India Eyes Global Chemical Leadership with NITI Aayog's Strategic Roadmap

The global chemical industry is undergoing structural shifts driven by decarbonization imperatives, digitalization, and geopolitical realignments.

India is poised to reshape its trajectory in the global chemical industry with the release of NITI Aayog’s new report titled “Chemical Industry: Powering India’s Participation in Global Value Chains”. The report outlines an ambitious, multi-pronged strategy to elevate India’s share in the global chemical value chain (GVC) from its current 3.5% to 12% by 2040, aiming to transform the country into a $1 trillion chemical powerhouse.

The report arrives at a critical juncture when global supply chains are being realigned, demand is growing for specialty and sustainable chemicals, and countries are striving to boost indigenous innovation and resilience. It reflects NITI Aayog’s vision to position India at the forefront of global chemical manufacturing and trade through reforms, infrastructure upgrades, skill development, and regulatory modernization.

Global Context and India's Current Position

The global chemical industry is undergoing structural shifts driven by decarbonization imperatives, digitalization, and geopolitical realignments. Amidst this backdrop, India holds a competitive edge with a growing domestic market, expanding middle class, and availability of engineering talent.

However, India's chemical trade deficit of USD 31 billion in 2023 reveals its continued dependence on imported feedstock and specialty chemicals. Despite ranking among the top producers of agrochemicals and bulk chemicals, fragmented industrial clusters, insufficient R&D, regulatory bottlenecks, and a 30% skill shortfall impede India’s capacity to rise as a global leader.

Key Challenges Identified

NITI Aayog highlights several critical pain points facing the sector:

• Feedstock Dependence: Over-reliance on imported petrochemical raw materials.

• High Logistics Costs: Outdated infrastructure in chemical hubs and port connectivity.

• R&D Deficit: India invests only 0.7% of sectoral turnover in R&D vs the global average of 2.3%.

• Regulatory Delays: Time-consuming environmental clearances hinder project rollouts.

• Skill Shortages: Acute scarcity in emerging fields like green chemistry and nanotechnology.

Strategic Interventions Proposed

To unlock India’s potential and make the chemical industry globally competitive, the report lays out a holistic blueprint built around seven pillars:

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1. Chemical Hubs and Cluster Development

• Upgrade existing industrial clusters into world-class Chemical Hubs.

• Set up a Central Empowered Committee with budgetary provisions for shared infrastructure and Viability Gap Funding (VGF).

• Establish local administrative bodies to oversee hub management.

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2. Port Infrastructure Modernization

• Form a Chemical Committee at ports to address logistics gaps in chemical handling.

• Develop 8 high-potential clusters with proximity to ports, pipelines, and power.

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3. Opex Subsidy Scheme for Chemicals

• Incentivize incremental production of strategically important chemicals.

• Link subsidies to factors such as import bill reduction, export potential, and supply chain vulnerability.

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4. Technology Access and Innovation Boost

• Launch a dedicated R&D interface agency involving the Department of Chemicals and Petrochemicals (DCPC) and Department of Science & Technology (DST).

• Facilitate MNC partnerships to acquire proprietary technologies for feedstock, polymers, and specialty products.

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5. Fast-track Environmental Clearances

• Introduce transparency and speed in environmental approvals by:

  • Creating a monitoring audit committee under DPIIT.

  • Publishing periodic reports and empowering Expert Appraisal Committees (EACs) with more autonomy.

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6. Strategic Free Trade Agreements (FTAs)

• Negotiate FTAs with chemical sector-specific provisions, including tariff quotas and exemptions on critical imports.

• Enhance FTA awareness and ease of usage through procedural simplification and origin proof automation.

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7. Skilling and Talent Pipeline Development

• Expand Industrial Training Institutes (ITIs) and chemical-specialized vocational schools.

• Upgrade training standards and faculty development to improve instruction quality.

• Establish industry-academia partnerships for curriculum modernization in polymer sciences, process safety, and petrochemicals.

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Vision for 2030 and 2040

By 2030, India aspires to:

• Reach 5%-6% share of the global chemical value chain.

• Double chemical production and significantly narrow the trade deficit.

• Create 7 lakh skilled jobs through industrial and academic investments.

By 2040, the goal is to emerge as a $1 trillion chemical sector contributing over 12% to global GVCs. This expansion will be fueled by a combination of infrastructure modernization, regulatory agility, research excellence, and deep integration with global partners.

Enabling Policy Landscape

The roadmap’s success hinges on active collaboration between central ministries, state governments, industry leaders, and academic institutions. Continued coordination with Make in India, PLI Schemes, Gati Shakti infrastructure push, and green hydrogen missions will further catalyze sectoral growth.

The chemical industry also intersects with national priorities such as:

• Atmanirbhar Bharat (Self-Reliant India)

• Energy Transition & Green Chemicals

• Sustainable Industrial Development

 

India's chemical sector sits on the cusp of a transformation. By implementing NITI Aayog’s reform agenda, the country can not only reduce dependency on imports and bridge trade deficits, but also claim a leadership position in global value chains.

As global demand pivots towards specialty, green, and advanced materials, India’s vast domestic market, youthful workforce, and policy momentum present a once-in-a-generation opportunity. With vision, coordination, and execution, India is set to become a chemical manufacturing and innovation hub of the future.