India’s chemical industry may see a huge boom in the coming years. According to a recent report by McKinsey & Company, India’s chemical industry can grow rapidly due to new fast-growing sectors. That growth can be faster than the country’s economy and can reach 230-255 billion dollars by the year 2030.
Currently the size of this sector is around 155-165 billion dollars and despite global challenges, it is expected to grow at 8-9 percent annual rate (CAGR). The report lists 8 fastest growing sectors such as semiconductors, electric vehicles and batteries, renewable energy, construction, aerospace and defense, auto parts, bio-to-x and e-commerce. Which can increase at an annual rate of about 16 percent by 2030 and generate additional demand of 30-35 billion dollars. With the support of infrastructure and urban development, the business of construction chemicals alone can double to $28 billion by 2030.
Data of last 10 years
In the last 10 years, India’s chemical sector has given about 17 percent annual return (CAGR) to investors, which is better than other countries and major indices of the world. However, the report also states that there is a trade deficit of $31 billion, especially in inorganic and polymer chemicals, which shows that India has a big opportunity to increase its own production by reducing imports.
To take advantage of this rapid growth opportunity, the report advised companies to expand their business globally, form partnerships and acquisitions, spend more on research and development (R&D) and use Artificial Intelligence (AI) to make operations more efficient. Besides, it has also been said that it is necessary to strengthen the supply chain and financial position so that global fluctuations can be dealt with and value based growth can be achieved. McKinsey said in its statement that India’s chemical industry is entering an important phase.
From challenges to opportunities
This report titled Growth of India’s chemical industry amid global challenges suggests that this sector can grow from $155-165 billion today to $230-255 billion by 2030, which will probably be more than the country’s GDP growth. To understand future growth, McKinsey has identified 18 special sectors in India. In these 8 major sectors, the demand for chemicals may increase by 30-35 billion dollars by 2030.
The report said India’s trade deficit represents a huge opportunity to reduce imports, especially in the inorganic and polymer chemicals sectors. Currently, India’s chemical trade deficit is around $31 billion (2025), of which inorganic ($12 billion) and polymers ($13 billion) have a major share. In such a situation, there is a good opportunity to develop world class capacity in products like styrene, acetic acid and polyols.
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