India’s Petrochemical Demand Strong Despite Rising Imports

The demand of petrochemical in India remains very resilient even amidst increasing importation and difficult market conditions in the globe. The demand of petrochemicals in India has been steadily growing over the last several years due to the development of the packaging, construction, automotive, and consumer goods industries. Nonetheless, the small scale domestic capacity addition has augmented the dependence on imports especially during global oversupply by China. Although decreasing crude oil prices have brought short term relief to the margins, weak spreads are also a problem. India is also anticipated to have a healthy petrochemical demand in the medium and long run due to its major capacity expansion plans.

Strong Growth in India’s Petrochemical Demand

It has been shown that India has been registering notable growth in the major segments of its petrochemical demand, which include polypropylene (PP), high density polyethylene (HDPE), low density polyethylene (LDPE), linear low density polyethylene (LLDPE), and polyvinyl chloride (PVC) as well. There has also been the consistent growth in the consumption of aromatics and elastomers. CareEdge Ratings believe that this trend will continue to increase due to the expanding downstream and growing industrial activity. The demand of petrochemicals in India is favored by good domestic consumption trends and the increasing infrastructure and manufacturing investments.

Rising Import Dependence and Capacity Constraints

In addition to the high demand of petrochemicals in India, there has been a slow rate of capacity addition in the country over the last several years. Consequently, there has been a rise in the import dependency. The average imports were approximately 6 million tonnes/year during the period FY19 to FY22 but went high with almost 9 million tonnes/year during FY23 and FY24. This increased due to high consumption levels, lack of new domestic capacities and low priced imports due to massive global capacity additions. High importation has strained the domestic capacity utilisation and competition among the Indian producers.

Global Oversupply Impacts Profitability

The petrochemical industry has seen significant capacity increases in the world especially in China, with demand growth lagging behind. This imbalance continued to maintain product spreads weak up to FY25 and impacted on the operating profitability of the Indian manufacturers in three consecutive years. Despite a firm demand of petrochemicals in India, the cheap imports into the market by China were straining the margins. The profitability in the first half of FY26 improved marginally because of the low price of crude oil, but in general, spreads still remained subdued.

Policy Changes and Future Outlook

The trends in policies have been influential in the trend of imports. Although the polyethylene imports were minimized by the Quality Control Order (QCO) that was introduced in early 2024, its partialism removal in late 2025 can result in increased imports in the medium term. In the case of FY26, imports will be largely stable. There is encouraging news in the form of big capacity announcements by big players which include major players (both public and private) in the industry especially in PP and PVC. Increasing capacity of polypropylene is estimated to grow by 1.8x by FY30 and this could lead to removing importation and enhancing the demand of petrochemical in India.