India’s chemical manufacturing industry is rapidly emerging as a critical pillar of both domestic industrial development and global supply chain diversification. With a market value of USD 232 billion in FY2022, the chemical manufacturing in India expected to grow at a CAGR of 11-12% to reach USD 304 billion by FY2025, according to the India Brand Equity Foundation (IBEF). For global B2B buyers, this signals not just scale — but capability, innovation, and reliability.

India’s Competitive Edge in the Chemical Manufacturing Ecosystem

India is the 6th largest producer of chemicals globally and the third largest in Asia. Over 80,000 commercial chemical products are produced domestically, spanning basic, specialty chemicals in India, and agrochemical categories. The sector contributes around 7% to the national GDP and 11% to the total industrial output, reinforcing its central role in India’s economic infrastructure.

Several factors contribute to this robust performance:

• Cost Advantage: India offers production costs 20–25% lower than the US and EU due to low labor and infrastructure costs.
• Strategic Location: Its proximity to Southeast Asia, the Middle East, and Africa allows cost-effective exports.
• Talent Pool: Over 2 million professionals are employed in the Indian chemical sector, with a significant proportion holding degrees in chemical engineering or applied sciences.

A Surge in Specialty and Performance Chemicals

The specialty chemicals India segment, currently valued at USD 40 billion, is expected to double to USD 80 billion by 2026, as reported by McKinsey. This growth is fueled by rising demand in end-user industries like automotive, packaging, construction, personal care, and agriculture.

One of the most in-demand subsets includes adhesives, coatings, water treatment chemicals, and textile auxiliaries, where performance, consistency, and sustainability are key.

B2B companies globally are now exploring India not just as a volume supplier but as a source of customizable, high-performance, and REACH-compliant B2B chemical solutions.

B2B Trends Driving Demand for Indian Chemical Products

• Contract Manufacturing and OEM Services: Indian chemical companies are increasingly offering private-label manufacturing and end-to-end formulation support under NDAs, particularly for EU and North American clients.
• Export-Led Growth: India’s chemical suppliers stood at USD 30 billion in FY2023, with the US, China, and Brazil among the top destinations. The government aims to boost this figure to USD 50 billion by 2027.
• Sustainability and Green Chemistry: Indian manufacturers are investing in bio-based chemicals, solvent-free formulations, and zero-discharge production, aligning with global ESG frameworks.

Policy Support and Infrastructure Development

The Indian government has introduced several supportive policies that strengthen its B2B chemical capabilities:

• 100% FDI is permitted under the automatic route for most chemical segments (excluding hazardous chemicals).
• The Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) offer cluster-based development zones to support industrial scaling.
• Introduction of PLI (Production Linked Incentive) schemes for specialty chemicals India is expected to attract INR 10,000+ crore in new investments.

Additionally, ports, highways, and inland logistics are being upgraded to reduce lead times and improve export efficiency — an essential factor for time-sensitive B2B shipments.

Challenges Being Addressed

Despite the positive outlook, the sector faces some hurdles:

• Dependency on Imports for Feedstock: Over 40% of raw materials for specialty chemicals are imported, primarily from China. However, efforts are underway to localize production.
• Compliance Delays: Regulatory bottlenecks, especially around environmental clearances, have historically slowed down project timelines. Streamlining is now being prioritized under the National Chemical Policy.
• Technology Gaps: While India excels in formulation, R&D for high-end chemical synthesis is still developing. Strategic JV models with global players are helping bridge this gap.

Why B2B Buyers Should Consider India for Chemical Sourcing

For international B2B buyers, India offers a rare combination of scale, skill, and cost-efficiency. Companies across Europe, North America, and Southeast Asia are turning to Indian partners for:

• Toll and contract manufacturing at scale
• REACH-compliant specialty chemicals
• OEM formulation and private label services
• Long-term supply chain resilience

As global companies look to reduce supply chain risks, chemical manufacturing in India provides a resilient, quality-assured, and economically viable option.

Innokan is a leading Indian chemical manufacturer specializing in B2B adhesive and specialty chemical solutions. The company adheres to international quality standards and offers scalable, contract-based formulations for global clients.