focusing on building
world-class chemical hubs, streamlining
regulatory processes, supporting R&D
and innovation, and nurturing a future-
ready workforce, India can reposition itself
from being a net importer to a globally
competitive exporter of high-value
chemicals.
The blueprint also draws insights from
China’s transformation, emphasizing
localized production, scale, vertical
integration, and regulatory reform. The
timing of these interventions is particularly
critical. Global supply chains are undergoing
seismic shifts due to geopolitical tensions,
trade realignments, and the push for
sustainability. As multinational corporations
seek alternative manufacturing hubs
beyond China, India has a unique
opportunity to emerge as a preferred
destination provided it acts swiftly and
decisively. The realignment of global trade
presents India with a once-in-a-generation
chance to establish itself as a key node in
the global chemicals network.
Conclusion Chemical Industry: Powering India’s participation in Global Value Chains75NON> CONFIDENTIAL
Ultimately, success will depend on a
cohesive approach that brings together
government, industry, academia, and civil
society. These policy interventions must be
backed by sustained financial investments,
collaborative research, and robust
institutional mechanisms. The role of the
central and state governments will be pivotal
in providing the necessary fiscal support,
land, infrastructure, and regulatory clarity.
Industry must respond with investments
in capacity, innovation, and training, while
academic institutions must realign their
programs to industry needs and co-create
knowledge for the future.
In its essence, this report is both a call
to action and a blueprint for progress. It
outlines not just what must be done, but how
it must be done. It invites all stakeholders
to align their efforts toward a shared
national goal: to build a globally competitive,
resilient, and future-ready Indian chemicals
industry.
In conclusion, the Indian chemicals industry
has the capacity to be a transformative
force in the country’s journey towards
economic self-reliance, job creation,
and global leadership in manufacturing.
The interventions laid out in the report
are comprehensive and actionable,
targeting the foundational elements of
competitiveness, innovation, infrastructure,
and governance. By embracing these
recommendations with urgency and
commitment, India can achieve its 2030
aspiration of a larger GVC share, transition
to a net-zero chemical trade position, and
set the stage for becoming a USD 1 trillion
chemicals industry by 2040. The future of
India’s chemical sector is not just a vision—
it is a well-charted roadmap awaiting timely
execution. 76Chemical Industry: Powering India’s participation in Global Value Chains
07
700K
Additional employment
generation by 2030
5-6%
Production share in the Global
Value Chain by 2030 (from
3-3.5% in 2023)
Net zero
India trade balance in
chemicals by 2030
35-40 $ bn
Additional exports in
2030 vs 2023
Proposed policy interventions and
potential impact by 2030
Establish world-class
chemicals hubs in India
Policy
interventions
Develop existing port infrastructure for storage
and handling of chemicals
Introduce an opex subsidy for chemicals with high
import dependence, export potential, and
end-market criticality
Develop and access technologies to enhance
self- sufficiency and foster innovation
Fast-track environmental clearance with
transparency and accountability
Securing FTAs to support
Industry growth
Talent and skill upgradation
in the chemical industry
220-280 $ bn
India production of
chemicals by 2030
01
02
03
04
05
06
07
76Chemical Industry: Powering India’s participation in Global Value Chains Chemical Industry: Powering India’s participation in Global Value Chains77
07
700K
Additional employment
generation by 2030
5-6%
Production share in the Global
Value Chain by 2030 (from
3-3.5% in 2023)
Net zero
India trade balance in
chemicals by 2030
35-40 $ bn
Additional exports in
2030 vs 2023
Proposed policy interventions and
potential impact by 2030
Establish world-class
chemicals hubs in India
Policy
interventions
Develop existing port infrastructure for storage
and handling of chemicals
Introduce an opex subsidy for chemicals with high
import dependence, export potential, and
end-market criticality
Develop and access technologies to enhance
self- sufficiency and foster innovation
Fast-track environmental clearance with
transparency and accountability
Securing FTAs to support
Industry growth
Talent and skill upgradation
in the chemical industry
220-280 $ bn
India production of
chemicals by 2030
01
02
03
04
05
06
07
Chemical Industry: Powering India’s participation in Global Value Chains77 78
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