Context:

• NITI Aayog has released a report titled 'Chemical Industry: Empowering India's Participation in Global Value Chains', which presents a strategic roadmap to establish India's chemical industry as a key player in Global Value Chains (GVCs).

Key Points:

• India's chemical sector, despite being significant in nature and GDP contribution, remains fragmented and constrained due to infrastructure gaps, regulatory inefficiencies, and low research and development activities.
• India's 3.5% participation in global chemical value chains and a chemical sector trade deficit of USD 31 billion in 2023 underscore its high reliance on imported raw materials and specialty chemicals.
• With targeted reforms encompassing a comprehensive range of fiscal and non-fiscal interventions, India will be able to achieve a USD 1 trillion chemical sector trade and 12% GVC participation by 2040, becoming a global chemical industry superpower.

Challenges Faced by India's Chemical Sector:

• India's chemical industry sector faces several structural challenges that hinder its global competitiveness.
• Limited domestic backward integration contributed significantly to the USD 31 billion trade deficit in 2023.
• Infrastructure deficiencies, outdated industrial areas, and high logistics costs have increased costs compared to other countries.
• Additionally, with only 0.7% investment in research and development compared to the global average of 2.3%, indigenous innovation in high-value chemicals is curbed.
• Furthermore, there is a 30% shortage of skilled professionals in the sector.

Proposed Policy Interventions and Potential Impact – By 2030:

Key Policy Interventions:

• Establishment of World-Class Chemical Hubs: Establishing world-class chemical hubs in India.
• Development of Port Infrastructure: Development of port infrastructure for storage and handling of chemicals.
• Apex Body for Import-Dependent Chemicals: Establishment of an apex body for chemicals with high import dependence, export potential, and significant end-market importance.
• Technological Innovation and Self-Reliance: Promoting technological development for self-reliance and innovation.
• Expedited Environmental Clearances: Expediting the environmental clearance process with transparency and accountability.
• Support through FTAs: Securing Free Trade Agreements to support industry growth.
• Talent and Skill Upgradation: Upgrading talent and skills in the chemical industry.

Potential Impact – By 2030:

• 700,000 New Jobs: Additional job creation by 2030.
• 5-6% Share in Global Value Chain: Increase from 3-3.5% in 2023 to 5-6% share in 2030.
• USD 35-40 billion Additional Exports: Compared to 2023.
• USD 220-280 billion Chemical Production: In India by 2030.
• Net Zero Trade Deficit: Trade balance in chemicals by 2030.

NITI Aayog: