• The Chemical industry in India provides several building blocks and raw materials for many industries, including textiles, paper, paints, soap and detergents, pharmaceuticals and agrochemicals. 1
  • The Chemical industry (including fertilizers and pharmaceuticals) in India stands at USD 178 Bn as of 2019 which is expected to reach USD 304 Bn by 2024-25 at an annual growth rate of 9.3%. 2
  • India's Chemical Industry ranks at the 6th position in the world and 4th position in Asia in terms of size. 2
  • The chemical industry has a market size of USD 300 bn in 2024-25.
  • Indian Chemical industry is 4th largest in Asia.
  • Chemical secor contributes 2.1% to the total FDI equity inflows in the country.
  • Fertilizers production (weight: 2.63 per cent) increased by 0.5 per cent in July, 2021 over July, 2020. Its cumulative index decreased by 1.1 per cent during April to July, 2021-22 over the corresponding period of previous year.
  • The government has targeted to increase the ethanol blending to 10 per cent by 2022 and 20 per cent by 2025 which is at 1.58 presently.
  • Indian chemicals and petrochemicals industry is growing to new heights, looking forward to an investment of INR 8 lakh cr by 2025.16
  • Among Major Chemicals, the production of Pesticides & Insecticides has increased by 25.04% and in the case of Alkali Chemicals, Inorganic Chemicals, Organic Chemicals and Dyes & Pigments production has decreased during the period as compared to the last year.
  • The production of Pesticides & Insecticides has increased by 32.54% and Organic Chemicals has increased by 2.13% and in case of Alkali Chemicals, Inorganic Chemicals, and Dyes & Pigments production has decreased during the period as compared to the last year.
Reasons to Invest
  • The growth drivers of the sector in India include a large domestic and foreign demand for chemicals and petrochemicals. 3
  • Four Petrochemical Investment Regions (PCPIRs) policies being implemented in Andhra Pradesh, Gujarat, Odisha and Tamil Nadu which is expected to attract investment of around INR 7.63 lakh cr. 
  • India ranks 17th in the world export of chemicals (excluding pharmaceutical products) and ranks 7th in the world imports of chemicals (excluding pharmaceuticals products). 3
  • The value additions in the petrochemicals chain offer immense possibilities and cater to the needs of textiles and clothing, agriculture, packaging, infrastructure, healthcare, furniture, automobiles, information technology, power, electronics and telecommunication, irrigation, drinking water, construction and a variety of other articles of daily and specialized usage amidst other emerging areas. 3
  • In recent times, there has been a global shift towards Asia as the world’s chemical manufacturing hub. 3
  • India also offers the availability of a large pool of skilled science professionals. 3
  • India has several world-class engineering facilities and strong R&D capabilities. 3
  • The per capita consumption of chemicals is lower in India, compared to western countries, therefore presenting immense scope for setting up export-oriented manufacturing units through new investments. 3
  • To promote investments in the sector, the government is implementing four Petroleum, Chemical and Petrochemical Investment Regions (PCPIR) in the country. PCPIRs will be clustered providing investors with a transparent and investment-friendly policy and facility regime. 2
  • To promote Make in India, 6788 Certificates of Registration (CR) issued to indigenous manufacturers of pesticides and 1011 CRs issued for export of pesticides.
  • The government has been promoting the use of ethanol as a blendstock with main automotive fuel like petrol in line, envisages an indicative target of blending 20% ethanol in petrol by 2030.15


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Recent Announcements

26th July 2021: India to explore indigenous deposits of Phosphatic rock, a step towards becoming ‘AatmaNirbhar’ in Fertilizer production.

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13th July 2021: The Ramagundam plant, added 12.7 LMTPA indigenous urea production in the country has been added and this will help realize the vision of the Prime Minister to make India ‘Aatmanirbhar’ (self-reliant) in urea production.

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2nd July 2021: Union Minister for Chemicals and Fertilizers Shri D.V Sadananda Gowda announced that an additional 1,14,000 vials of Liposomal Amphotericin-B, used in the treatment for Mucormycosis have been allocated to all the States/UTs and Central Institutions.

