India’s premier public policy think tank, NITI Aayog, has unveiled a strategic blueprint to nearly double the nation’s annual chemical exports to $88 billion by 2030. This ambitious target, outlined in a recent report, seeks to overcome the persistent challenge of limited domestic demand while bolstering India’s presence in global value chains. The proposals emphasise enhanced port infrastructure and a sales-linked incentive programme, aligning with a vision for a more sustainable and economically robust industrial future.
The comprehensive report, put forth by NITI Aayog, meticulously analyses the current landscape of India’s chemical industry, identifying key impediments and proposing actionable strategies for accelerated growth. In 2023, India registered a significant trade deficit of $31 billion in chemicals, underscoring the imperative for robust export promotion. Furthermore, the nation’s share in global value chains (GVCs) for chemicals stood at a modest 3.5 per cent, starkly contrasting with major players like China, which commands a substantial 23 per cent. This disparity highlights a vast untapped potential for India to expand its global footprint and enhance its economic resilience. The domestic market, valued at $220 billion in 2023, is projected to reach an impressive $1 trillion by 2040, signalling a burgeoning internal demand that will complement export-led growth.
Despite these challenges, the Indian chemical industry has demonstrated remarkable resilience, maintaining a consistent annual growth rate of 6 per cent over the past three decades. Sectors such as agrochemicals and dyes have shown particular strength in exports, indicating inherent capabilities and competitive advantages. However, the report acknowledges a puzzling divergence when compared to the pharmaceutical sector, with which the chemical industry shares close intellectual and scientific linkages. While India has leveraged its strength in chemistry to achieve significant success in pharmaceuticals, a similar trajectory has not been as pronounced in the broader chemical sector. This observation prompts a deeper examination of policy interventions and strategic alignments necessary to unlock the industry’s full potential.
A central recommendation from NITI Aayog is a strategic shift from the export of bulk chemicals towards high-demand specialty chemicals. This transition is projected to double India’s share in GVCs to between 5 and 6 per cent by 2030. Furthermore, targeted policy interventions are expected to increase chemical exports by an additional $35-40 billion by the same year, building upon the $44 billion recorded in 2023. This strategic reorientation is crucial for enhancing the industry’s value proposition, fostering innovation, and securing a more prominent position in the global chemical landscape, all while promoting more sustainable production methods.
To achieve these ambitious targets, the report proposes a sales-linked incentive scheme, structured as an operational expenditure (opex) subsidy. This financial mechanism is designed to incentivise the expansion of production capacities, particularly for critical chemicals where India currently exhibits heavy reliance on specific countries for imports. The scheme aims to bolster domestic production, thereby enhancing supply chain resilience and simultaneously boosting exports. Products earmarked for eligibility under this proposed scheme span broad categories, including agrochemical intermediates, pharmaceutical intermediates, battery and electronic chemicals, dyes and pigments, petrochemicals, and various multi-use chemicals. This targeted approach is vital for fostering self-reliance and reducing geopolitical vulnerabilities within critical supply chains.
The report also calls for a comprehensive revitalisation of India’s existing cluster-based Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), specifically highlighting Dahej, Paradeep, and Vizag. While these regions have made progress in establishing foundational infrastructure and attracting anchor tenants, they continue to grapple with challenges related to infrastructure quality, the adequacy of financial incentives, and regulatory complexities. The report underscores the need for strategic interventions to address these bottlenecks, ensuring that these hubs can truly facilitate scale and become global manufacturing powerhouses. Furthermore, it recommends the establishment of a dedicated Chemical Committee to identify and rectify infrastructure gaps in port-based chemical trade, alongside the development of eight high-potential clusters encompassing 14 major and 12 minor ports across India. This focus on port infrastructure is crucial for improving logistics, enhancing storage capabilities, and streamlining export operations, thereby reducing the carbon footprint associated with inefficient transportation.
The proposed reforms are not merely about economic growth; they are intrinsically linked to India’s broader agenda of creating zero net carbon, eco-friendly, sustainable, gender-neutral, and equitable cities. By promoting localised production and efficient logistics, the initiatives can reduce the environmental impact associated with long-distance transportation of raw materials and finished goods. The emphasis on high-value specialty chemicals, often produced with more advanced and cleaner technologies, further aligns with a sustainable industrial future. Moreover, a robust and growing chemical sector, supported by equitable policies, can create diverse employment opportunities, fostering economic inclusion and contributing to a more prosperous and balanced society. This holistic approach ensures that industrial growth is pursued in harmony with environmental stewardship and social equity.
Also Read :Visakhapatnam Launches Cordelias MV Empress For Coastal Cruise Tourism Growth
