NITI Aayog Report on Chemical Industry

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

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• 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• Feedstock vulnerability, outdated clusters, high logistics costs.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

1. Mega Chemical Clusters:
   • Upgrade existing clusters (e.g., Paradeep, Dahej, Vizag).
   • Chemical Infrastructure Fund & empowered committees.
2. Opex Subsidy:
   • Incentives based on import substitution and export growth.
3. R&D and Tech Transfer:
   • DST-led interface for academia-industry collaboration.
   • Support tech transfer from global players.
4. Regulatory Reforms:
   • Simplify Environmental Clearances via DPIIT committee.
   • Enhance transparency.
5. Skilling Initiatives:
   • Expand ITIs, create courses in polymer science and process safety.
6. Trade Facilitation:
   • Include chemical-specific provisions in FTAs.
   • Simplify documentation and origin certification.

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