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25th June 2021: CCI approves acquisition of Zuarinagar plant of Zuari Agro Chemicals Limited by Paradeep Phosphates Limited.

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16th June 2021: Cabinet approves Nutrient Based Subsidy (NBS) rates for Phosphatic & Potassic (P&K) Fertilisers for the year 2021-22.

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  • The Chemical industry in India is expected to grow at 9.3% per annum to reach USD 304 Bn by FY 2025. 2 
  • The market size of the Chemicals & Petrochemicals sector in India is around $165 bn during 2019-20; expected to grow to $300 bn by 2025.14
  • Exports of chemicals and chemical products (excluding pharmaceutical products and fertilizers) contributed 14.9% of total export in the year 2020-21 (upto September 2020) compared to 12.4% in the year 2019-20 during the corresponding period.
  • Polymers account for approximately 59% of the total production of basic major petrochemicals in 2019-20 (up to September). 2
  • The value of chemicals and chemical products exported for the period 2019-20 (upto September) stood at USD 148.3 Bn. 2
  • The share of export of Chemicals and Petrochemicals is 12.5% of the total national export in 2019-20 (up to September). 2
  • The annual growth of production in 2018-19 over the preceding year was 4.70% with a CAGR of 3.02% over a period of 8 years, in the case of Major Chemicals.11 
  • The annual growth of Basic Major Petrochemicals was 3.82% over the preceding year with a CAGR of 3.54% during the same period. 11
  • The Organic & inorganic chemicals have recorded positive growth during September 2021 vis-à-vis September 2020 are 29.65%.
  • Major Chemicals valued at INR 5,601 cr and Major Petrochemicals valued at INR 3,029 cr were exported in the month of January 2021.
  • The export figures for Major Chemicals and Major Petrochemicals in the year 2020-21 (up to February 2021) stood at INR 51.78 thousand cr and INR 39.17 thousand cr respectively.
  • CAGR in production of Total Chemicals and Petrochemicals during the period 2015-16 to 2019-20 is 5.74%.
  • Hindustan Organic Chemicals Limited (HOCL) has produced 822 MTs of H2O2 with a capacity utilization of 94.37% during April 2021.17
  • The quantum of production of Major Chemicals increased to 19.77 lakh tonnes during 2021-22 (Up to May-2021) as compared to 10.85 lakh tonnes during the corresponding period of the previous year, recording an increase of 82.19%.


FDI Policy
  • 100% FDI is allowed under the automatic route in the Chemical industry, except in the case of hazardous chemicals. 4
  • The cumulative FDI equity inflow in the Chemicals industry (excluding fertilizers) is USD 18,699.83 mn during the period April 2000 to June 2021. This constitutes 3.42% of the total FDI inflow received across sectors.9


Read more about Foreign Direct Investment Policy in India >

Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in Advance Chemistry Cell Battery for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.

Financial Outlay- INR 18,100 cr

For more details on PLI Schemes, Click Here

Sector Policy

Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs) 2

  • The Government of India has conceptualized PCPIRs as clusters that provide investors with a transparent and investment-friendly policy and facility regime. PCPIRs have a high-class infrastructure and provide a competitive environment conducive to setting up businesses. 
  • Each PCPIR is a specifically delineated region spread over an area of about 250 sq. km. These areas will have manufacturing facilities, along with associated logistics and other services. The required infrastructure along with a non-processing area will be developed, to include residential, commercial and other social and institutional infrastructure. 
  • The minimum processing area for the PCPIR will be about 40% of the total designated area, i.e., around 100 sq. km.
  • The Ministry of Chemicals & Petrochemicals has set up four PCPIRs in Dahej (Gujarat), Vishakhapatnam-Kakinada (Andhra Pradesh), Paradeep (Odisha), and Cuddalore and Nagapattinam (Tamil Nadu). 
  • The projected investment on the full realisation of PCPIRs is INR 7.63 lakh cr. 

