India-US, EU FTAs to Boost Chemical Industry's Global Competitiveness
A Centrum report indicates that India-USA and India-EU Free Trade Agreements (FTAs) will significantly enhance the Indian chemical industry's global competitiveness. By reducing tariffs and offering a level playing field, these FTAs provide better market access and a duty differential advantage over China. This is expected to strengthen India's position in global supply chains and support long-term growth. While the sector's outlook remains company-specific, addressing China's overcapacity could further improve commodity chemical prospects.
A report by Centrum highlights that the India-USA and India-EU Free Trade Agreements (FTAs) are poised to significantly improve the global competitiveness of India's chemical industry. These agreements are crucial for providing Indian chemical companies a level playing field with other developing nations and offering benefits from a duty differential compared to China. By reducing tariffs, the FTAs create more favorable market access, which is expected to bolster India's position within global chemical supply chains and foster long-term growth for the sector.The report emphasizes that while the overall outlook for the chemical sector will have company-specific elements, clarity on these FTAs provides a substantial advantage. Companies with diversified products and strong execution capabilities are anticipated to capitalize most effectively on emerging opportunities. Furthermore, ongoing discussions regarding China's Anti-Involution Policy, particularly its potential to address overcapacity, could lead to an improved outlook for commodity chemicals over the next 2-3 years. China's historical overcapacity has been a major concern, suppressing prices and demand globally; any steps to reduce this could restore market balance and improve profitability for chemical companies worldwide, including those in India.The report also observed an uneven performance in 3QFY26, with some companies achieving strong profitable growth in specific areas, while others grappled with global supply-demand imbalances. However, positive factors such as robust growth in select segments, the successful ramp-up of new capacities backed by dedicated orders, stable raw material prices, and reduced freight costs provided essential support during the quarter. These strengths are expected to help companies enhance efficiency, develop specialized products, and maintain competitiveness despite ongoing global challenges.
