India’s Chemical Sector Poised For $1 Trillion Boom By 2040: NITI Aayog Charts Ambitious Roadmap

By Surabhi Gupta

New Delhi: With appropriate reforms and focus, India’s chemical sector will reach $1 trillion by 2040 and create more than seven lakh skilled jobs by 2030, says an ambitious new report released by NITI Aayog titled “Chemical Industry: Powering India’s Participation in Global Value Chains.”

The Indian chemical sector is valued at upwards of $190 billion and has approximately 3.5% of global chemical value chains. The sector is a $31 billion deficit as it is heavily dependent on imported feedstocks and specialty chemicals. NITI Aayog’s pathway is envisaging the sector to reach $1 trillion and have 12% of global chemical value chains (GVCs) share by 2040.

Why chemicals matter now more than ever

At the launch of the report, NITI Aayog CEO BVR Subrahmanyam emphasized, “This is the time to leverage on what our strength is. We are already a major producer of chemicals. And from fertilizers and pharmaceuticals, to electronics and infrastructure, these are present in every aspect of our lives.”

The chemical sector is operating with significant constraints in research and development spending (0.7% as compared to 2.3% as global average), infrastructure, regulatory challenges, a lack of qualified professionals, and approximately 45% of chemical manufacture consumes potable water.

Vision 2030: Becoming a Global Chemical Hub

The report envisions that by 2030, India can:

1. Double its chemical production levels

2. Generate an additional $35–40 billion in exports

3. Create over 7 lakh new jobs

4. Achieve a net-zero trade balance in chemicals

5. Grow its share in the global chemical industry from 3.5% to 5–6%

By 2040, the domestic chemicals market is projected to touch $850–1000 billion, making up nearly 10–12% of the global market and around 5% of India’s GDP.

Challenges holding India back

Despite its promise, the chemical industry faces several bottlenecks like:

1. Import Dependency: India imports large volumes of petrochemicals, specialty chemicals, and plastics, primarily from China, Southeast Asia, and the Middle East.

2. Infrastructure Deficits: Poorly developed chemical clusters, inadequate port facilities, and high logistics costs contribute to India’s cost disadvantage.

3. Regulatory Delays: Environmental clearances can take up to 1,005 days, delaying industrial growth.

4. Skill Gaps: The sector faces a 30% shortage in trained professionals, particularly in emerging areas like green chemistry and nanotechnology.

5. Low R&D Investment: Insufficient innovation capacity hinders competitiveness in high-value chemicals.

The Reform Blueprint: What India must do

NITI Aayog has laid out a set of transformative interventions, both fiscal and non-fiscal, to turn the vision into reality:

1. Chemical Clusters & Hubs

Upgrade existing Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) in Gujarat, Andhra Pradesh, and Odisha.

Develop new hubs in West Bengal, Tamil Nadu, Maharashtra, and Rajasthan.

Establish empowered central and state-level committees with budgeted “GVC Chemical Funds” for shared infrastructure and incentives.

2. Port Infrastructure Development

Identify and invest in eight high-potential coastal clusters with improved berths, storage, and mechanization.

Improve last-mile connectivity to hinterland industrial centers.

3. Opex Subsidy Scheme

Provide subsidies on incremental production for strategically important chemical segments such as agrochemical intermediates, electronic chemicals, and battery chemicals. 124 chemical products have been shortlisted based on import dependency, single-source risks, and export potential.

4. Innovation and Technology Access

Disburse R\&D funds through an interface agency in collaboration with the Department of Chemicals and Petrochemicals (DCPC) and the Department of Science and Technology (DST).

Forge partnerships with global multinationals for tech access in high-barrier segments like Nylon 6,6, Titanium Dioxide, PC Resin, and MDI/TDI.

5. Environmental Clearances

Simplify and expedite EC processes under a proposed DPIIT-led oversight committee.

Permit construction to begin while EC is in process, in low-risk cases.

6. Free Trade Agreements (FTAs) with Protections

Future FTAs should include tariff quotas and duty exemptions for raw materials while safeguarding finished product markets. Boost awareness and ease of access to existing FTA benefits for exporters.

7. Skill Development

Expand ITIs and training institutes focused on chemical and petrochemical industries. Upgrade teacher training and curricula through industry-academia partnerships. Emphasize emerging areas such as polymer science, industrial safety, and sustainable chemistry.

India’s Global Position: Room to Grow

The global chemical trade is currently worth $1.5 trillion. China dominates with 23% of global exports and 12% of imports. India, in comparison, has a modest 3.5% GVC share and a $31 billion deficit, primarily in plastics, petrochemicals, and inorganic chemicals.

Yet, India’s strong base in bulk chemical production (e.g., polypropylene, polyethylene, benzene derivatives) can provide the launchpad for higher-value segments.

According to the report, India is among the top importers of methanol, styrene, phosphoric acid, and titanium dioxide, all key feedstocks where domestic production is either limited or dependent on imported technology.

Geopolitical shifts, supply chain diversification, and rising demand for green and specialty chemicals offer India a unique opportunity to step up. With the world looking to reduce dependence on China, India’s massive market and engineering talent could offer an alternative, if backed by the right policies and infrastructure.

India’s chemical sector stands at a historic inflection point. With the right policy push, infrastructure investments, and talent development, it can evolve into a global chemical manufacturing powerhouse by 2040. This will not only boost exports and employment but also reduce import dependence, enhance resilience, and catalyze innovation.

As Subrahmanyam aptly said, “This is the time to act.” The coming years will be critical in transforming the vision into reality, and determining whether India can truly claim its place among the global chemical giants.