New Delhi

The export competitiveness of the domestic chemical industry has been improved as India-USA and India-EU Free Trade Agreements (FTAs) provide Indian chemical companies a level playing field with other developing nations and also offer benefits from duty differential with China, according to a report by Centrum.

The report stated that these trade agreements, by reducing tariffs, create more favourable market access. This is expected to strengthen India's position in global chemical supply chains and support long-term growth for the sector.

It stated, "While outlook will have a company-specific element to it, clarity on India-USA and India-EU FTA provides India a level playing field with other developing nations and also benefits from duty differential with China".

The report noted that the overall outlook for the chemical sector will remain company-specific, depending on factors such as business mix, product portfolio, and operational strengths. Companies with diversified products and strong execution capabilities are likely to benefit more from emerging opportunities.

The report also highlighted ongoing discussions around China's Anti-Involution Policy, which could improve the outlook for commodity chemicals over the next 2-3 years if the issue of overcapacity is addressed.

China's overcapacity has been a major concern for the global chemical sector, as excess supply has put pressure on prices and demand across key value chains.

If China takes steps to reduce overcapacity, it could help restore the balance between supply and demand, leading to improved pricing conditions and better profitability for chemical companies globally, including those in India.

The report highlighted that 3QFY26 was another quarter where performance remained uneven. While some companies reported strong profitable growth in select areas, others continued to face pressure due to global supply-demand imbalances.

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However, certain positive factors supported the sector during the quarter. These included strong profitable growth in select pockets, ramp-up of recently created capacities backed by dedicated orders, stable raw material (RM) prices, and lower freight costs. These developments helped offset some of the pressures faced by chemical companies.

These strengths are expected to help companies improve efficiency, develop specialised products, and maintain competitiveness despite global challenges.