By: Vikram Handa
Last updated : July 12, 2025 9:24 am
By enabling vertical integration of upstream processes, industries can significantly mitigate the Scope 3 emissions that account for approximately 79.93% of total emissions in the chemicals industry
As the country navigates the dual requirements of economic growth and environmental sustainability, the need to dissociate industrial expansion from carbon emissions has never been greater. This is especially true for the carbon black sector in India, projected to grow at a CAGR of 9.52% during 2025–2034. India’s chemical industry must make prudent, sustainable practices a top priority to match its remarkable pace of growth.
As we renew our commitment to environmental stewardship, the government’s long-term low-carbon development strategy (LT-LEDS) comes into focus. Among key transitions needed for industrial decarbonization, backward integration can propel India’s sustainable industrial evolution along with energy and material efficiency.
Catalyzing Industrial Circularity
Backward integration refers to acquiring or internally developing supply chain operations, gaining end-to-end control over production lifecycles while optimizing resource use through recycling and low-carbon technology integration. While traditionally associated with cost reduction and supply chain stability, backward integration has emerged as a potent tool for enabling circularity, especially relevant in India’s climate action arsenal for accelerating growth amidst constrained resources.
This is particularly significant for an emission-intensive sector like the specialty chemicals and carbon black industry, where inefficiencies at any stage can lead to significant environmental costs.
By enabling vertical integration of upstream processes, industries can significantly mitigate the Scope 3 emissions that account for approximately 79.93% of total emissions in the chemicals industry. Given that product quality, regulatory compliance, and environmental responsibility are non-negotiable, backward integration can reduce carbon footprint while maintaining quality, cost-effectiveness, and global competitiveness.
Enabling Policy Ecosystems
To realize its full potential, backward integration will require a robust, policy-supported environment that encourages industries to reconfigure their supply chains and look into sustainable raw material sourcing. Besides, access to low-interest green financing and carbon credits can further lower the entry barrier for small and medium enterprises looking to adopt this model. In addition, the inclusion of integrated, environmentally compliant projects into the scope of production-linked incentive (PLI) scheme for the manufacturing sector will be beneficial.
Building such integrated industrial complexes takes a top-down approach and many countries that have successfully implemented backward integration strategies offer a valuable blueprint. South Korea’s Eco-Industrial Park (EIP) program encourages companies to utilize each other's by-products and waste materials, while Germany’s Carbon Contracts for Difference (CCfD) scheme is allocating up to €3 billion to incentivize low-carbon technology adoption and aiming to reduce emissions by 17 million metric tons over 15 years.
Charting the Path Forward
Achieving this scale in India will require technological, operational, and financial innovation. From bio-based feedstocks and green hydrogen integration to AI-led energy optimization and closed-loop recycling systems, the possibilities for industries to invest in clean technologies are immense. However, realizing them will require a synergistic approach involving public-private partnerships and cross-sector technology diffusion initiatives.
As the country strives for sustainable innovation through strategic Make in India targets, backward integration can help industries build a truly Atma Nirbhar Bharat. Ultimately, the future of Indian industry lies not just in expanding capacity but in rethinking how we manufacture and grow as an environmentally conscious leader.