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World's chemical nucleus

Indian chemicals sector is highly diversified, covering more than 70,000 commercial products. It is broadly classified as basic chemicals, speciality chemicals and agrochemicals. India’s proximity to the Middle East, the world’s source of petrochemicals feedstock, makes for economies of scale. India is a strong global dye supplier amounting to approximately 16% of the world production of dyestuff and dye intermediates. 100% FDI is permitted under automatic route for the sector. Chemicals sector is de-licensed except for few hazardous chemicals. Upcoming Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) & Plastic Parks will provide state-of-the-art infrastructure for Chemical & Petrochemicals Sector. 

  •   Total production of major chemicals including petrochemicals was 23.9 MT (during FY 2015-16) 
  •   By 2020, India speciality chemical market is expected to reach USD 70 bn by 2020
  •   By 2025, the Indian chemical industry is projected to reach USD 403 bn 


100% FDI is allowed under the automatic route

for more details refer FDI Policy 2017


  • Fourth largest producer of agro chemicals in the world
  • Third largest consumer of polymers in the world
  • Sixth largest producer of chemicals in the world

Industry Scenario

Indian chemicals industry had a market size of USD 139 bn in 2016.

In terms of volume, total chemical production in India was around 9,884 MT. The growth of 2.6% was registered from FY15 to FY16. Alkali chemicals had the largest share in Indian chemical industry with around 69% share of the total production. Organic chemicals had a share of around 16% followed by inorganic chemicals commanding a share of around 10 %. The remaining market is catered by dye/dyestuffs and pesticides with a share of 3% and 2% respectively.

  •   Production of polymers stood at around 9 mn tons. Polymer demand is expected to grow by 8-10% with healthy growth in industries such as clothing, automobiles, etc.
  •   The Indian colorant industry, valued at USD 6.8 bn, exports nearly 75% of its production.

Growth Drivers

GD chem
  • Share in world’s dyestuff and dye intermediates


  • Nation’s Gross Value Added (GVA) in 2013-14


  • Chemical products share in total exports (2016)


  • Sector growth (for the Financial Year 2017)


Key policies

Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR)

PCPIR is a specifically delineated Investment Region planned for the establishment of production facilities for petroleum, chemicals and petrochemicals. PCPIR Andhra Pradesh PCPIR Gujarat

Policy Resolution for Promotion of Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs)

Policy objective is to promote investment in this sector and make the country an important hub for both domestic and international markets, the government has decided to attract major investment, both domestic and foreign, by providing a transparent and investment friendly policy and facility regime under which integrated Petroleum, Chemicals & Petrochemical Investment Regions (PCPIRs) may be set up.

Scheme for setting up of plastic parks

The major objectives of the scheme are:

1) Increase the competitiveness, polymer absorption capacity and value addition in the domestic downstream plastic processing industry through adaptation of modern, research and development led measurers.

2) Increase investments in the sector through additions in capacity and production, creating quality infrastructure and other facilitation to ensure value addition and increase in exports.

3) Achieve environmentally sustainable growth through innovative methods of waste management, recycling, etc.

4) Adopt a cluster development approach to achieve the above objectives owing to its benefits arising due to optimization of resources and economies of scale.

FDI Facts

  • FDI in chemicals (in USD) during April 2000 - September 2017

  • Growth in FDI equity inflows (FY 2014 to FY 2016)

  • FDI is allowed under the automatic route in the chemicals sector

Recent Investments

  • March 2018 - Himadri Speciality Chemical Ltd, the largest vertically integrated speciality carbon company of the country with a market capitalization of over USD 1 bn, is planning to invest USD 153 mn to expand its Carbon Black business by setting up new carbon black lines in its existing integrated plant in Mahistikry, West Bengal for producing Specialty Carbon Black.

  • January 2017 - Hindustan Petroleum Corporation Ltd (HPCL), Gail India Limited (GAIL) and Government of Andhra Pradesh, have signed a Memorandum of Understanding (MoU) for setting up a greenfield, standalone petrochemical complex in Andhra Pradesh. The proposed complex, which will come in 2000 acres of GMR’s Kakinada SEZ, is expected to involve an investment of USD 6.1 bn.

  • September 2016 - Sudarshan Chemicals, Pune based pigment and agro chemical maker Sudarshan Chemicals is planning to invest USD 154.6 mn over the next 5 years. The company is aspiring to become the fourth largest company in the world. Its products primarily serve the coatings, plastics, inks and cosmetics markets.

Major Investors