India’s Chemical Exports Poised for Growth: Targeting USD 31 Billion in 2024-25

India’s chemical export sector is poised for a strong performance in 2024-25, with a targeted export value of USD 31 billion, according to CHEMEXCIL Director General Raghuveer Kini. The growth is supported by global demand for high-quality “Made in India” chemicals, driven by end-user industries such as pharmaceuticals, agriculture, and manufacturing. Here’s a detailed analysis:

Key Highlights of the Export Strategy

1. Strong Demand Drivers:
   • Healthy global demand from countries like Brazil, the US, Japan, and Saudi Arabia underpins the export target.
   • Improved quality and compliance with international standards, such as REACH, enhance India’s competitiveness.
2. Growth Trajectory:
   • Chemical exports during April-September 2023 increased by 4.57%, reaching USD 14.1 billion.
   • The second half of 2023-24 is expected to grow at a faster pace due to recovery in key markets like Brazil, where drought had previously dampened demand.
3. South America Focus:
   • Brazil alone accounts for USD 1 billion in annual exports, with improved agricultural conditions supporting higher growth this fiscal.

Challenges and Mitigation Plans

1. EU’s Carbon Border Adjustment Mechanism (CBAM):
   • The EU’s upcoming carbon tax (effective January 2026) targets carbon-intensive goods, including chemicals.
   • CHEMEXCIL is conducting awareness programs for exporters to navigate CBAM paperwork and compliance requirements.
2. Infrastructure Bottlenecks:
   • Poor infrastructure at major ports like Nhava Sheva and Mundra causes delays in shipments.
   • Suggestions include expanding road networks, improving maintenance, and resolving traffic congestion near ports.
3. Payment Mechanism Issues:
   • Sanctions on Russian banks (e.g., Sberbank) disrupt the rupee-ruble trade mechanism for exports to Russia.
   • CHEMEXCIL proposes increasing the number of authorized banks to facilitate smoother transactions.

Opportunities for Expansion

1. Sustainability & Compliance:
   • India’s chemicals adhere to international environmental standards, strengthening their position in regulated markets like the EU, US, and Japan.
   • Investments in sustainable production will enhance competitiveness under CBAM and similar frameworks.
2. Sectoral Growth Areas:
   • Increasing demand in pharmaceuticals for intermediates and APIs.
   • Rising adoption of Indian agrochemicals in agriculture-dependent markets like Brazil and Africa.
   • Growing global focus on cosmetics and personal care chemicals from India.
3. Trade Facilitation:
   • Addressing infrastructure and payment issues could streamline exports to challenging markets like Russia and African nations.

Future Outlook

India’s chemical export sector is well-positioned to achieve its USD 31 billion target, with high demand, quality improvements, and strategic market recovery. However, addressing infrastructure limitations and staying ahead of compliance requirements, such as the EU’s carbon tax, will be critical to sustaining long-term growth.