CareEdge Report: India's Petrochemical Consumption to Grow 6-7% Annually, Import Reduction a Priority
India's petrochemical consumption is projected to grow 6-7% annually, driven by economic expansion and downstream demand, according to a CareEdge Ratings report. Reducing import dependence is a strategic priority, with significant capacity expansions planned, particularly in polypropylene, aiming for import elimination by FY30. However, global oversupply, led by China, is expected to pressure near-term prices and spreads, emphasizing the need for domestic players to maintain cost competitiveness.
A recent report by CareEdge Ratings forecasts a robust 6-7% annual growth in India's domestic petrochemical consumption over the medium term, fueled by sustained economic expansion and steady demand from downstream industries. This strong growth trajectory has made import reduction a key strategic priority for the sector, prompting both public and private entities to announce aggressive capacity expansion plans across various petrochemical segments.Specifically, polypropylene (PP) capacity is projected to increase 1.8 times between FY25 and FY30, outstripping the estimated 1.4 times rise in demand. This expansion is anticipated to significantly decrease India's reliance on imports, potentially eliminating PP import dependence by FY30. Despite these ambitious plans, CareEdge cautions that cost competitiveness will be crucial for domestic players, as generating reasonable returns on large capital investments will depend on operating efficiency, pricing discipline, and global market conditions.In the near term, the report indicates that prices and product spreads in the domestic petrochemical sector will face pressure due to global oversupply, primarily driven by substantial capacity additions in China. This demand-supply imbalance has already impacted operating profitability for Indian manufacturers, exacerbated by cheaper Chinese imports. While operating profitability saw a marginal improvement in the first half of FY26 due to lower input costs from declining crude oil prices, sustained profitability will ultimately rely on improved cost competitiveness, balanced global demand-supply dynamics, and targeted policy support.
