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Home Chemical Projects

Is India Ready for the $2 Trillion Chemical Industry? What Startups You Must Know

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July 7, 2025
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Table of Contents

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  • A Defining Moment for Indian Manufacturing
  • Foundations of India’s Chemical Understanding
    • Related: How to Launch a Specialty Chemical Manufacturing Unit in India: Opportunities and Challenges
  • Key Components to Driving Growth
    • China+1 Strategy
    • Domestic Demand Expansion
    • Government Policy Support
    • Specialty Chemicals Export Surge
  • Five-Year Demand Projections: India’s Chemical Industry Growth Outlook
  • Manufacturing Process Outline: Key Insights for Startups
    • General Steps in the Manufacturing Process:
      • Sourcing the Required Raw Materials
      • Chemical Reaction Phase
      • Purification Steps
      • Formulation and Blending
      • Quality Control and Certification
      • Effluent Treatment and Environmental Safety
    • Related: How Chemical Manufacturing is Adapting to Sustainable Chemical Manufacturing Practices
  • High-Growth Opportunities: Where the Real Gaps Lie
    • Designated Areas with Further Potential Focus for New Startups:
      • Specialty Chemicals
      • Green and Bio-Based Chemicals
      • Contract Manufacturing Services
      • Import Substitution
  • Navigating Challenges: What Founders Must Prepare For
    • Key Challenges in the Sector:
      • Regulatory Delays and Compliance
      • Infrastructure Gaps
      • Shortage of Skilled Employees
      • Supply Chain Gaps
  • How NPCS Assists Entrepreneurs in the Chemical Manufacturing Sector
    • How NPCS Helps:
      • By Preparing Comprehensive Techno-Economic Feasibility Reports
      • Completing All Manufacturing Aspects
      • Determining Startup Feasibility
    • For more information check our Project Reports
  • Conclusion: India’s Chemical Future Needs Smart, Early Movers
    • Which business to start? How to choose a business idea?

A Defining Moment for Indian Manufacturing

The change in India’s chemical industry is transforming at a breakneck speed. Due to its extensive industrial base, India is being considered a key player in the international chemical value chain. In addition to this, global demand is shifting from China to India and other manufacturing hubs. However, with estimates suggesting that the Indian chemical industry could reach up to $1 trillion by the year 2040—and possibly even double that—the question arises whether India is fully prepared to embrace the $2 trillion chemical economy?

This projection is not just an industrial benchmark. It provides Indian startups, MSMEs, and investors with strategic directions to establish a prominent position in one of the most rapidly evolving and diverse sectors. It is critical to note that immense potential comes with a host of new challenges. Here, the complex structure of the sector’s demand, production models, technology landscape, regulatory ecosystem, and ever-changing regulatory environment must be considered as well.

Foundations of India’s Chemical Understanding

Covering a range of basic chemicals alongside petrochemicals, India’s chemical industry is sector is one of the country’s most important industries. Examples of the products the industry serves include agrochemicals, polymers, and specialty formulations. This industry also enables the growth of many downstream sectors which feature agriculture, automotive, pharmaceuticals, food processing, construction, and textiles.

The chemical industry supports India’s economy significantly, contributing about seven percent (around $240 billion) of the GDP alongside having more than 80,000 commercial products. The sector is heavily integrated with the global supply chain and receives a lot of foreign investment (FDI), showing that it also has potential for overseas consumption. India is increasingly being viewed as a processing and exporting center for chemicals.

Estimates suggest that the world will have an unprecedented demand for chemical products, opening the door for India to become one of the leading manufacturing powerhouses. Digitization, as well as sustainability initiatives from the government, are a big help in this vision. Although there are foundational gaps that need to be addressed, I believe reaching a $2 trillion goal is ambitious but achievable.

Related: How to Launch a Specialty Chemical Manufacturing Unit in India: Opportunities and Challenges

Key Components to Driving Growth

China+1 Strategy

India will benefit from being a low-cost manufacturer. As geopolitical tensions rise around China, many companies are shifting away from Chinese chemical suppliers. India is quite favorable due to its strategic location and cost competitiveness which makes it a prime candidate as a receiving country.

Domestic Demand Expansion

The need for construction and modernization fosters great demand for chemicals, multiplied by other growing sectors such as electronics and agriculture. The chemical value chain also benefits from sustained demand from the health sector, enabling even more expansion for the chemical industry.

Government Policy Support

Comprehensive policy reform such as 100% FDI allowance, development of industrial corridors, and regulatory streamlining is motivating both large and startup ventures.

Specialty Chemicals Export Surge

India is now poised to specialize in niche and value-added chemicals, leading to rapid growth in exports, which are projected to reach over 10% CAGR in the next five years.

Five-Year Demand Projections: India’s Chemical Industry Growth Outlook

For entrepreneurs, it is essential to dig deeper beyond marketing slogans to understand market evolution in order to glean the scope of opportunity. Using secondary research and industry trends, we present projected demand estimates of key chemical segments over the next five years.

Chemical Segment2025 (₹ Cr)2026 (₹ Cr)2027 (₹ Cr)2028 (₹ Cr)2029 (₹ Cr)
Bulk Chemicals520000565000615000670000730000
Petrochemicals410000460000515000580000650000
Specialty Chemicals390000450000525000620000725000
Agrochemicals120000135000150000165000180000
Dyes and Pigments8000092000105000120000135000
Total Industry Size15200001702000191000021550002420000

Numbers demonstrate multivariate growth, indicating compounding demand in the consumer and industrial sectors. Additionally, it accentuates the need for increased domestic manufacturing. Startups see an opportunity in these gaps that can be strategically filled with contract services, and innovation-driven solutions.

