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The chemical manufacturing sector has started focusing more on climbing the value chain by producing high-value specialty chemicals to fulfil the rising global demand. Specialty chemicals influence our life in countless ways. From strengthening durability and performance of the automobile components, boosting crop yields and soil fertility, improving therapeutic effectiveness of medicines to even redefining the sensory appeal in cosmetics – they are shaping our day-to-day life with their unique properties and performance traits.
Unlike bulk commodity chemicals, specialty chemicals are more about functionality, precision, customisation and innovation. The demand is steadily growing for specialty chemicals from a range of end-user industries such as food, automobiles, pharmaceuticals, construction, textiles, cosmetics, to name a few. The continued expansion of end-use industries is diversifying the demand landscape for specialty chemicals.
India’s evolving chemical landscape
Specialty chemicals take up more than 50 percent of chemical exports in India (NITI Aayog report). However, when it comes to global market share, the specialty chemicals of India account for about 4 per cent whereas China enjoys a healthy 26 per cent (KPMG Report).
Although India has a long way to go to touch China’s trajectory, the country has the opportunity to further bolster its position in the global market as a leading specialty chemical manufacturing hub. India stands at an inflection point to capture larger global demand and at the same time build self reliance to cater to the growing domestic demand.
India has traditionally been known as a bulk chemical manufacturing country, supplying to the local markets and engaging in exporting of basic intermediaries while banking on cost competitiveness and volume-based output. However, over the last two decades, there has been a pivot from volume to value.
The chemical manufacturing sector has started focusing more on climbing the value chain by producing high-value specialty chemicals to fulfil the rising global demand. This shift gained momentum when China, the world’s chemical powerhouse, decided to curtail production capacity due to environmental restrictions. Global buyers were looking for new sourcing destinations, and the chemical manufacturing sector stepped up with agility, reliability, and R&D capabilities.
As a result, India emerged as a significant specialty chemical supplier for segments like oleochemicals, pigments, dyes, etc. The progress sets things up for India to further increase its share in the global market and spread out its specialty chemicals basket to include emerging sectors like EV battery materials, advanced coatings, semiconductors, etc. The need of the hour is to adopt a concerted approach to attain the target of garnering 12% global value chain share by 2040.
Drivers for sustained growth
The specialty chemicals market is being reshaped by a set of powerful megatrends. Apart from the broadening of end-use industries, rising urbanisation, a young consumer base, consumer awareness, evolving lifestyle and higher disposable incomes are fuelling premiumisation, customisation and aspirations across product categories. The scenario is creating steady domestic demand. At the same time, global companies are steadily diversifying supply chains in line with the China-plus-one strategy, which puts India in an advantageous position. In fact, chemical manufacturing companies are moving their base from Europe and North America to Asia to leverage cost advantages and emerging opportunities.
While China dominates with over 40 per cent global chemical market share, its anti-involution policy to control over-capacity is opening doors for India. Indian manufacturers, with competitive labour costs, process engineering know-how, abundant availability of human capital, enabling policy interventions in the form of National Chemical Policy and production-linked incentive scheme as well as improving compliance standards, are well positioned to capture this emerging space.
Scale-up strategy
For India to establish global leadership, the policy makers and other stakeholders need to assign equal importance to scale, innovation, sustainability and global standards. Capacity augmentation – be it private or public – needs to be directed towards setting up world-class facilities that meet stringent compliance parameters, involving safety to sustainability.
The development of Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), and dedicated cluster-based promotion programs under the Chemical Promotion Development Scheme (CPDS) are steps in the right direction. Having said that, these well-intentioned policy measures need to be ably supported by faster approvals, advanced infrastructure, access to feedstock and viability gap funding.
The dependence on imports of critical building blocks like C1, C2, and C3 hydrocarbons remains a vulnerability. A long-term strategy to secure raw materials through global tie-ups or domestic alternatives is essential.
Innovation and sustainability: the next frontier
Moreover, innovation is crucial to climb the value chain. For that, the industry and the government need to work together to invest in R&D, create the pathway for collaborating with global companies on product design and build intellectual property in niche high-performance segments such as advanced pharma intermediates, coatings, and electronic chemicals.
In addition, the industry needs to adopt green chemistry, circular economy models, and renewable energy. Aligning growth and innovation with sustainability will help companies to command premium and build long-term partnerships both in the domestic and global markets.
Road to global supremacy
The Indian specialty chemicals industry is expected to be valued over $60 billion by 2026 (EY Report). The global specialty chemical market size is likely to exceed $900 billion by 2028. Even modest increases in global and domestic market share can lead to significant value creation.
So, the coming years present a huge growth opportunity. With supportive policies, global supply chain shifts and domestic demand tailwinds, India’s specialty chemical industry is set to claim its supremacy at the global stage.
- Published On Sep 18, 2025 at 09:05 PM IST
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