By: Rahul Koul
Last updated : July 13, 2025 1:51 pm
Experts call for urgent interventions such as expansion of cracking capacity, investment in alternative feedstock routes, joint ventures and R&D-driven innovation
India’s petrochemical industry is at a pivotal crossroads. With a market potential estimated at over US$ 35–37 billion and a growing demand across key downstream sectors like agrochemicals, surfactants, and construction chemicals, the momentum is undeniable. Yet, a persistent feedstock bottleneck, particularly in intermediates like propylene, ethylene, and toluene, is hampering growth.
Industry experts discussed the topic recently at the sixth 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 ‘Petrochemicals: A Mega Opportunity for India’ was moderated by Sudeep Maheshwari, Partner, Kearney, noted the momentum in India’s petrochemical sector while flagging recent profitability concerns and policy implications.
“The petrochemical industry has seen significant activity over the past five years, with several new projects in the pipeline. While the sector experienced a strong growth trajectory, margins have notably declined over the past two years from their peak levels in FY2022. Looking ahead, sustaining momentum will require consistent capacity additions—ideally one new cracker every year. Despite India’s feedstock disadvantage, domestic production has remained competitive, largely supported by the 7.5%–10% import duty protection extended to the industry.”
Gaurang Mishra, Joint Director, Centre for High Technology, Ministry of Petroleum & Natural Gas, emphasized India’s strategic opportunity in petrochemicals, while underlining the structural shifts and policy challenges ahead.
"Petrochemical demand typically grows at 1.3 to 1.5 times GDP. For a developing nation like India, which is aiming for a $5 trillion economy in the coming decades, this presents a massive opportunity. While global per capita consumption is around 38 kg, India stands at just 30 kg, indicating significant headroom for growth. Today, India’s petrochemicals market is valued at around US$ 51 billion and is projected to reach US$ 350 billion by 2040. Globally, technologies like propane dehydrogenation (PDH) are gaining traction, with China advancing aggressively. Indian players are beginning to explore this space too, particularly in propylene, which could be a game-changer but will require substantial capital and strategic deliberation. Amid the ongoing energy transition, declining fuel demand is a reality. We must evaluate refinery capacity carefully, balancing domestic needs with global trends. Although India ranks fourth in global refining capacity, we still import 85% of our crude oil and 55% of natural gas. This highlights the need to turn dependency into opportunity. True self-sufficiency isn’t just about feedstock abundance, it’s about being feedstock smart. For instance, the Ministry of Coal’s push for coal gasification opens up avenues for producing methanol and DME. Moreover, greater integration between refineries and petrochemical complexes is a step in the right direction. Policy mismatches like higher import duties on building blocks compared to finished goods must also be addressed to build a resilient and competitive domestic petrochemical industry.”
Debashish Nandi, Sr. General Manager & Head – Acetone Marketing, Haldia Petrochemicals Ltd., reflected on India’s persistent feedstock deficit and the investment-led pathway to building self-reliance.
“A CII study conducted a decade ago identified several critical feedstock shortages in India, including propylene oxide, toluene, and others. In the alkyl phenol space, for example, there were only two producers; one shut down, and only one new player has emerged in the past 6–7 years. At Haldia Petrochemicals, we are addressing part of this gap by establishing a state-of-the-art phenol-acetone plant, with a combined capacity of 570,000 tonnes, comprising 350,000 tonnes of phenol and 220,000 tonnes of acetone, scheduled for commissioning by June 2026. In our experience, the creation of upstream capacity often catalyzes downstream demand. When a mother plant is established, ancillary industries naturally develop around it. Yet, India still faces significant shortfalls—around 500,000 tonnes in propylene oxide, 3 million tonnes in methanol, 2 million tonnes in acetic acid, and about half a million tonnes in toluene. With an average chemical demand growth of around 7%, India's capacity will likely double over the next decade. These segments represent major untapped opportunities. Since the 1990s, duty protection has steadily declined—from nearly 100% earlier to around 7.5% today. While the industry has adapted, often through restructuring and M&A, and both public and private players have invested in world-class facilities, challenges remain—particularly on feedstock availability. Unlike Gulf nations, which benefit from both duty protection and feedstock abundance, India’s growth trajectory will depend less on trade barriers and more on how we navigate our feedstock disadvantages through innovation, integration, and investment.”
Nilesh Kandalkar, General Manager – Petchem Process, Bharat Petroleum Corporation Ltd., highlighted how current global headwinds in petrochemicals are unlocking long-term opportunities for India.
“While the petrochemical sector faces its share of challenges, these are also gateways to significant opportunity. Globally, the six key building blocks—ethylene, propylene, butadiene, and others—are experiencing overcapacity, particularly in Europe and China’s earlier advantage was driven by relaxed regulations and low-cost labor. But that landscape has changed. Labor costs in China have increased by 7–8 times since 2020, while tightening environmental laws and U.S. tariffs have further strained their competitiveness. Similarly, decarbonization-related economic pressures in Taiwan and Japan are creating a shift in the global balance. This disruption opens up a window of opportunity for India. We are no longer followers—we are charting our own path. As one of the world’s largest and fastest-growing economies, having already surpassed Japan and possibly on track to overtake Germany, India is increasingly being seen as a viable alternative. However, the sector is facing margin pressures due to global overcapacity and dumping. Being a cyclical industry, we observed a peak around FY22–23, followed by a dip—but margins are expected to recover between 2028 and 2030.”Refineries are undergoing their own transitions, and there’s a lot we can learn and apply from those shifts to build a stronger petrochemical base. At a crude oil price of around US$60–70 per barrel—which remains economically viable—our raw material cost structure remains competitive. Looking ahead, India must continue to pursue an integrated ecosystem approach. Major investments from refinery players, combined with government support through initiatives like the PCPIR (Petroleum, Chemicals and Petrochemicals Investment Region) and the PLI (Production Linked Incentive) scheme, will be key enablers of long-term growth in this sector.”
Subikash Jena, Director, Payal Group, emphasized the critical challenges surrounding feedstock access in India’s petrochemical and specialty chemicals value chain.
“When discussing feedstocks for downstream chemical production, naphtha is often the starting point. According to PPSC data, India has a surplus of naphtha, yet due to quality variations, both imports and exports continue. Once naphtha is cracked, it leads to the production of key intermediates like propylene and ethylene, which are largely controlled by oil marketing companies (OMCs) and used internally for their own downstream integration. This internal consumption often sidelines the broader chemical and petrochemical industry, creating a bottleneck in feedstock availability. Despite the sector holding an estimated US$35–37 billion market potential and growing at 5–7% CAGR, the growth is constrained by these supply limitations. In fact, last year alone, the sector recorded a trade deficit of nearly US$22 billion. Take Oxo Alcohols for example, which are derived from propylene, we currently produce only about 50% of domestic demand, with the rest being imported. This imbalance highlights the broader inadequacy in upstream capacities. To address this, we need to expand cracking capacities and ensure a reliable supply of downstream intermediates to fuel specialty chemical production. We also need to focus on technology upgrades and explore alternative routes like PDH (Propane Dehydrogenation) or bio-based feedstocks. Investment in R&D, whether through equity infusion or strategic joint ventures, will be key to overcoming technological gaps. Reducing the trade deficit is essential—and with massive growth potential in agrochemicals, surfactants, construction chemicals, and plasticizers, the time to act is now.”
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.