Why in News?

NITI Aayog has proposed measures to nearly double India’s $44 billion chemical exports by 2030.

Key recommendations include developing production clusters for scale, upgrading port infrastructure for improved logistics and storage, and introducing a sales-linked incentive scheme to localise production and enhance exports of critical chemicals.

The initiative addresses limited domestic demand as a major growth constraint.

What’s in Today’s Article?

• India’s Chemical Industry
• Government Support to Chemical Industry
• NITI Aayog Charts Roadmap to Boost Chemical Exports

India’s Chemical Industry

• India is the 6th largest chemical producer globally and 3rd in Asia, contributing 7% to the national GDP. It ranks 14th in global chemical exports (excluding pharma).
• In FY23, exports of major chemicals and petrochemical products stood at US$ 23.8 billion.
• It had a $31 billion trade deficit in chemicals in 2023 and held a 3.5% share in global value chains, compared to China’s 23%.
• India’s chemical market was valued at $220 billion in 2023, with ambitions to reach $1 trillion by 2040.
  • Experts emphasized the need to prioritize exports, noting that domestic demand alone cannot drive the sector to a $1 trillion valuation by 2040.
• Regional Manufacturing Hubs
  • Chemical manufacturing is concentrated in Maharashtra and Gujarat, with West Bengal and Tamil Nadu also being major contributors.
  • India’s chemical industry produces over 80,000 commercial products and is classified into bulk chemicals, agrochemicals, specialty chemicals, polymers, petrochemicals, and fertilizers.
• Global Leadership in Niche Segments
  • 4th largest agrochemical producer
  • 3rd largest polymer consumer
  • Major exporter of dyes and colourants, contributing 16–18% to global dyestuff production and holding a ~15% market share in colourants

Government Support to Chemical Industry

• India has de-licensed the sector (except hazardous chemicals) and is promoting PCPIRs and plastic parks to provide modern infrastructure, increase output, and generate employment.
• PCPIR Policy 2020–2035: Driving Massive Investment and Job Creation
  • The revised Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) Policy targets:
    • US$ 142 billion investment by 2025
    • US$ 213 billion by 2030
    • US$ 284 billion by 2035
• Chemical Promotion and Development Scheme (CPDS)
  • CPDS supports the growth of the chemical and petrochemical industry through:
    • Creation of knowledge products
    • Knowledge dissemination via surveys and studies
    • Excellence awards for research and innovation in the sector

NITI Aayog Charts Roadmap to Boost Chemical Exports

• NITI Aayog aims to nearly double India’s annual chemical exports from $44 billion by 2030, citing limited domestic demand as a major constraint.
• Proposed measures include:
  • Developing new and existing production clusters
  • Upgrading port infrastructure for improved logistics and storage
  • Launching a sales-linked incentive scheme to promote local production and exports of critical chemicals
• Shift to Specialty Chemicals to Raise Global Value Chain (GVC) Share
  • The report suggests India can double its share in global value chains to 5–6% by 2030 by moving from bulk to high-demand specialty chemicals and increasing exports by $35–40 billion with the right policy support.
• Proposed Sales-Linked Incentive as Opex Subsidy
  • A sales-linked incentive scheme, structured as an operational expenditure (opex) subsidy, is proposed to:
    • Reduce dependence on specific countries for imports
    • Expand capacity in targeted sectors like agrochemical and pharma intermediates, battery chemicals, dyes, pigments, and petrochemicals
• Identifying Supply Chain Choke Points
• The report stressed the importance of identifying potential choke points in India’s chemical supply chain—mirroring China’s approach in 2018—to guide the strategic allocation of subsidies.
• Revamping PCPIRs and Revitalizing Hubs
  • The report called for revitalizing existing Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIRs) in Dahej, Paradeep, and Vizag, which face infrastructure, financing, and regulatory challenges.
• Port-Centric Cluster Development and Infrastructure Gaps
  • It recommended forming a Chemical Committee to address port infrastructure bottlenecks and proposed the development of eight high-potential chemical clusters linked to 14 major and 12 minor ports across the country.