India’s chemicals and petrochemicals industry plays a vital role in strengthening the country’s manufacturing ecosystem, supporting agriculture and accelerating industrial development. Its products serve a wide range of sectors, including pharmaceuticals, textiles, construction, automobiles, electronics and consumer goods. As a result, the industry remains a key contributor to India’s economic growth and industrial competitiveness.
India is the sixth-largest chemical producer globally and the fourth-largest in Asia. Valued at approximately USD 220 billion, the sector is projected to reach USD 300 billion by 2030 and USD 1 trillion by 2040. India also holds significant positions in specialised chemical segments. It is the second-largest manufacturer and exporter of dyes and the third-largest exporter of agrochemicals worldwide. The industry comprises approximately 13,000 large-scale units and 4.45 lakh micro, small and medium enterprises (MSMEs), highlighting its extensive manufacturing base.
Policy Support and Investment Drive Industry Expansion
Government initiatives are playing an important role in accelerating chemical manufacturing, strengthening research capabilities and developing industrial infrastructure. These measures include dedicated chemical parks, investment incentives and quality-focused initiatives designed to improve manufacturing standards.
Furthermore, India allows 100% Foreign Direct Investment (FDI) through the automatic route in most chemical sectors. This enables foreign investors to invest without obtaining prior government approval, subject to applicable regulations. The sector has witnessed substantial growth in foreign investment. FDI inflows reached ₹1,04,895 crore between 2014 and 2026, more than double the ₹45,240 crore recorded between 2004 and 2014. This growth reflects increasing investor interest in India’s chemical manufacturing capabilities and long-term market potential.
Rising Chemical and Petrochemical Production
India’s chemical and petrochemical manufacturing capacity has continued to expand. Production of major chemicals and petrochemicals increased from 45,638 thousand metric tonnes (MT) in 2015–16 to 58,617 thousand MT in 2024–25.
This growth reflects the industry’s expanding production capabilities and supports the government’s broader efforts to strengthen domestic manufacturing. In addition, investments in industrial infrastructure and specialised manufacturing hubs are expected to improve operational efficiency and enhance India’s position in global chemical value chains.
PCPIRs: Developing Integrated Chemical Manufacturing Hubs
Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) represent an important initiative to promote integrated development across the chemical and petrochemical industries. Each PCPIR is a specifically designated investment region covering approximately 250 sq. km, with around 40% of its area earmarked for processing activities. These regions follow a cluster-based development model that brings together manufacturing facilities, common infrastructure, essential utilities and supporting services.
The infrastructure includes road and rail connectivity, port facilities, Common Effluent Treatment Plants (CETPs), sewage disposal systems, water supply networks and steam generation units. By providing these shared facilities, PCPIRs help reduce infrastructure costs, improve operational efficiency and create a competitive environment for chemical manufacturers and investors.
BHAVYA Rasayan Scheme to Establish Three Dedicated Chemical Parks
Further strengthening India’s chemical manufacturing ecosystem, the Centre approved the Bharat Audyogik Vikas Yojana Rasayan (BHAVYA Rasayan) Scheme in July 2026. The initiative aims to establish three dedicated chemical parks to accelerate domestic production and attract fresh investments. Each proposed park will cover a minimum area of 8 sq. km (approximately 2,000 acres). The Central Government will provide financial assistance of up to ₹1,000 crore per park, while the concerned State Government must contribute at least ₹500 crore.
The scheme has a total financial outlay of ₹3,030 crore, comprising:
₹3,000 crore for developing common infrastructure and essential utilities.
₹30 crore for administrative expenditure.
The scheme will operate over five years, covering FY 2026–27 to FY 2030–31.
Plug-and-Play Infrastructure to Strengthen Competitiveness
The proposed chemical parks will provide plug-and-play infrastructure, enabling companies to establish manufacturing facilities more efficiently. By providing ready-to-use industrial infrastructure, the initiative aims to improve resource utilisation, streamline logistics and reduce project development costs. Moreover, the parks will promote sustainable industrial development through an environment-friendly ecosystem. Key facilities will include centralised Common Effluent Treatment Plants, Storage and Disposal Facilities, and infrastructure for hazardous waste management. These integrated facilities will help address environmental compliance requirements while supporting efficient and responsible chemical manufacturing.
Strengthening India’s Position in Global Chemical Value Chains
With rising production, strong domestic demand, supportive investment policies and dedicated industrial infrastructure, India’s chemicals and petrochemicals sector is entering an important phase of expansion. Initiatives such as PCPIRs and the BHAVYA Rasayan Scheme are expected to attract investments, strengthen domestic manufacturing capabilities and improve supply-chain efficiency. As reported by pib.gov.in, together, these developments will help India expand its participation in global chemical value chains and move towards its ambition of becoming a USD 1 trillion chemicals industry by 2040.