Context:
NITI Aayog has released a strategic roadmap titled “Chemical Industry: Powering India’s Participation in Global Value Chains (GVCs)”. The report envisions India becoming a global chemical powerhouse with 12% GVC share and USD 1 trillion output by 2040.
Current Landscape of India’s Chemical Industry
- Global Rank: 6th largest producer globally; 3rd in Asia.
- GDP Contribution: 7% of manufacturing GDP; supports pharma, textiles, agriculture, construction.
- Fragmentation: MSME-dominated; lacks integrated clusters and infrastructure.
- GVC Participation: Only 3.5% global share; trade deficit of USD 31 billion (2023).
- Import Dependence: High reliance on China for APIs and Gulf for feedstock.
- Regulatory Challenges: Long delays in environmental clearances (12–18 months).
- Skill Gaps: 30% shortfall in trained professionals in green chemistry and nanotech.
Opportunities Identified
- Green Chemistry Demand: Eco-friendly chemical demand rising globally.
- China+1 Strategy: Global firms looking for alternatives to China.
- FTAs Leverage: Trade pacts with UAE, EU, ASEAN open export potential.
- PLI Schemes & Parks: Government support via PLI, PCPIRs, mega chemical clusters.
- Employment Potential: 7 lakh skilled jobs possible by 2030.
Challenges Facing the Sector
- Feedstock vulnerability, outdated clusters, high logistics costs.
- Regulatory bottlenecks and policy inconsistency.
- Poor academia-industry interface and low patent output.
NITI Aayog Key Recommendations
- Mega Chemical Clusters:
- Upgrade existing clusters (e.g., Paradeep, Dahej, Vizag).
- Chemical Infrastructure Fund & empowered committees.
- Opex Subsidy:
- Incentives based on import substitution and export growth.
- R&D and Tech Transfer:
- DST-led interface for academia-industry collaboration.
- Support tech transfer from global players.
- Regulatory Reforms:
- Simplify Environmental Clearances via DPIIT committee.
- Enhance transparency.
- Skilling Initiatives:
- Expand ITIs, create courses in polymer science and process safety.
- Trade Facilitation:
- Include chemical-specific provisions in FTAs.
- Simplify documentation and origin certification.
