India Can Become a $1 Trillion Chemical Powerhouse by 2040: NITI Aayog.jpg)
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New Delhi | July 3, 2025 —India has the potential to emerge as a global chemical manufacturing powerhouse with a $1 trillion sectoral valuation by 2040, provided it undertakes targeted reforms and strategic interventions. This projection comes from a comprehensive NITI Aayog report released on Thursday, which outlines a clear roadmap to position India among the top chemical-producing nations in the world.
Currently holding a 3.5% share in global chemical value chains, India has significant room for expansion. The report aims for a 12% global value chain (GVC) share by 2040, transforming India into a critical player in the global chemicals landscape.
Aiming for Global Leadership in Chemicals
India's chemical sector, while diverse and rapidly growing, currently faces challenges such as heavy dependence on imports, especially for feedstock and specialty chemicals. In 2023 alone, India recorded a chemical trade deficit of $31 billion, reflecting significant import dependency.
The vision for 2030 is to increase India’s GVC share to 5–6%, with a longer-term objective of reaching 12% by 2040 through industrial and policy transformation.
“We are a major producer of chemicals. This is a fast-growing sector. Chemicals, both organic as well as inorganic, are part of our lives in almost everything we do,” said B.V.R. Subrahmanyam, CEO of NITI Aayog, highlighting the sector's untapped potential.
Key Goals and Impact
According to the report, the strategic transformation of the sector will:
- Double current production levels
- Reduce the trade deficit to net zero
- Generate an additional $35–40 billion in exports
- Create around 7 lakh skilled jobs
These outcomes would not only boost India's GDP but also support sustainable and innovation-driven manufacturing practices in alignment with global trends.
Strategic Interventions Proposed by NITI Aayog
To unlock the full potential of the chemical sector, the NITI Aayog report proposes a comprehensive mix of fiscal and non-fiscal reforms, including the following:
1. World-Class Chemical Hubs
- Revamp existing chemical clusters
- Develop new state-of-the-art chemical hubs
- Creation of empowered committees at the Central level
- Establishment of a Chemical Fund with dedicated budget for infrastructure, viability gap funding (VGF), and support systems
2. Administrative and Infrastructure Support
- Creation of hub-level administrative bodies for streamlined governance
- Modernization of port infrastructure to support chemical exports
- Focus on eight high-potential chemical clusters identified for strategic investment
3. Opex Subsidy Scheme
- Introduction of a new operational expenditure (Opex) subsidy scheme for chemicals
- Subsidies to be linked with factors such as import substitution, export potential, and strategic dependency on single-source countries
4. Incentivising Incremental Production
- Financial incentives for manufacturers based on incremental sales
- Emphasis on reducing reliance on chemical imports from select geographies
Focus on Innovation and R&D
A significant pillar of the strategy revolves around technology development and research:
- Enhanced industry-academia collaboration through a proposed interface agency involving the Department of Chemicals & Petrochemicals (DCPC) and the Department of Science and Technology (DST)
- Allocation of dedicated R&D funds to drive innovation, especially in specialty and green chemicals
- Partnerships with multinational corporations (MNCs) to access and localize foreign technologies
- Leveraging Free Trade Agreements (FTAs) to open up global market access for Indian chemical products
Why the Chemical Sector Matters
The Indian chemical industry is one of the most diverse in the world, covering segments such as bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, and polymers. It is deeply interlinked with multiple sectors like agriculture, textiles, construction, and pharmaceuticals.
The sector is already the sixth-largest in the world by output and contributes nearly 7% of India’s manufacturing GDP. A robust domestic chemicals sector will not only reduce India’s reliance on imports but also strengthen national security, sustainability, and global competitiveness.
Challenges to Address
While the outlook is optimistic, the road ahead is not without hurdles. Key challenges include:
- Insufficient feedstock availability and pricing issues
- Regulatory hurdles and lack of coordination between departments
- Environmental concerns and need for cleaner production processes
- Infrastructure gaps in logistics and industrial parks
Experts suggest that policy consistency, investor confidence, and long-term infrastructure planning will be critical to the success of this vision.
Reader Takeaway
- India aims to reach $1 trillion in chemical sector valuation by 2040
- Target of 12% share in global chemical value chains
- Focus on innovation, infrastructure, and trade reforms
- Goal: Net-zero trade deficit and 7 lakh new jobs by 2040