Sector Analysis

Posted On: February 25, 2026

Indian Chemical Sector Analysis | Feb 2026

Industry Overview

India’s chemical industry is the sixth-largest in the world and contributes ~7% to GDP and ~11% to industrial GVA. It encompasses bulk chemicals, petrochemicals, fertilizers, specialty chemicals, and agrochemicals.

• Global Position: India accounts for ~4% of global chemical sales.
• Market Size (FY25): Valued at ~USD 220 billion.
• Employment: Supports ~2 million direct jobs and ~10 million indirect jobs.
• Exports: Chemicals and petrochemicals exports crossed USD 36 billion in FY25.

Market Size and Growth Metrics

• Bulk Chemicals: Largest segment, ~35% of industry output.
• Petrochemicals: ~25% share, driven by plastics and polymers.
•  Specialty Chemicals: ~23% share, fastest-growing segment
•  Fertilizers: ~17% share, with urea production at ~26 million tonnes in FY25.
• Forecast: Industry projected to reach USD 300 billion by FY27.

Market Dynamics and Drivers

• Growth Drivers: Rising domestic demand, export competitiveness, PLI schemes, Make in India, and global supply chain diversification.
• Supply Chain: Strong domestic base but reliant on imports for crude oil and feedstock.
• Technological Trends: Green chemistry, bio-based chemicals, digital manufacturing.
• Consumer Trends: Rising demand for specialty chemicals in pharma, textiles, and agrochemicals

Competitive Landscape

• Large Players: Reliance Industries, Indian Oil, GAIL, Tata Chemicals, UPL, Aarti Industries.
• Fertilizers: National Fertilizers Ltd, IFFCO, Rashtriya Chemicals & Fertilizers.
• Specialty Chemicals: Deepak Nitrite, SRF, Navin Fluorine.
• Buyer Power: High, with global clients demanding cost efficiency and compliance.
• Supplier Power: Moderate, impacted by crude oil price volatility.

Regulatory Measures

• Chemi-Sankhya 2025 (DCPC): Provides official production and trade statistics.
• Chemical & Petrochemical Statistics at a Glance – 2025: Tracks indices, NIC coding, and economic indicators.
•  Department of Fertilizers Annual Report 2024–25: Covers fertilizer production, consumption, and subsidy framework.
• PLI Schemes: Incentives for specialty chemicals and petrochemicals.

Macro Environmental Analysis

• Exports: Rising demand from US, EU, and Asia-Pacific.
• Climate Policy: Push for green chemistry and ESG compliance.
•  Commodity Prices: Crude oil volatility impacting margins.
•  Global Risks: Trade tensions and supply chain disruptions.

SWOT Analysis – Indian Chemical Sector

Strengths

• Large domestic market.
•  Strong export base.
• Policy support via PLI and subsidies.
• Growing specialty chemicals segment.

Weaknesses

• Dependence on imported feedstock.
• Environmental compliance costs.
• Fragmented industry structure.

Opportunities

• Green chemistry and bio-based chemicals.
• Specialty chemicals for pharma and agro.
•  Export expansion via trade deals.
• Fertilizer modernization.

Threats

• Global crude oil price shocks.
• Competition from China and ASEAN.
• Stringent environmental regulations.
• Supply chain disruptions.

Future Outlook

• Industry projected to reach USD 300 billion by FY27.
• Specialty chemicals to drive double-digit growth.
• Fertilizer sector modernization to improve efficiency.
• Green chemistry and ESG compliance to become mainstream.

Conclusion

The chemical sector offers steady long-term growth, driven by specialty chemicals, fertilizers, and exports. While crude oil dependency and compliance costs pose risks, focusing on diversified chemical producers and specialty leaders can provide resilience and consistent returns for investors.

Sources

• Chemi-Sankhya 2025 (Department of Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers)
  Official statistical compendium providing verified data on production, trade, and India’s global position in chemicals and petrochemicals.
• Chemical & Petrochemical Statistics at a Glance – 2025 (DCPC)
  Government publication tracking indices, NIC coding, production volumes, and economic indicators for the chemical industry.
• Department of Fertilizers – Annual Report 2024–25
  Provides official data on fertilizer production, consumption, subsidies, and modernization initiatives, forming a critical part of the chemical sector.
• Press Information Bureau (PIB) Releases – 2025
  Government press notes highlighting policy measures, PLI schemes, and export performance in chemicals and petrochemicals.

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