PCPIR projects for National Infrastructure Pipeline (NIP): 

  • 14 projects worth INR 18,843 cr by Odisha PCPIR
  • 5 projects worth INR 3,758 cr by Gujarat PCPIR

For more details on the PCPIRs, refer to PCPIR Policy.


Plastic Parks 2

  • The Department of Chemicals and Petrochemicals has formulated the scheme for setting up Plastic Parks with the objective of synergizing and consolidating the various units of the Indian Plastics Industry. The larger objective of the scheme is to contribute to the economy by increasing investment, production, export in the sector and also the generation of employment.
  • The units will be consolidated through the cluster development approach. The Government of India will provide grant funding of up to 50% of the project cost subject to a ceiling of INR 40 cr. The remaining project cost is to be funded by the State Government or State Industrial Development Corporation.
  • Plastic Parks in the States of Madhya Pradesh, Odisha, Jharkhand, Assam and Tamil Nadu are being set up under the scheme of Plastic Parks.

For more details, refer to Scheme for Setting Up Plastic Parks.


National Policy on Petrochemicals 2

  • The National Policy on Petrochemicals aims to achieve sustainable development for the petrochemical industry by promoting research and development and human resource planning and development to cater to the needs of the industry by adopting a mission mode approach.
  • A programme on Petrochemical Development is required to improve existing petrochemical technology and research in the country and to promote the development of new applications of polymers and plastics. Centre(s) of Excellence (COE) are being set up for this reason and will be one of the components of the programme.
  • COEs will be set up in existing educational and research institutions working in the field of polymers, and include the following:
    • Updating and modifying products for new uses
    • Innovative product technology and product designs
    • Improving production processes to make them more efficient
    • Development of biopolymers and biodegradable polymers
  • The COEs are expected to emerge as internationally recognised centres for the analysis and dissemination of existing global knowledge, provide authoritative, strategic and timely information to organizations and companies to use in the development and implementation of their projects/programmes, which engaging in path-break R&D efforts.
  • 8 COEs have been set up in Pune, Chennai, Delhi, Bhubaneshwar, Roorkee and Guwahati.

For more details, refer to National Policy on Petrochemicals.


Chemicals Promotion Development Scheme 2

The aim of the Chemicals Promotion Development Scheme (CPDS) is promotion and development of chemical and petro-chemical industry by extending financial support to conduct of seminars, conferences, exhibitions, conducting studies/consultancies, for facilitating growth as well as analysing critical issues affecting the chemical and petrochemical industry.

For more details, refer to Chemical Promotion Development Scheme.


Central Institute of Plastic Engineering and Technology 5

The Central Institute of Plastic Engineering and Technology (CIPET) has been set up to develop manpower in different disciplines of Plastics Engineering and Technology. The CIPET has a variety of activities and programs focusing on skill training, technology support, academics and research.

For more details, refer to the Central Institute of Plastic Engineering and Technology.


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Financial Support


  • A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act.
  • Weighted deduction of 200% is granted to assess for any sums paid to a national laboratory, university or institute of technology, or specified people with a specific direction and that the said sum is used for scientific research within a program approved by the prescribed authority.


  • Section 35 (2AB) of the Income Tax Act, 1961 provides a weighted tax deduction of 150% of the expenditure incurred by a specified company, on scientific research in the in-house R&D centres as approved by the prescribed authority. This does not include expenditure on the cost of any land or building.
  • The weighted tax deductions of 150% are effective till 31st March 2020. Consequent to that, the weighted tax deductions will be 100%.


  • Apart from the above, each state in India offers additional incentives for industrial projects.
  • Incentives are in areas like subsidized land cost and relaxation in stamp duty exemption on sale/ lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects.


  • Export promotion capital goods scheme
  • Duty drawback scheme
  • Merchandise Export from India Scheme


  • Incentives for units in Special Economic Zones (SEZ)/ National Investment and Manufacturing Zones (NIMZ) as specified in respective Acts or setting up projects in special areas like the North-east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.

