By: Rahul Koul
Last updated : July 11, 2025 9:42 am
While capital is abundant and demand is rising, industry leaders caution that gaps in R&D, regulatory complexity, and risk appetite are slowing India's true potential
India’s chemicals and petrochemicals industry is in the midst of a strategic transformation, spurred by a surge in investments, joint ventures, and mergers and acquisitions. With demand rising in specialty chemicals, advanced materials, and clean energy-linked sectors, companies are scaling capacities, pursuing global tie-ups, and diversifying portfolios to strengthen their long-term competitiveness.
Industry experts discussed the subject recently at the fifth session of 5th edition of the NextGen Chemicals and Petrochemicals Summit 2025 themed ‘Preparing for the future' in Mumbai on June 18-19, 2025.
The session titled ‘Investments/M&A in Chemicals & Petrochemicals’ was moderated by Viswanathan Rajendran, Partner, Kearney who outlined the market potential yet pointed out a few key challenges.
“The chemical industry stands at a pivotal moment. We've often discussed achieving a US$ 2–3 trillion valuation by 2030 or 2047, but while timelines may shift, the real question remains where will the capital come from? R&D, infrastructure, and capacity building are essential, but funding is equally crucial. In 2024, nearly 80% of the global capacity additions happened in China, and from 2022 to 2024, almost all chemical capex was concentrated there. If India is to realize its potential and aim to become the world’s second-largest chemical producer, solving the capital conundrum is the most critical piece of the puzzle.”
Vishal Sharma, Executive Director & CEO, Godrej Industries Ltd. (Chemicals), highlighted both India’s market potential and its innovation gap:
“For any investor, market size is a primary attraction and India offers that in abundance. Our domestic market spans across diverse segments, all showing positive growth trajectories ranging from low to high double digits. What truly sets India apart is the long-term growth outlook; the market isn’t nearing saturation and it’s on the cusp of a multi-decade takeoff. In terms of core production factors such as land, labour, capital, and technology, India remains cost-effective. Access to capital isn’t the constraint; what we often lack is bold ideas and risk-taking capacity. The bigger challenge lies in technology, both in terms of what we produce and whether we’re truly innovating or merely replicating. Unless we invest meaningfully in R&D, we risk remaining a 'me-too' market rather than a source of original innovation. As for M&A, while there’s certainly opportunity in the chemicals space, much of it is currently overhyped. Unrealistic expectations around valuations are stalling deals. Moreover, regulatory bottlenecks, from land transfers and hazardous goods clearances to narcotics licenses, significantly slow down the process, diminishing the value for potential buyers.”
Sanjay Tibrewala, Executive Director and CFO, Fineotex Chemical Ltd., shared his perspective on investor expectations, capital deployment, and M&A trends shaping the Indian chemicals industry.
“In today’s environment, both strategic and financial investors are looking well beyond short-term profits. What they truly value is long-term credibility, consistent performance, and how well the business is positioned for the future. Factors like sustainability, innovation, and return on capital employed (ROCE) are becoming central to investment decisions. At Fineotex, we raised Rs 342 crore (approximately US$ 42 million) last year with the clear intent to build for the long haul. For us, investor trust is earned by maintaining transparency, executing well, and continuously enhancing our capital efficiency. While there’s no shortage of capital in the market, the real challenge lies in deploying it smartly. Investors are increasingly asking: How will this capital be used? What is the strategy for value creation? What synergies will this acquisition or expansion bring? Mere topline growth doesn’t impress anymore but it’s the strategic rationale and operational resilience that really matter. One key insight we’ve gained is that Indian investors often expect a faster or higher return on investment compared to global peers. That’s a reality companies must navigate carefully. At the same time, M&A activity in the chemicals sector is being influenced by a noticeable trend—cross-border deals, especially with foreign companies, tend to offer more strategic value and global access than many domestic opportunities today. These deals bring not just capacity but also advanced technology, new markets, and brand equity, which can significantly enhance long-term competitiveness.”
Mahesh “Deal” Singhi, Founder & Managing Director, Singhi Advisors, shared a grounded perspective on M&A dynamics and the importance of internal business readiness.
“There is ample capital available in India today but the key lies in delivering meaningful returns on that capital. It’s true that around 70% of M&A deals don’t meet expectations and nearly 95% of businesses fail within a decade. But viewed from another angle, M&As offer a higher survival probability compared to building something entirely from scratch. The real question isn’t how many deals fail—it’s how well the successful ones deliver sustainable value. M&A should be seen not just as a growth strategy, but as an outcome of deep internal reflection. Before evaluating another company, it’s critical to assess your own business—its strengths, gaps, management depth, risk appetite, and long-term potential. Clarity around why you're acquiring, whether to expand capacity, access new capabilities, or even neutralize competition is what drives successful outcomes. Execution is everything. As for the perceived risk of doing business in India, let’s be clear every market has its challenges. In fact, greater difficulty often signals higher entry barriers, and those who crack the model stand to gain significantly. With all the talk of ‘China plus one’, we should focus less on comparisons and more on building our own distinct competitive edge. A strong domestic foundation is essential before aspiring to lead globally. Long-term success will depend on how well we nurture and harmonize that core advantage.”
Eva Verstraelen, Trade & Investment Commissioner, Flanders Investment & Trade – Consulate General of Belgium, highlighted the potential for deeper collaboration between India and Flanders in sustainable and innovation-led industries.