Manufacturing Process Outline: Key Insights for Startups

Starting a chemical manufacturing business is more than just setting up reactors for compound mixing. It involves thorough knowledge of process technology and equipment, material handling safety, and environmental concerns.

General Steps in the Manufacturing Process:

Sourcing the Required Raw Materials

For specific products like surfactants, pigments, resins, or agrochemicals, key inputs include:

  • Petrochemical Derivatives: Ethylene, benzene, propylene
  • Inorganic Minerals: Sulfur, limestone, chlorine
  • Solvents, acids, and catalysts

Chemical Reaction Phase

This is a transformation step conducted in batch or continuous reactors. It can include:

  • Heating and cooling under controlled pressurization
  • Use of catalysts for improved reaction efficiency
  • Real-time monitoring to mitigate contamination or explosion risks

Purification Steps

Post reaction, the chemical mixture undergoes treatment, through:

  • Distillation
  • Crystallization
  • Filtration or centrifugation

These techniques enhance product quality by removing impurities and recovering solvents.

Formulation and Blending

The product is then:

  • Blended into its commercial form (paste, liquid, powder)
  • Adjusted for pH, viscosity, texture, and color
  • Packaged according to market application and customer specifications

Quality Control and Certification

Each batch undergoes lab testing for:

  • Purity, consistency, and contamination
  • Compliance with ISO, REACH, and BIS norms
  • Export certification if required

Effluent Treatment and Environmental Safety

Compliance with Zero Liquid Discharge (ZLD) mandates and local pollution control norms is critical:

  • Install ETP and STP units
  • Maintain chemical handling logs
  • Schedule regular audits

Related: How Chemical Manufacturing is Adapting to Sustainable Chemical Manufacturing Practices

High-Growth Opportunities: Where the Real Gaps Lie

Instead of competing in heavily saturated markets such as commodity chemicals, new ventures have a better chance of meeting gaps in niche, small, and high-margin areas.

Designated Areas with Further Potential Focus for New Startups:

Specialty Chemicals

These include performance additives, textile auxiliaries, electronic chemicals, and cosmetic ingredients. They are often small in volume but can be sold for a high price.

Green and Bio-Based Chemicals

Due to rising ESG concerns, the following are in demand:

  • Biodegradable Ethanol Surfactants
  • Solvents Derived from Ethanol
  • Colorants and Antioxidants Derived from Plants

Contract Manufacturing Services

As large corporations outsource production, Indian small to medium-sized companies can provide:

  • Custom Synthesis Services
  • Intermediate Toll Manufacturing
  • Private Labeling Co-Branding Services

Import Substitution

India remains a major importer of dyes, APIs, and plasticizers. Startups can gain favorable policies and market positioning by reverse engineering these compounds and localizing them.

Navigating Challenges: What Founders Must Prepare For

While opportunities are plenty, there is a high degree of complexity and risk that founders must be ready for in the sector.

Key Challenges in the Sector:

Regulatory Delays and Compliance

Obtaining environmental clearance from the Ministry of Environment and Forests (MoEF) along with the pollution control boards can take as long as a year. Further, navigating state-specific regulations makes it worse.

Infrastructure Gaps

Some industrial regions still lack:

  • Round-the-clock electricity and water supply
  • Safe systems for chemical waste
  • Facilities for storing hazardous chemicals

Shortage of Skilled Employees

Small towns often lack:

  • Lab technicians
  • Process engineers
  • Fire safety professionals

Supply Chain Gaps

Margins can be strained by fluctuating prices of raw materials globally. Therefore, efficient sourcing and long-term vendor contracts are vital.

How NPCS Assists Entrepreneurs in the Chemical Manufacturing Sector

Every entrepreneur, whether an experienced industrialist or a newbie, requires a business strategy that is compliant with regulations and technical standards. NPCS provides detailed guidance at this stage.

How NPCS Helps:

By Preparing Comprehensive Techno-Economic Feasibility Reports

These cover emerging opportunities along with existing ones by tracking the market progress and evaluating rival businesses as well as their chemical industry product licensing prerequisites.

Completing All Manufacturing Aspects

Their reports provide with:

  • Manufacturing process diagrams
  • Inventory Collections
  • Utilities and plant layout drafts

Determining Startup Feasibility

NPCS allows founders to:

  • Validate the market premise of the idea
  • Draft proposals for funding and permits
  • Make decisions about land and scale of operations

Their experience enhances venture opportunities while safeguarding technical clarity, thus helping the founders better navigate complexities.

For more information check our Project Reports

Conclusion: India’s Chemical Future Needs Smart, Early Movers

India’s emergence as a $2 trillion chemical economy is not a question of if, but when. The pieces are already in place—policy momentum, global demand shifts, evolving domestic infrastructure, and skilled human capital. What remains is the execution capacity of India’s entrepreneurs.

Startups with the vision to innovate, the patience to comply, and the agility to adapt will lead this transformation. Whether it’s through contract manufacturing, green chemistry, or import substitution, the future of India’s chemical industry will be shaped by those who start today.

And as this future unfolds, partners like Niir Project Consultancy Services stand ready to ensure that these ventures are not just ambitious—but also viable, scalable, and globally competitive.

Which business to start? How to choose a business idea?

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