The chemicals sector is amongst the most important manufacturing industries across the globe, contributing to improvement in productivity, efficiency and quality across several end-use industries. Over the last two decades, the global chemical industry has been concentrated largely in China, EU and U.S. With the outbreak of the COVID-19 pandemic, there was a sharp decline in global production driven by demand slowdown due to lockdowns as well as supply chain disruptions in both feedstock and end-product movement.

India showcased continuous growth and outperformed the global industry in the past decade driven by strong domestic demand, export competitiveness and an enabling ecosystem owing to:

  • Manufacturing growth driven by usage in construction, automotive, food and beverage (F&B) and consumer products
  • Robust growth expected in packaging across consumer and industrial sectors driven by increase in domestic demand
  • Government setting up PCPIRs (Petroleum, Chemicals and Petrochemicals Investment region) to promote investment
  • Rising competitiveness of domestic production, investments in R&D and protection from cheap imports
  • Increased exports to EU and the U.S. upon recognition as a reliable source for chemicals
  • Significant investments in production of high-growth downstream specialty chemicals with substantial export potential.

As a result, global companies have turned towards India to ensure continuous supply of high-quality chemicals at competitive prices, not just to meet domestic demand in India but also to serve export markets. India’s chemical industry is expected to grow at CAGR of 7 to 8 per cent to reach ~USD160 bn by 2025 and account for 3-3.5 per cent of the global chemical industry according to KPMG in India’s analysis.

Chemical Infograph

KPMG in India analysis

Note: Constant exchange rate of 1 EUR = 1.18USD has been used across years 

Key growth drivers

De-licensed and de-regulated industry

  • 100 per cent FDI is allowed in the Indian chemical industry through the automatic route
  • De-licensed manufacturing of most chemical products (organic and inorganic), dyestuffs and pesticides.

Growing chemicals infrastructure

  • Dedicated regions in four states of India: Tamil Nadu, Gujarat, Andhra Pradesh and Odisha spread over 250 sq. km. with manufacturing facilities, logistics support, and other services2
  • Plastic parks to synergise capacities and improve efficiencies.

Financial support and subsidies

  • R&D incentives and weighted tax deduction for private and sponsored research expenditure at national labs and institutes
  • Various export, state, and area-based incentives (SEZ/NIMZ).

Increasing availability of raw material

  • Investments to increase local production to reduce import dependence

Location advantage and FTAs

  • India is centrally located in the trans-Indian Ocean routes connecting Europe with east-Asian countries
  • Proximity to Middle East provides access to petrochemical feedstock at a low cost
  • India has 13 executed FTAs and 16 under negotiation, which is more than any other SEA country.3 

How can KPMG in India help?

A leading professional services firm

  • Currently servicing more than 140 clients in the chemicals industry
  • A strong advisory practice that is well positioned to support clients across a gamut of strategic initiatives like product-market strategy development, major project advisory, M&A and deals advisory, supply chain optimisation and cost optimisation among others
  • Robust credentials across areas like ESG and decarbonisation, which are increasingly gaining strategic importance among chemical manufacturers
  • Digital transformation is also an integral part of our offerings, helping transform business models, operations, customer experiences and empowering workforces in the chemicals sector
  • We are part of a global network: KPMG International’s member firms serve 92 of the 110 chemicals companies listed on the Chemical Week, Billion Dollar Club list.


  1. KPMG in India analysis based
  2. PCIPR policy report, FICCI, May 2019
  3. Supply Chain Realignment, KPMG in India, May 2020

Guidance note to readers: We have relied on secondary sources which are considered reliable but have not independently verified the data and we will not incur any liability based on the content of the website