“Flanders serves as a strategic gateway to both Europe and parts of East and South Asia. Like India, we face shared global challenges—particularly in the areas of climate change and sustainable development. But beyond our commonalities, the real opportunity lies in how we can complement one another. That’s where meaningful matchmaking comes into play. Flanders offers world-class infrastructure and strong R&D capabilities that can align well with the scale and growing demand of the Indian market. India, in turn, brings cost competitiveness and a dynamic pool of talent, making it an ideal partner for innovation, especially in green chemistry and advanced materials. For Indian companies looking to access Europe, Flanders can act as a launchpad. Likewise, for Flemish businesses, India represents a high-potential destination for manufacturing and skill-based collaboration. As a government agency, we actively connect companies, industry federations, and policy stakeholders, and we’re always open to offering tailored advice and support to foster cross-border partnerships.”
Amita Parekh, Managing Director & Partner, Boston Consulting Group, highlighted the growing global interest in India amid an evolving geopolitical landscape.
“The world is changing rapidly with every quarter bringing a new geopolitical dynamic. In our conversations with global companies, there’s a clear and growing recognition of India as a future growth destination. Unlike in the past, when India wasn’t always seen as a viable strategic option, the narrative has shifted significantly. This shift is being driven by three key factors: a large and growing domestic market, the presence of robust Indian corporates open to partnerships, and a strong push from the government to position India as an investment-friendly destination. However, while there’s significant momentum and optimism, the pace of actual investment remains cautious. Challenges persist, particularly around regulatory complexity, infrastructure readiness, logistics, and the capability of Indian firms to invest meaningfully in R&D. International investors are asking: Will we have the infrastructure we need to operate effectively? And are our Indian partners willing to make parallel investments in technology and innovation?”
Konagalla Ranjith, Manager – Chemicals, Petrochemicals & Other Red Category Industries, APEDB, Government of Andhra Pradesh, acknowledged the regulatory complexities in India while highlighting the proactive steps being taken to support industry.
“Doing business in India, especially in highly regulated sectors like chemicals and petrochemicals, is undoubtedly challenging. However, despite these hurdles, many companies continue to operate with reasonable margins, which reflects both market resilience and growing institutional support. Governments at both the central and state levels are working actively to improve the ease of doing business. One major step has been the integration of state and central regulatory frameworks through unified single-window clearance portals. This reduces redundancy and speeds up approvals. We’re also facilitating greater market access, particularly for MSMEs, through buyer-seller meets and trade networking initiatives. Additionally, industry-specific clusters such as those for pharmaceuticals, petrochemicals, steel, and agrochemicals are being developed to build supportive ecosystems. Incentive frameworks are also strengthening investor confidence. Central schemes like the Production Linked Incentive (PLI) and state-level GST reimbursements are designed to make investments more attractive and sustainable.”
Neha K. Shah, Central & West India Lead, Invest India, emphasized India’s steady and democratic approach to industrial development in the chemicals sector, highlighting both progress and constraints.
“While we acknowledge that there’s still a long journey ahead to meet India’s ambitious targets, it’s important to remember that we operate within a democratic framework unlike some competing economies like China. Our policies must be transparent and accountable, particularly because we are answerable to taxpayers. This means capital allocation must be credible and carefully assessed. The government has rolled out several landmark initiatives—such as the Production Linked Incentive (PLI) schemes—to support industrial growth. While chemicals don’t yet have a dedicated PLI, we’ve extended strong support to ancillary sectors like APIs and pharmaceutical intermediates. We have also launched major infrastructure efforts, including the establishment of four Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) in Dahej (Gujarat), Barmer (Rajasthan), Kakinada and Visakhapatnam (Andhra Pradesh), and Paradip (Odisha), with capex ranging from Rs 40,000 crore to Rs 1 lakh crore. Significant reforms have also taken place in the labour ecosystem—streamlining 29 existing laws into four key labour codes. Additionally, we’ve identified 10 Plastic Parks across India with Rs 40 crore capex each to support downstream industry. Innovation in R&D and soft skill development are being actively promoted. In the agrochemical space, fertilizer pricing support (e.g., Rs 242 per 45 kg bag) is also creating positive momentum for manufacturers. There’s certainly a lot of work in progress and while challenges remain, we’re clearly moving in the right direction.”
The 5th edition of NextGen Chemicals and Petrochemicals Summit 2025 themed ‘Preparing for the future' witnessed massive attendance by leading industry experts and stakeholders from pan India. The 12 sessions at the two-day event were attended by a total of 85 speakers and more than 500 delegates.
The Country Partner of the event was Flanders Investment & Trade. The State Partner was Andhra Pradesh Economic Development Board (EDB). The Principal Partner was DCM Shriram Chemicals. The Gold Partners included Revvity Signals, Ingenero, Tubacex, GloGreen, BTG (A Voith company), Gujarat Fluorochemicals, Excel Industries, Epsilon Carbon, Aquapharm, HPCL, BPCL, and WoodField.
The Associate Partners were Zodiac Tank Container Terminals, ReGreen Excel and AnalytikJena. The Supporting Partner was Archroma.
Industry Association Partners of the event included AMAI, CropLife, Gujarat Chemical Association, and Agro Chem Federation of India.