India’s USD 1 Trillion Chemical Dream: NITI Aayog’s Global Value Chain Roadmap

India’s emergence as a formidable hub in the global chemicals landscape is being accelerated by a pivotal move: NITI Aayog’s launch of its report, “Chemical Industry: Powering India’s Participation in Global Value Chains.” The initiative marks a vital step towards catalyzing economic opportunity, drawing international investment, fostering innovation, and deepening industrial cooperation not only domestically but also with global partners such as the European Union. At its heart, the report outlines a comprehensive vision that harnesses India’s existing strengths - demographic vitality, evolving industrial infrastructure, and increasing R&D emphasis to elevate its share of chemical value chains from 3.5 percent today to a projected 5–6 percent by 2040, while setting an audacious goal of transforming into a USD 1 trillion chemical economy. These projections unlock a cascade of opportunities: enabling India to double its production, bridge its USD 31 billion trade deficit in chemicals, generate up to 700,000 skilled jobs by 2030, and significantly enhance export potential. This momentum aligns seamlessly with the broader B2B potential with the EU, prepared to reinforce India’s journey as a trusted, innovation-driven supply-partner for specialty and green chemicals in global markets.

This visionary report released on July 3, 2025 by NITI Aayog, offers a granular analysis of India’s chemical sector, highlighting structural challenges such as dependence on imported feedstock, fragmented industrial clusters, logistical inefficiencies, and muted investment in research and talent development. India’s current 3.5 percent share in global chemical value chains underscores a landscape of both immense promise and pressing constraints. The report emphasizes that addressing these gaps can reshape India into a key global chemical manufacturing powerhouse, one capable of capturing a 12 percent share of GVCs by 2040 with steadfast reforms.

Officials at the launch were emphatic about the transformative potential: “India will increase its chemical GVC share from 3.5 percent in 2023 to 5–6 percent by 2040, igniting India’s chemical transformation,” the release states. Another notable quote framed a bold vision: “India Eyes USD 1 trillion Chemical Output by 2040,” reinforcing how integral this sector is to realizing the vision of a ‘Viksit Bharat’ by 2047. These remarks signal a strategic pivot—a high-level affirmation that India’s ambitions are not merely aspirational but are backed by policy intent and measurable milestones.

A central thrust of the report is the implementation of multifaceted interventions across fiscal, governance, infrastructural, technological, trade, and human capital arenas. On infrastructure, the report advocates establishing world-class chemical hubs by modernizing existing clusters and building new ones, overseen by empowered central bodies and regional hub administrations. This includes constructing shared infrastructure, supported by a dedicated Chemical Fund and strengthened port facilities through a national Chemical Committee designed to secure seamless import-export efficiency. By addressing these foundational bottlenecks, India can position itself as a globally competitive, cost-effective hub for chemical production.

Recognizing the critical nature of operating expenditures in global competitiveness, NITI Aayog recommends an innovative Opex subsidy scheme. This would incentivize incremental local production by reducing reliance on single-source imports, encouraging domestic supply, and aligning chemical output with international market potential. The report also underscores the importance of bolstering R&D via disbursement of research funds, fostering industry-academia synergy, and enhancing international technology adoption through partnerships with multinational corporations. This commitment to knowledge creation and innovation is vital for transitioning beyond commodity chemicals into high-value specialties and green alternatives.

Environmental regulation, a perennial challenge, receives focused attention. NITI Aayog proposes streamlined, transparent, and accountable environmental clearances through a revamped audit mechanism, allowing faster industry approvals without compromising compliance. Underlining the report’s diplomatic and global trade dimensions, it calls for targeted Free Trade Agreement (FTA) provisions for chemicals that provide tariff quotas, duty exemptions on strategic inputs, and simplified origin rules, enabling India to better leverage its manufacturing progress for export competitiveness.

The imperative of skilled labour forms another cornerstone of the strategy. Citing a shortfall of 30 percent in professionals skilled for emerging domains such as green chemistry and nanotechnology, the report recommends scaling Industrial Training Institutes (ITIs), upgrading faculty, and nurturing deep partnerships between industry and academia. By 2030, these interventions are expected not only to support industrial expansion but also to create direct skilled jobs and unlock USD 35–40 billion in exports.

While the vision to 2030 focuses on growth, the long-term 2040 goal is equally ambitious: an expanded GVC share of 12 percent and a USD 1 trillion chemical sector. The launch release states: “India Eyes USD 1 Trillion Chemical Output by 2040,” and highlights how, with coordinated reforms, global value chain share could grow to 12 percent. By achieving this, India would not only eliminate its trade deficit but emerge as a global source for specialty and sustainable chemicals—a domain of increasing demand in Europe and beyond.

Additionally, the report’s implications for India–EU relations are profound. The EU, which prioritizes green chemistry, circular economy, and regulatory harmonization, becomes a natural partner to India’s chemical ambition. Through FTAs that integrate chemicals-specific carve-outs and enhanced intellectual property frameworks, both sides can cultivate joint R&D in catalysts, bio-based feedstocks, and sustainable production technologies. A robust partnership could see India supplying intermediates to EU-based manufacturers, while benefiting from European investments in clean processing and digital chemical plants. This alignment supports India’s industrial resilience and the EU’s diversification goals.

The launch also generated public outreach via official social channels, where NITI Aayog highlighted the USD 1 trillion target, the ambition to double output, and the intent to eliminate the trade deficit by 2030. Such communication underscores the government’s intent to attract investors and engage international stakeholders, including key EU players, by positioning Indian chemicals as a stable, policy-backed, and innovation-driven ecosystem.

Beyond headline numbers, the report reflects a strategic reorientation of India’s economic fabric. Transitioning from import dependency to forward integration, from commodity production to specialty and green chemistries, and from fragmented clusters to globally connected hubs reflects a deliberate move toward creating a globally resilient manufacturing archetype.

On the EU side, there is growing interest in supply chain resilience and greener materials. India’s report dovetails with the EU’s Green Deal aspirations, offering collaboration opportunities in areas like bio-plastics, advanced polymers, and catalyst recycling. Securing joint projects, co-funded through EU Horizon grants or bilateral innovation funds, can provide Indian producers competitive technology while granting European companies diversified supply sources aligned to sustainability benchmarks and geopolitical assurances.

In an era when global manufacturing is being reconfigured with decarbonization, supply chain realignment, and localized production, India’s ambition is well-timed. By positioning itself as a reliable, innovative, and skilled manufacturing partner, India lays the foundation for a deepened, strategic partnership with the EU—one that could redefine industrial cooperation and strengthen economic resilience on both sides.

This initiative is more than a policy document—it is a diplomatic overture and an investment destination brief. It tells international investors, European regulatory bodies, and trade partners that India is methodically addressing its limitations, amplifying value creation in its chemical industry, and committing to global best practices. As the report moves from paper to action—in chemical clusters, clearances, R&D labs, and skilled workforce training—the collaboration between India and the EU seems poised to accelerate: marked not only by trade, but investments, innovation, and shared sustainability goals.

Ultimately, this policy launch and report reaffirms that the chemical sector is now a linchpin for India’s global value chain strategy and a beacon for international partnership. For policy makers in Brussels and Delhi, this report signals a moment ripe for engagement, investment, and mutual ambition—a foundational base for forging a new chapter in India–EU industrial cooperation.