{"id":46965,"date":"2025-07-04T20:18:44","date_gmt":"2025-07-04T14:48:44","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=46965"},"modified":"2025-07-25T11:28:24","modified_gmt":"2025-07-25T05:58:24","slug":"india-global-value-chains","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/04-07-2025\/india-global-value-chains","title":{"rendered":"Chemical Industry: Powering India\u2019s Participation in Global Value Chains: Report"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>NITI Aayog has released its report <strong>&#8220;Chemical Industry: Powering India\u2019s Participation in Global Value Chains&#8221;.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This report offers an <strong>extensive analysis of India\u2019s chemical sector<\/strong>, highlighting both <strong>opportunities and challenges,<\/strong> and outlining a <strong>pathway for positioning India as a key player in global chemical markets.<\/strong><\/li>\n\n\n\n<li><strong>The chemical industry <\/strong>is a vast and diverse sector that encompasses the <strong>production, transformation, and distribution of chemical substances.&nbsp;<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Chemical Industry<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India is the <strong>sixth-largest chemicals producer globally<\/strong> and <strong>third in Asia <\/strong>and holds immense potential for expansion.&nbsp;<\/li>\n\n\n\n<li><strong>Share in Global Chain:<\/strong> India has a<strong> 3.5% share<\/strong> in <strong>global chemical value chains<\/strong>.&nbsp;<\/li>\n\n\n\n<li><strong>Market Size:<\/strong> With over $220 billion market size in 2023, it contributed around<strong> 7% to India&#8217;s GDP <\/strong>and provided vital raw materials to critical sectors such as agriculture, pharmaceuticals, textiles, automotive, and construction.&nbsp;<\/li>\n\n\n\n<li><strong>Future Projection: <\/strong>The industry is poised to expand to <strong>$400\u2013450 billion by 2030 and potentially reach $1 trillion by 2040.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Segments by Market Consumption<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Petrochemicals :<\/strong> These chemicals are <strong>derived from petroleum and natural gas<\/strong> through a refinement process and are also known as petroleum distillates.\n<ul class=\"wp-block-list\">\n<li>Petrochemicals form the<strong> biggest chemicals segment, <\/strong>with consumption of <strong>$65 to $75 billion.<\/strong> The production &#8211; consumption gap in these has remained negative over the years.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Specialty Chemicals:<\/strong> Chemicals with <strong>high value but low production volume<\/strong> are considered specialty chemicals, such as paints and coating, dyes, agrochemicals, textile chemicals etc.\n<ul class=\"wp-block-list\">\n<li>This category constitutes around $40 to $ 45 billion of market consumption and<strong> over 50% of India\u2019s chemical exports<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Inorganic Chemicals: <\/strong>Fundamental to India\u2019s industrial base, these chemicals provide essential materials for applications in construction, water treatment and electronics, among other sectors.\n<ul class=\"wp-block-list\">\n<li>They encompass a variety of substances such as metals, salts and minerals.<\/li>\n\n\n\n<li>They make up <strong>$15 to 20 billion<\/strong> of the total market consumption.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Other Non-Core Segments:<\/strong> Other \u201cnon-core\u201d chemicals categories include <strong>fertilizers, pharmaceutical products&nbsp; and medical devices and personal care consumer products.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Together, they contribute around <strong>$90 billion<\/strong> in market consumption.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Constraints<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High Import Dependence:<\/strong> In 2023, India imported chemicals worth $75 billion compared to exports worth $44 billion, accounting for a trade deficit of around <strong>$31 billion<\/strong>; major imports were from China (30\u201335%).<\/li>\n\n\n\n<li><strong>Low Investment in R&amp;D:<\/strong> India&#8217;s low investment in R&amp;D, with only 0.7% of investment against the global average of 2.3%, hampers indigenous innovation in high-value chemicals.<\/li>\n\n\n\n<li><strong>Infrastructure Deficits:<\/strong> Infrastructure gaps, outdated industrial clusters, and high logistics costs have created a cost disadvantage compared to global peers.<\/li>\n\n\n\n<li><strong>Regulatory Complexity:<\/strong> Delayed environmental clearances, multiple approvals hampers the growth of the sector.<\/li>\n\n\n\n<li><strong>Skilled Talent Gap:<\/strong> The sector is hampered by a <strong>30% shortfall in skilled professionals<\/strong>, particularly in emerging areas such as green chemistry, nanotechnology, and process safety.<\/li>\n\n\n\n<li><strong>Low Diversification: <\/strong>Focus on bulk chemicals over high-value products.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Strategic Vision: Doubling India\u2019s Global Value Chain Share by 2030<\/strong><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"1b294b\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"697\" height=\"344\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Doubling-Indias-Global-Value-Chain-Share-by-2030.webp\" alt=\"global value chains\" class=\"not-transparent wp-image-46966\" style=\"--dominant-color: #1b294b; width:499px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Doubling-Indias-Global-Value-Chain-Share-by-2030.webp 697w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Doubling-Indias-Global-Value-Chain-Share-by-2030-300x148.webp 300w\" sizes=\"auto, (max-width: 697px) 100vw, 697px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Growth Drivers:&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li>Rapid urbanization and consumer demand.