Key Points in the Union Budget 2020-21 6

  • The total allocation towards the Department of Chemicals and Petrochemicals is USD 28.97 Mn.
  • The total allocation towards the Central Institute of Plastic Engineering and Technology stands at USD 13.03 Mn.
  • The allocation towards the Promotion of Petrochemicals stands at USD 7.13 Mn.
Investment Opportunities

Dyestuff Industry 

The Indian Dyestuff Industry is an important sub-sector of the Chemicals industry and it ranks second in Asia. It also accounts for 16% of the world market. It has forward and backward linkages with various sectors such as paper, textiles, plastics, printing inks, leather and foodstuffs. The sub-sector has immense potential and serves as a profitable opportunity for investors. 3

Pesticides Industry 

India is the 4th largest producer of agrochemicals in the world. With more than 45 technical grade pesticides being manufactured in the homeland, the country qualifies as one of the most dynamic generic pesticide manufacturers in the world. Being a net export earning industry, it has a significant contribution to the foreign exchange basket of the country. 3

Fine & Specialty Chemicals

India produces many fine and speciality chemicals, which are essential for increasing industrial production. These special chemicals find wide usage as polymer additives, food additives and pigments and anti-oxidants in the rubber industry. 3


Explore projects to invest in Chemicals sector >

Key Achievements
  • The Chemicals and Petrochemicals Industry in India landed in the topmost exporting segment with INR 2.68 lakh cr worth of exports during the period April 2019 - January 2020. The export of chemicals witnessed a growth of 7.43% as compared to the previous year during the same period. 7
  • Union Minister for Chemicals and Fertilizers, Shri D.V. Sadananda Gowda launched the Phase-II of the Direct Benefit Transfer of Fertilizer Subsidy (DBT 2.0) in July 2019. The new initiatives of DBT 2.0 are DBT Dashboards, PoS 3.0 Software and Desktop PoS Version. The Department of Fertilizers (DoF) has implemented the Phase-I of the DBT system in fertilizer subsidy pan-India in Fertilizers w.e.f. March 2018. 8
  • The contract for the coal gasification plant for the urea project at the erstwhile Talcher unit of FCIL was awarded on 17th September 2019. 8
  • Under its diversification programme, FCI Aravali Gypsum and Minerals India Limited (FAGMIL) has taken up a project to establish a white cement plant near village Nohra Dhar in the Sirmour district of Himachal Pradesh, at a project cost of approximately INR 605 cr. 8
  • HIL (India) Ltd   a PSU under the Department of Chemicals and Petrochemicals has recorded growth in exports in the first two-quarters of FY 2020-21.12 
  • Exports of Organic And Inorganic Chemicals values at USD 2377.07 mn in September 2021 covers 7.11% of total exports of the country.
  • The production of Pesticides & Insecticides has increased by 23.5%
  1. About Chemicals, Department of Chemicals & Petro-chemicals,
  2. “Annual Report 2019-20", Department of Chemicals & Petro-chemicals,
  3. About Chemicals, Department of Chemicals & Petro-chemicals,
  4. Consolidated FDI Policy,
  5. Central Institute of Plastics Engineering and Technology,
  6. “India Budget”, Department of Chemicals and Petrochemicals
  7. "Gowda congratulates Chemical & Petrochemicals industry on becoming the topmost exporting segment for the first time with exports valued at Rs 2.68 lakh crore in April 2019 - January 2020", PIB,
  8. "Year-End Review 2019: Ministry of Chemicals & Fertilizers", PIB,
  9. Factsheet on FDI - April 2000 to June 2021Department for Promotion of Industry and Internal Trade,
  10. PIB Release,
  11. Department of Chemicals & Petro-chemicals,
  12. PIB Release,
  13. PIB Release,
  14. Year-End Review- 2020:Ministry of Chemicals & Fertilizers,
  15. PIB Release,
  16. PIB Release,
  17. Monthly Achievement Report,

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