India’s consumption of major petrochemicals has grown steadily in recent years and is expected to continue its upward trajectory, as per a report by CareEdge Ratings.

 

Yet, domestic capacity additions for the same -- including polymers like Polypropylene (PP), High-Density Polyethylene (HDPE), Low-Density Polyethylene (LDPE), Linear Low-Density Polyethylene (LLDPE), Polyvinyl Chloride (PVC), aromatics, and elastomers -- have lagged, leaving India heavily reliant on imports to meet rising demand.

 

Globally, China has dominated recent petrochemical capacity additions, creating a supply glut that outpaced demand. “Operating profitability, however, improved marginally in H1FY26, largely due to lower input costs driven by a decline in crude oil prices,” the report notes. Indian manufacturers have faced three years of intense pressure from cheaper imports, particularly from China.

 

Imports have soared, rising from an average of 6 million tonnes during FY19–FY22 to about 9 million tonnes in FY23–FY24, driven by strong domestic demand, limited local capacity, and cheaper global supplies. 

 

This surge dented domestic capacity utilization, while FY25 saw a slight decline in imports after the government imposed a Quality Control Order (QCO) on polyethylene in January 2024. The QCO was later rescinded in November 2025 to boost domestic supply and support downstream competitiveness, which may trigger a medium-term influx of imports.

 

India remains heavily dependent on imports for PVC, Polypropylene, and Polyethylene. About three-fourths of PVC demand is met through imports, while PP and PE rely on imports for roughly a fifth of domestic consumption, as per CareEdge Ratings.

 

To reduce import dependence, domestic players have announced ambitious expansion plans. Polypropylene capacity is set to rise 1.7x, while PVC capacity could increase 2.5x relative to current levels. Despite these plans, significant ramp-up timelines mean imports will remain crucial in the near term.

 

“The domestic market remains reliant on imports in the near term to meet domestic requirements,” the report observes.

 

Spreads for key petrochemical products surged during FY21–FY22, fueled by pandemic-era demand and low feedstock costs. However, oversupply from China’s aggressive capacity additions has kept spreads subdued for the past three and a half years. 

 

Global ethylene capacity, for instance, jumped from ~183 million tonnes in 2019 to ~231 million tonnes by the end of CY24, with China contributing as much as 66% of the additions. While falling crude prices have slightly improved profitability in H1FY26, sustaining margins remains a challenge.

 

“India’s petrochemical consumption growth is expected to remain robust at 6–7% per annum in the medium term, driven by economic expansion and downstream product demand. Against this backdrop, reducing reliance on imports is viewed as a key strategic aim,” said Rabin Bihani, Associate Director, CareEdge Ratings. 

 

Polypropylene capacity alone is expected to rise 1.8x between FY25–FY30, outpacing projected demand growth of 1.4x and potentially eliminating import dependence by FY30.

 

However, cost competitiveness will remain critical. “Prices and spreads in the domestic petrochemical sector are expected to remain weak in the near term due to global oversupply. 

 

"While there has been marginal recovery in spreads in H1FY26 which could support ~200 bps improvement in EBITDA margin in FY26, sustained recovery and achievement of optimum operating profitability would hinge more on their cost competitiveness, global demand-supply scenario and need-based support from the Government given sizeable global capacity additions especially by China, which has impacted the profitability of Indian manufacturers for an extended period of time,” said Hardik Shah, Director, CareEdge Ratings.