India’s Chemical Sector Sees FDI Double: A Growth Story

Understanding the Investment Surge

India’s Chemicals & Petrochemicals sector has achieved significant expansion over the past twelve years, largely driven by substantial foreign direct investment. The sector recorded more than double the FDI inflows during 2014-2026 compared to the preceding decade.

The growth in investment highlights a robust period for the industry, reflecting confidence from international investors. FDI inflows reached Rs 1,04,895 crore from 2014-2026, significantly surpassing the Rs 45,240 crore received during 2004-2014. This surge was enabled by India’s Foreign Direct Investment policy, which permits 100% FDI under the automatic route across most chemical sectors.

Policy Reforms and Infrastructure Development

The Department of Chemicals & Petrochemicals (DCPC) spearheaded various initiatives over the last twelve years to foster this growth. These included policy reforms, infrastructure enhancements, skill development programs, and quality control measures. The Chemical Promotion and Development Scheme (CPDS) supported sector development through conferences, exhibitions, and training, while 37 Quality Control Orders (QCOs) were issued to ensure quality and curb sub-standard imports.

Crucial infrastructure projects, like the Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), also played a vital role in attracting capital and creating jobs. The three operational PCPIRs at Dahej (Gujarat), Visakhapatnam-Kakinada (Andhra Pradesh), and Paradeep (Odisha) collectively attracted investments exceeding Rs 3.4 lakh crore. These regions generated approximately 3.7 lakh employment opportunities and facilitated over 2,200 chemical manufacturing units.

Expanding Downstream Capabilities

Beyond large-scale investment regions, the DCPC has also broadened support for downstream plastic processing industries through the establishment of dedicated industrial zones. A total of 10 Plastic Parks have been approved nationwide, with four achieving 100% infrastructure completion, including three completed during 2025–26.

Furthermore, the department expanded the network of the Centre of Excellence to support research and innovation. The 18 Centres of Excellence have filed 85 patents, published over 600 research papers, and developed 105 new technologies/products.

Future Growth through New Chemical Parks

Looking ahead, the Union Budget 2026-27 introduced a new scheme designed to further strengthen domestic manufacturing and reduce import dependence. This initiative aims to enhance India’s global competitiveness in the chemical sector. The Union Cabinet approved the BHAVYA Rasayan Scheme (Bharat Audyogik Vikas Yojana Rasayan) with a provision of over Rs 3030 crore.

This scheme will establish three Chemical Parks based on a cluster-based plug-and-play model. These proposed parks are expected to support the chemical sector and integrated circular economy principles, marking a strategic step towards future industrial resilience.