India - Country Commercial Guide
Chemical Industry

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-10-22

Overview 

India’s diversified chemicals industry covers over 80,000 commercial products that are broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilizers.  India is ranked sixth in the world in terms of sales and imports of chemicals (excluding pharmaceuticals products), and the industry is expected to grow at a compound annual growth rate (CAGR) of 8 to 10 percent over the next five years. 

The Indian chemicals industry stood at $178 billion in 2020 and is projected to reach $300 billion by 2025.  Approximately 70 percent of the India’s chemical production is consumed in country.  Bulk chemicals constitute 25 percent of the market, while specialty chemicals, petrochemicals, and agrochemicals have 21, 19, and 15 percent of the market, respectively.  Biotech and pharmaceuticals (including active pharmaceutical ingredients and others) together constitute 20 percent of the market. 

India imported $56 billion and exported $41 billion worth of chemicals and petrochemicals in the year 2020.  Specialty chemicals, especially agrochemicals, dyes, and pigments account for over 50 percent of exports from India.  Indian chemical imports have increased steadily in recent years, with petrochemical intermediates accounting for over 30 percent of total chemical imports.  

Opportunities

With a growth rate of 12 percent, the specialty chemicals segment has seen an increased demand for flavors and fragrances, personal care chemicals, nutraceutical ingredients, and surfactants due to increased consumption of hygiene products, packaged foods, energy drinks, and nutraceuticals during the COVID-19 pandemic.  There are opportunities for U.S. companies to export intermediates/fine chemicals, adjuvants, surfactants for agrochemical applications, specialty products for seed treatment, and fertilizers and fluorochemical compounds for agrochemical and pharmaceutical applications.  Opportunities also exist under personal and home care for enzymes and plant-based extracts for household care applications and probiotic and keratin based actives, conditioning actives and glutathione for personal care applications.  Increased demand from construction, automotive, and water treatment applications could further boost growth in this segment. 

India is seeking to increase imports of technologies to aid local chemical manufacturing, including acetic acid, acrylonitrile, and chemicals used in the production of lithium-ion batteries.  Few Indian companies have the technology to manufacture and manage the disposal of hazardous effluents in these processes.  The Government is also implementing a production linked incentive (PLI) scheme in the chemical sector to boost domestic manufacturing and exports.  Such measures provide opportunities for U.S. companies interested in supplying raw materials, technical expertise, and technologies. 

Several global oil and gas companies are turning their sights toward downstream chemical opportunities in the Indian petrochemicals sector.  This presents investment opportunities in the sector for U.S. companies to participate and provide technology and solutions. 

The recent trade tensions with Chinas have affected bilateral trade and offer opportunities for India-based players to bridge the supply chain gap.  According to some industry insiders, Indian companies are actively looking for alternatives to China for supplies for key materials and ingredients.

Foreign Technology Agreements in India permit the transfer of technology with government approval or through the RBI-delegated automatic route.  Payments pertaining to such technology transfers should not exceed $2 million.  Royalties are restricted to five percent for domestic sales, eight percent for exports, and total payments must be eight percent on sales for a period of 10 years.  Royalty periods should not exceed seven years from the date of starting a business, or ten years from the date of signing an agreement.  The duty on most building blocks & feedstocks varies from 5 to 10 percent.  The customs duty on dyestuffs is 10 percent.  The Goods and Service Tax (GST) rate on almost all chemicals is 12 percent. 

Export Promotion Opportunities

  • ChemTech World Expo 2021, February 23-26, 2022, Mumbai, India
  • ChemExpo India, April 20-21, 2022, Mumbai, India 

To learn more about opportunities in this sector, contact Commercial Specialist Sanjay Arya.