CareEdge Ratings expects India’s domestic petrochemical consumption to grow 6–7% p.a. in the medium term, driven by economic expansion and steady downstream demand. The rating agency noted that rising consumption continues to underpin long-term demand across key petrochemical segments.
Import dependence drives capacity expansion plans
CareEdge highlighted that strong growth in domestic consumption has made reducing import dependence a strategic priority for India’s petrochemical sector. Consequently, both public and private sector players have announced aggressive capacity expansion plans across major petrochemical products. India’s petrochemical consumption will grow robustly at 6–7% p.a. in the medium term, driven by economic expansion and downstream product demand.
Polypropylene capacity set to outpace demand growth
Polypropylene (PP) capacity is expected to rise sharply. CareEdge estimates PP capacity will grow 1.8 times between FY25 and FY30, outpacing 1.4 times demand growth, likely reducing India’s PP import dependence significantly by FY30.
Cost competitiveness remains key challenge
CareEdge cautioned that capacity additions alone will not ensure profitability. Instead, cost competitiveness will remain the most critical factor for domestic petrochemical players. Sustained product spread recovery and returns on large investments will depend on operating efficiency, global markets, and pricing dynamics.
Global oversupply to weigh on near-term margins
CareEdge expects weak prices and spreads due to global oversupply, mainly from China, with demand lagging capacity growth, pressuring Indian manufacturers’ profitability and margins amid competition from cheaper Chinese imports.
Marginal recovery in profitability in H1FY26
Despite pressures, operating profitability improved slightly in H1FY26, aided by lower input costs from falling crude prices. CareEdge noted healthy growth in India’s major petrochemical consumption, including polymers, aromatics, and elastomers. However, limited domestic capacity additions during this period resulted in high import dependence to meet rising demand. To bridge this gap, domestic producers have now outlined large-scale expansion programmes.
Profitability hinges on costs and policy support
As per thehindubusinessline.com, CareEdge said India’s petrochemical growth will need better cost competitiveness, supportive global markets, and targeted government aid to sustain profitability.
