Can India crack the code to a $1 trillion chemical empire by 2040?

India aims to transform its chemical sector into a US$ 1 trillion global powerhouse by 2040, up from US$ 220 billion in 2023. A NITI Aayog report outlines sweeping reforms—ranging from fiscal incentives and infrastructure upgrades to skill development and R&D investments—to boost self-reliance, reduce the US$ 31 billion trade deficit, and expand its global value chain share from 3.5% to 12%.

India is gearing up to become a global chemical powerhouse, with NITI Aayog projecting the sector to grow into a US$ 1 trillion industry by 2040 and capture 12% of global value chains (GVCs). A comprehensive reform roadmap—spanning fiscal incentives, infrastructure upgrades, and regulatory easing—aims to transform the country’s fragmented and import-reliant chemical sector into an innovation-driven, globally competitive engine of growth.

The report lays out a wide range of interventions. These include an operational expenditure (Opex) subsidy scheme, faster environmental clearances, the negotiation of more free trade agreements (FTAs), and access to cutting-edge technologies. India currently holds only a 3.5% share in the global chemical GVC and recorded a US$ 31 billion trade deficit in 2023—largely due to its reliance on imported feedstock and specialty chemicals.

Valued at US$ 220 billion in 2023, the domestic chemicals market is projected to grow to US$ 400–450 billion by 2030, with the ambition to reach US$ 850–1,000 billion by 2040. Yet, challenges persist. The sector suffers from infrastructure bottlenecks, regulatory delays, and underinvestment in R&D—India spends just 0.7% of total chemical investment on R&D, compared to the global average of 2.3%. A 30% shortfall in skilled professionals, particularly in green chemistry, nanotechnology, and process safety, further hampers growth.

To accelerate clearances, NITI Aayog recommends setting up a dedicated audit committee to track approval timelines and publish regular compliance reports. The roadmap also envisions world-class chemical hubs—both through modernising existing clusters and developing new ones—with support from a proposed Central Chemical Fund. This fund would offer viability gap financing and assist in building shared infrastructure such as effluent treatment plants, logistics, and storage.

Additionally, the plan suggests establishing chemical-specific logistics committees at major ports and developing eight coastal clusters with high export potential. Chemical-specific provisions in future FTAs—such as duty exemptions and tariff quotas—are also recommended to enhance raw material access and market competitiveness.

To stimulate local production, NITI Aayog proposes performance-linked incentives for incremental sales based on factors like import dependence, export potential, single-country sourcing, and end-use criticality. The reforms are expected to generate over 700,000 skilled jobs by 2030.

Finally, the report stresses the need for stronger industry-academia collaboration through an interface agency working with the Department of Chemicals and Petrochemicals (DCPC) and the Department of Science and Technology (DST). Technology tie-ups with global firms will also be critical in advancing India’s domestic capabilities and reducing reliance on imports.

Together, these measures aim to position India as a resilient and innovation-led leader in the global chemical value chain.