India's Chemicals Industry to Hit $255 Billion by 2030, Driven by High-Growth Segments: McKinsey
India's chemicals industry is forecast to grow significantly from $155-165 billion to $230-255 billion by 2030, outpacing economic growth, according to a McKinsey report. This expansion is powered by emerging high-growth segments like semiconductors and EVs, potentially adding $30-35 billion in demand. Despite strong past performance, a $31 billion trade deficit presents import substitution opportunities. McKinsey recommends scaling global operations, increasing R&D, adopting AI, and strengthening supply chains to capitalize on this defining decade.
A report by McKinsey & Company projects India’s chemicals industry to expand robustly from its current $155-165 billion valuation to $230-255 billion by 2030, growing at an 8-9 percent compound annual rate and potentially outperforming the GDP growth. This surge will be primarily driven by emerging high-growth segments such as semiconductors, electric vehicles and batteries, renewables, and construction, which are expected to generate an additional $30-35 billion in demand by 2030, growing at about 16 percent annually. Construction-linked chemicals alone are predicted to double to $28 billion.The sector has demonstrated strong performance, achieving a 17 percent total shareholder return CAGR over the past decade. However, the report highlights a significant $31 billion trade deficit, particularly in inorganics and polymers, indicating substantial import substitution opportunities. To fully realize its growth potential, McKinsey recommends that companies implement strategic levers: scale up global operations in priority markets, pursue programmatic partnerships and acquisitions, and significantly increase R&D spending from its current low of 0.5 percent of revenue. Additionally, adopting AI and advanced analytics is advised for 8-12 percent EBITDA improvements across various functions, while strengthening balance sheets and building resilient supply chains are crucial for navigating global volatility and positioning India as a competitive global manufacturing hub. Nitika Nathani, Partner at McKinsey, emphasized that disciplined capital allocation and sustained investment in innovation are key for the next growth phase.
