$220 billion sector now, petrochem has potential to grow to $1 trillion by 2040
The government’s ambitious Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) Policy 2020-35 aims to attract a combined investment of ₹10 lakh crore (approximately $142 billion) by 2025, further bolstering the sector’s development.
As India strives to achieve its ambitious target of becoming a $5 trillion economy and a developed nation by 2047, the petroleum and petrochemical sector is emerging as a cornerstone of this journey. Acting as the backbone for key industries such as agriculture, infrastructure, manufacturing, and services, this sector holds immense potential to drive economic growth and prosperity.
Currently, the chemical industry contributes approximately 6% to India’s GDP and provides employment to over 5 million individuals, highlighting its critical role in the nation’s economic framework. With the market size of the Indian chemicals and petrochemicals sector valued at $220 billion, projections indicate significant growth to $300 billion by 2025 and a potential to touch an extraordinary $1 trillion by 2040.
This promising growth trajectory is accompanied by expectations of investment inflows exceeding $87 billion over the next decade, representing over 10% of global petrochemical growth. The government’s ambitious Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) Policy 2020-35 aims to attract a combined investment of ₹10 lakh crore (approximately $142 billion) by 2025, further bolstering the sector’s development.
The rising middle class in India is a key driver of the demand for a diverse range of petrochemical products. Coupled with the government’s focus on clean energy initiatives, this demand is paving the way for innovative petrochemical solutions. The sector is not just an enabler of industrial growth but also a vital player in India’s energy transition, with the potential to align with global sustainability goals and position the country as a leading hub for petrochemical production on the international stage.
To harness this potential, experts emphasize the need for strategic interventions. Infrastructure development is crucial, with a focus on accelerating the establishment of PCPIRs and plastic parks equipped with world-class facilities. Policy reforms such as enabling 100% Foreign Direct Investment (FDI) through automatic routes can create an investor-friendly environment to attract global players. Sustainability remains a key priority, and adopting green chemistry principles, reducing carbon footprints, and enhancing energy efficiency are essential to meet international environmental standards.
Another critical area is research and development, where significant investments can spur innovation and result in high-value petrochemical products that enhance the industry’s global competitiveness. Developing a skilled workforce through training programs is equally vital to meet the evolving needs of the sector. Additionally, exploring new markets and diversifying product portfolios can mitigate risks associated with market fluctuations, while public-private partnerships (PPPs) can leverage the combined strengths of government bodies and private enterprises for sustainable growth.
The government’s commitment to fostering innovation, driving investment, and promoting sustainability is evident in policies such as the PCPIR Policy 2020-35, which aims to create a supportive ecosystem for the petrochemical industry. The sector’s alignment with the broader goals of clean energy and sustainability further reinforces its strategic importance in India’s economic aspirations.
As India’s economy diversifies and the middle class continues to grow, the demand for petrochemical-based products will rise sharply, strengthening the industry’s role as a catalyst for economic growth. With a projected market size of $1 trillion by 2040, the petroleum and petrochemical sector has the potential to significantly contribute to India’s economic transformation.
By embracing progressive policies, fostering innovation, and investing in infrastructure and human capital, the sector can unlock unprecedented growth and pave the way for India’s emergence as a global economic powerhouse. This growth story will not only create jobs and boost GDP but also position India as a leader in sustainable and competitive petrochemical production, contributing decisively to its vision of becoming a developed nation by 2047.
