India Petrochemical Growth and Capacity Expansion

A report by CARE ESG Ratings Limited indicates that India's domestic petrochemical consumption is expected to grow robustly at 6-7% annually in the medium term. This growth is prompting both public and private sector companies in India to aggressively expand capacity across major petrochemical segments, particularly for Polypropylene, aiming to significantly reduce import dependence by FY30. However, the report cautions that despite these capacity additions, cost competitiveness will be crucial for domestic players. The global petrochemical sector has seen significant capacity additions, predominantly by China, leading to an oversupply and weak product spreads. This demand-supply mismatch has pressured the operating profitability of Indian manufacturers, who also face intense competition from cheaper Chinese imports. While operating profitability saw a marginal improvement in H1FY26 due to lower crude oil prices, sustained recovery hinges on improved cost competitiveness, favorable global demand-supply conditions, and government support.