<\/li>\n\n\n\n<li>Supply chain shifts post-COVID and geopolitical tensions.<\/li>\n\n\n\n<li>India&#8217;s potential to serve as a reliable global partner.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Seven Strategic Interventions<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Intervention 1<\/strong><strong>Establish World-Class Chemicals Hubs<\/strong>:\n<ul class=\"wp-block-list\">\n<li>Establishment of <strong>empowered committee at the Central level <\/strong>along with creation of a<strong> Chemical Fund<\/strong> under the committee with a budgetary outlay for shared infrastructure development, VGF, etc&nbsp;<\/li>\n\n\n\n<li>Revitalize existing hubs (Dahej, Paradip, Visakhapatnam, Cuddalore\u2013Nagapattinam).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 2 Strengthen Port Infrastructure<\/strong>:\n<ul class=\"wp-block-list\">\n<li>Establish chemical Committee at major ports.<\/li>\n\n\n\n<li>Develop 8 high-potential coastal clusters.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 3 Introduce a Opex subsidy scheme for chemicals:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Incentivize incremental production of chemicals based on import bill, export potential, single source country dependence, end-market criticality etc.&nbsp;<\/li>\n\n\n\n<li>The scheme proposes for incentives on incremental sales to selected participants for a fixed number of years.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 4 : Develop and access technologies to enhance self-sufficiency and foster innovation:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Disbursement of R&amp;D funds to drive innovation with enhanced collaboration between industry and academia through creation of an interface agency in collaboration with DCPC and DST.<\/li>\n\n\n\n<li>Encourage MNC partnerships for access to global tech.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 5 Streamline Environmental Clearances:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Fast-track approval system with autonomy for EAC.<\/li>\n\n\n\n<li>\u201cDeemed EC\u201d if the delay exceeds 270 days.<\/li>\n\n\n\n<li>Clubbing EAC and EIAA for quicker processing.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 6 Securing Free Trade Agreements (FTAs) to support Industry growth:&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li>Targeted negotiations for tariff quotas and critical feedstock exemptions.<\/li>\n\n\n\n<li>Simplify FTA compliance to widen industry access.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Intervention 7 Talent and skill upgradation in the chemical industry:&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li>Expansion of ITIs and specialized training institutes.<\/li>\n\n\n\n<li>Design industry-aligned curricula in polymer science, petrochemicals, safety.<\/li>\n\n\n\n<li>Faculty training and PPP-based apprenticeship programs.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Global Lessons: Case Study of China<\/strong><br>&#8211; China grew its global chemicals share from<strong> 6% in 2000 to 33\u201335% in 2023<\/strong>.<br>&#8211; Invested in<strong> state-led infrastructure, R&amp;D, and attracted FDI.<\/strong><br>&#8211; <strong>Achieved net export status <\/strong>through scale, self-sufficiency goals, and policy consistency.<br>&#8211; This transformation over two decades began with a <strong>phase of massive overinvestment and oversupply,<\/strong> led by state-owned enterprises (SOEs) and a <strong>thrust on establishing small to medium-scale production.<\/strong><br>&#8211; India can adapt similar lessons while<strong> tailoring solutions to its federal structure and domestic capabilities.<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead: Toward a $1 Trillion Industry<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s chemical industry sits at a pivotal juncture. The combination of domestic market strength, favorable policy momentum, and global supply chain realignments present an unprecedented opportunity.<\/li>\n\n\n\n<li>If the government successfully implements the<strong> seven-pronged intervention strategy, India can:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Transform into a global manufacturing hub.<\/li>\n\n\n\n<li>Secure strategic autonomy in key chemical segments.<\/li>\n\n\n\n<li>Lead in green and innovation-driven chemical production.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Achieving this would not only bolster India\u2019s share in GVCs but significantly <strong>contribute to the $5 trillion economy vision.<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.pib.gov.in\/PressReleseDetailm.aspx?PRID=2141832\" rel=\"nofollow noopener\" target=\"_blank\"><strong>PIB<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">NITI Aayog has released its report &#8220;Chemical Industry: Powering India\u2019s Participation in Global Value Chains&#8221;.<\/li>\n<p><\/p>\n<h3><strong>About<\/strong><\/h3>\n<li class=\"ms-5\">This report offers an extensive analysis of India\u2019s chemical sector, highlighting both opportunities and challenges, and outlining a pathway for positioning India as a key player in global chemical markets.<\/li>\n<li class=\"ms-5\">The chemical industry is a vast and diverse sector that encompasses the production, transformation, and distribution of chemical substances.\u00a0<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-07-2025\/india-global-value-chains\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-46965","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=46965"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46965\/revisions"}],"predecessor-version":[{"id":49140,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46965\/revisions\/49140"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=46965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=46965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=46965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}