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India should raise its petrochemical production capacity to meet growing domestic demand, reduce import dependence, and counter China’s dominance in the sector, a senior official from Reliance Industries said on the sidelines of an industry event late last week. The official called for substantial investment across various segments of the petrochemical sector to boost overall manufacturing capacity throughout the industry value chain.
Addressing the gathering, Vikram Sampat, Senior Vice-President for Strategy and Business Development in the Polyester Chain at Reliance Industries, said, “China is taking over the entire petrochemical industry. If we don’t act now, China will capture all the growth opportunities. China will continue to grow.” Sampat indicated that China’s expansion will come at the expense of other players, including India. Reliance’s current petrochemical output accounts for about 20 percent of its overall refining capacity.
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India’s petrochemical industry
India’s current petrochemical manufacturing capacity is estimated at 29.62 million tonnes per annum. With continuous expansion underway, the overall capacity is expected to reach 46 million tonnes by 2030. There is vast potential across the petrochemical value chain in India. With annual consumption ranging between 25 and 30 million tonnes, India—Asia's third-largest economy—exhibits a per capita consumption significantly lower than that of developed nations. This gap presents ample opportunities for demand growth and investment.
The Indian petrochemical industry is planning to add significant production capacities of both polyethylene (PE) and polypropylene (PP), anticipating a rebound in long-term demand from both domestic and international markets. If implemented as scheduled, these additions will not only reduce India’s reliance on imported petrochemicals but may also create a temporary oversupply, leading to price pressures in the near term.
The government, along with Public Sector Undertakings such as Oil and Natural Gas Corporation (ONGC) and Bharat Petroleum Corporation Ltd (BPCL), and private players like Haldia Petrochemicals, is committed to substantial investments. Currently, nearly US$ 45 billion worth of petrochemical projects are underway, with an additional US$ 100 billion projected to meet rising demand, in line with India’s transition to a lower-carbon future.
A KPMG report published in January 2025 estimates that India’s US$ 220 billion chemicals and petrochemicals sector contributes about 6 percent to the country’s gross domestic product (GDP) and employs over 5 million people. “India is a net importer of chemicals and petrochemicals, relying on imports for around 45 percent of petrochemical intermediates. With annual imports valued at approximately US$ 88.6 billion, chemicals and petrochemicals represent India’s second-largest import category. With over US$ 124 billion in planned investments, this dependency is expected to reduce significantly, playing a vital role in achieving the Viksit Bharat goal,” the report notes.
India’s per capita petrochemical consumption stands at approximately 12 kg—just one-third of the global average—highlighting substantial room for growth and investment. More importantly, the sector is evolving rapidly, becoming increasingly sophisticated in terms of products and processes, thereby necessitating further investment and targeted policy support to fully capitalize on value addition opportunities.
Investments
India’s petrochemical sector is projected to attract investments worth US$ 87 billion over the next decade, accounting for more than 10 percent of global petrochemical growth, according to Hardeep Singh Puri, Minister of Petroleum and Natural Gas. These investments are expected to come from both domestic and foreign sources to meet India’s rapidly growing demand, driven by infrastructure development.
Speaking at the ‘Roundtable on Petrochemicals’ during India Chem 2024 held in October in Mumbai, Puri estimated a total investment of US$ 142 billion (approximately ₹10 lakh crore) by the end of 2025 under the new Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) Policy 2020–2035. This target reflects the government’s long-term vision for the chemicals and petrochemicals industry.
Rising demand
Perceived to move in tandem with the broader economy, India’s petrochemical demand is projected to grow by 7 percent in the financial year (FY) 2024–25, driven by strong performance in the manufacturing and services sectors. While this projected growth is in line with the expansion seen in FY 2023–24, it remains notably lower than the sharp post-pandemic rebound recorded in the two preceding financial years.
According to the Chemicals and Petrochemicals Association of India, the apex industry body, India’s total petrochemical demand is forecast to reach 65 million tonnes in FY 2025–26—an increase of 5 percent from the previous year’s 62 million tonnes and 8 percent from 58 million tonnes recorded in FY 2023–24. In the two preceding years, total petrochemical demand had grown by 8 percent to 53 million tonnes and by 13 percent to 49 million tonnes, respectively.
This growth trajectory is supported by forecasts of robust economic expansion, largely fuelled by the government’s substantial infrastructure spending and a resurgence in post-pandemic consumer activity. After contracting in FY 2020–21 due to pandemic-induced disruptions to manufacturing and trade, India’s petrochemical consumption rebounded and has since outpaced the growth of gross domestic product (GDP). The current projections reflect a sustained increase in consumption across petrochemical value chains, indicating a healthy outlook for the industry.
China’s position
According to GlobalData, a London-based data analytics firm, China is likely to dominate the global petrochemical market in the mid-term, driven by economic growth, with both the highest number of new projects and the largest absolute capacity expansion. The country is forecast to account for 51 percent of Asia’s total capacity additions by 2030. Furthermore, the study reveals that China will lead global capacity growth, with additions totalling 245.5 million tonnes per annum (MTPA) by 2030. A major contributor to this expansion will be the Shandong Yulong Petrochemical Longkou Ethylene Plant 2, which is expected to add 5.2 MTPA by 2030.
Global petrochemical capacity is projected to grow significantly by the end of the decade. GlobalData estimates an increase from 2,214.9 MTPA in 2020 to 3,103.6 MTPA by 2030, registering a cumulative growth of 40 percent. Reliance Industries Ltd and Haldia Petrochemicals Ltd in India, along with China Petrochemical Corporation, are expected to be the top three companies globally in terms of planned and announced capacity additions by 2030.
China is currently the world’s largest exporter of key petrochemical products, including polyethylene terephthalate (PET) resins, purified terephthalic acid (PTA), polyvinyl chloride (PVC), and polyester fiber. Meanwhile, Beijing has mandated that the country’s total refining capacity remain below one billion tonnes annually by this year, up from the current level of approximately 960 million tonnes.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
