New Delhi

NITI Aayog released its report offering an extensive analysis of India's chemical sector, highlighting both opportunities and challenges, and outlining a pathway for positioning India as a key player in global chemical markets.

The report was titled, “Chemical Industry: Powering India's Participation in Global Value Chains”.

The global chemical industry is undergoing a major transformation, driven by shifting supply chains, demand for specialty and green chemicals, and heightened focus on innovation and sustainability.

India's chemical sector, while significant in size and GDP contribution, remains fragmented and constrained by infrastructure gaps, regulatory inefficiencies, and low R&D intensity.

India's 3.5 per cent share in global chemical value chains and its chemical trade deficit at USD 31 billion in 2023 underscore its high dependence on imported feedstock and specialty chemicals.

However, with targeted reforms encompassing a comprehensive range of fiscal and non-fiscal interventions will enable India to have a USD 1 trillion chemical sector and achieve 12 per cent GVC share by 2040, thus becoming a global chemical powerhouse.

India's chemical sector faces several structural challenges that constrain its global competitiveness.

A key issue is the country's heavy reliance on imported feedstock, which contributed to a USD 31 billion trade deficit in 2023, stemming from limited domestic backward integration.

Infrastructure gaps, outdated industrial clusters, and high logistics costs have created a cost disadvantage compared to global peers.

Compounding this, India's low investment in R&D, with only 0.7 per cent of investment against the global average of 2.3 per cent, hampers indigenous innovation in high-value chemicals. Regulatory delays, especially in environmental clearances, further stifle industrial agility.

Additionally, the sector is hampered by a 30 per cent shortfall in skilled professionals, particularly in emerging areas such as green chemistry, nanotechnology, and process safety.

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NITI Aayog's report outlines several strategic fiscal and non-fiscal interventions aimed at enhancing India's global competitiveness in the chemical sector.