News and Articles

• India’s petrochemical consumption growth expected at 6-7% per year.
• Strong growth in consumption driving efforts to reduce import dependence.
• Polypropylene capacity expected to increase 1.8 times by FY30, reducing reliance on imports.
• Cost competitiveness will be crucial for domestic petrochemical producers.
• Global oversupply and competition from cheaper Chinese imports impacting domestic margins.
• Modest profitability improvement in H1FY26 due to lower input costs from falling crude oil prices.

India’s domestic petrochemical consumption is projected to maintain a strong growth rate of 6-7 percent annually in the medium term, driven by the ongoing expansion of the economy and sustained demand from downstream industries, according to a report by CareEdge Ratings. This robust consumption growth has highlighted the need to reduce reliance on imports, making it a strategic priority for India’s petrochemical sector. In response, both public and private sector companies have unveiled ambitious plans to expand their capacity across key petrochemical segments.

The report indicated that the consumption of petrochemicals in India is expected to grow steadily, supported by economic growth and increasing demand for downstream products. Specifically, it noted that the capacity for polypropylene (PP) is anticipated to increase by 1.8 times from FY25 to FY30, which is significantly higher than the 1.4 times growth projected for demand over the same period. This expansion could substantially reduce India’s reliance on imports, potentially eliminating import dependence on polypropylene by FY30.

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However, the report also stressed that while capacity expansion is critical, maintaining cost competitiveness will be crucial for the success of domestic petrochemical companies. The ability to achieve reasonable returns on large capital investments will depend on operational efficiency, global market conditions, and pricing dynamics. In the short term, the sector is expected to face challenges as domestic prices and spreads remain weak due to a global oversupply of petrochemical products.

CareEdge Ratings also pointed out that global petrochemical capacity additions, particularly in China, have been substantial in recent years. This has created a demand-supply imbalance, leading to weaker product spreads and affecting the profitability of Indian manufacturers between FY23 and FY25. Additionally, domestic players have faced intense competition from cheaper imports, especially from China, which has impacted margins.

The report noted a modest improvement in operating profitability during the first half of FY26, primarily due to lower input costs, resulting from a decline in crude oil prices. Consumption of key petrochemicals such as polypropylene, polyethylene (HDPE, LDPE, LLDPE), polyvinyl chloride (PVC), aromatics, and elastomers has seen healthy growth in India. However, domestic capacity additions have been insufficient to keep pace with rising consumption, leading to a high reliance on imports. To address this gap, domestic companies have outlined significant expansion plans.

The report concluded by emphasizing that while consumption growth is strong, achieving optimal profitability will depend on enhancing cost competitiveness, favorable global market conditions, and government support, especially as global petrochemical capacity continues to grow.

Suggested Titles:

• India’s Petrochemical Sector Eyes Growth Amid Rising Consumption
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