New Delhi [India], March 17 (ANI): India's chemical industry is expected to sustain strong growth momentum despite mounting global pressures, with its structural advantages and emerging demand drivers as key tailwinds.

According to a recent report by McKinsey, the global chemicals sector has entered 'a structurally different operating environment,' marked by overcapacity, weak demand, and pricing pressures. These dynamics have begun to weigh on Indian players as well, softening near-term performance.

However, the outlook for India remains optimistic. 'India's strong domestic demand, competitive cost base, and expanding role in global value chains offer structural resilience,' the report notes, underscoring the country's relative advantage in a challenging global market.

The report says India's chemical market is projected to grow at 8-9 per cent CAGR, reaching USD 230-255 billion by 2030, up from the current USD 155-165 billion.

The report highlights that the Indian chemical industry 'could continue to outpace GDP growth,' driven by both traditional consumption and emerging sectors.

Growth is expected to be supported by rising demand from consumer goods and packaging, infrastructure and construction expansion and increased industrial activities.

At the same time, companies are being encouraged to look beyond domestic markets. 'Trends indicate a significant growth opportunity for companies willing to... scale capabilities to compete as global suppliers,' the report states.

A major driver of future growth will be new industrial ecosystems. The report identifies eight high-growth arenas, including construction, semiconductors, renewables, and automotive, that 'could add USD 30 billion to USD 35 billion to chemical revenues by 2030.'

These sectors are benefiting from strong policy support, localisation efforts, and capital investments, creating a multiplier effect on chemical demand.

India's USD 31 billion chemical trade deficit is emerging as a major opportunity for domestic players.

The report notes that this gap 'highlights a substantial import substitution opportunity,' particularly in segments such as inorganics and polymers. Building local capacity in these areas could not only reduce dependence on imports but also strengthen global competitiveness.

However, despite the strong long-term outlook, the industry is facing short-term headwinds. Revenue growth between FY2019 and FY2025 has remained modest at 6-7 per cent, while 'EBITDA margins have compressed across multiple segments.'

The report also points to growing divergence within the sector: 'A limited set of winners combine double-digit growth with margin expansion, while the broader cohort remains mired in modest growth with flat margins.'

Additionally, global factors, particularly China's rising exports, continue to exert pressure. Increased supply and falling prices have 'intensified competition... leading to sustained margin erosion for Indian producers.'

As the industry navigates this transition, companies are being urged to rethink growth strategies. The report emphasises that 'profitable growth is likely to depend on sharper choices around portfolios, capabilities, capital allocation, and execution.'

Rather than relying on volume expansion, future success will hinge on moving into speciality and differentiated segments, strengthening innovation and R&D, building global operating capabilities and leveraging digital and AI-led efficiencies

The coming decade, the report suggests, will reward those who combine scale with strategy, transforming India into a more prominent force in the global chemicals landscape. (ANI)