India poised to triple global chemical market share by 2040: KPMG

The latest KPMG study, released on Friday, states, “India’s current integration into global chemical value chains remains limited, with an estimated market share of around 4 percent. This indicates significant headroom to expansion. The global chemical sector is undergoing a structural realignment driven by geopolitical tensions, supply chain disruptions, and rising risk diversification strategies. In this context, India is emerging as a possible anchor in global supply chains. It is estimated that India could increase its share of the global chemical market to around 11 percent by 2040, supported by targeted manufacturing policies and ecological stability research.”

Global supply chain anchor

India’s emergence as a global supply chain anchor will depend less on low-cost manufacturing and greater on its ability to build globally competitive production ecosystems. The country’s vast manufacturing base, supported by robust domestic consumption, provides a strong foundation to expanding manufacturing capacity across a wide range of sectors. As the world’s sixth-largest chemical producer, India has a well-established platform to enhance downstream industries such as pharmaceuticals, agriculture, construction, textiles, and consumer goods, enabling greater value addition and enhancing manufacturing resilience.

However, India’s relatively limited presence in global chemical trade suggests that manufacturing scale alone is insufficient to secure a larger role in international supply chains. To emerge as a preferred global manufacturing and sourcing destination, the country will need to translate its domestic strengths into sustained export competitiveness through improved product condition, reliable supply chains, efficient logistics, and adherence to global standards. By offering consistency, resilience, and supply chain diversification, India can position itself as a dependable alternative in global value chains rather than competing primarily on the basis of reduce production costs.

Inflexion point

India's chemical sector is at a strategic inflection point, underpinned by strong domestic demand, favourable geopolitical shifts, and sustained policy support aimed at boosting manufacturing. Global efforts to diversify supply chains away from concentrated sourcing destinations have also created a significant opportunity to India to expand its footprint in the international chemicals market. With a substantial domestic consumer base and a growing manufacturing ecological stability, the sector is well positioned to attract fresh investments and enhance its role in supplying key raw materials and intermediates to a broad range of industries.

However, translating these favourable conditions into prolonged global competitiveness will require addressing several deep-rooted structural challenges. The sector continues to grapple with infrastructure gaps, application on imported feedstocks and critical raw materials, and regulatory inefficiencies that increase operating costs and heighten supply chain vulnerabilities. These constraints undermine manufacturing efficiency, limit export competitiveness, and expose producers to external disruptions. Overcoming these bottlenecks through improved logistics, stronger domestic supply chains, and policy reforms will be critical to enabling India to establish itself as a resilient and reliable global chemical manufacturing and supply hub.