India’s chemical industry is expected to benefit significantly from the country’s Free Trade Agreements (FTAs) with the United States and the European Union, which will improve export competitiveness and strengthen India’s position in global supply chains. According to a report by Centrum, reduced tariffs and improved market access under these trade agreements will help Indian chemical companies compete more effectively with global players. The FTAs are expected to provide Indian companies with a level playing field relative to other developing nations and offer a cost advantage over Chinese competitors due to tariff differentials. This could help Indian manufacturers expand their global presence and increase exports to major international markets. The agreements are also likely to improve pricing competitiveness.
The report noted that the sector’s outlook will vary depending on individual company strengths, product portfolios, and operational efficiency. Companies with diversified product offerings, specialised chemical capabilities, and strong execution strategies are expected to benefit the most from the improved trade environment. Increased clarity around trade policies also provides businesses with better visibility into planning and greater investment confidence. Global market conditions, particularly China’s chemical production polices, could also influence India’s growth opportunities. China’s overcapacity has historically pressured global prices and reduced profitability. However, China’s efforts to address excess production could help restore the supply-demand balance, improving pricing conditions and profitability for Indian chemical manufacturers over the next few years.
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Despite some uneven performance across the sector in recent quarters, several positive factors are supporting growth. These include stable raw material costs, lower freight expenses, and the ramp-up of new production capacities backed by confirmed orders. These developments are helping chemical companies improve efficiency and strengthen their market position. Overall, India’s FTAs with the US and EU are expected to play a crucial role in strengthening the chemical sector, boosting exports, enhancing competitiveness, and positioning India as a key global manufacturing hub in the coming years.
