The US accounts for 18% of India’s chemical exports, underscoring the need to broaden the export base and reduce concentration in a single market, the first person cited above said. Encouraging greater exports across Europe, Southeast Asia, West Asia, Africa and Latin America could help diversify export destinations, reduce geographic concentration risks and build a more resilient export ecosystem for India’s chemical industry, this person added.

The two people cited above said that a product-region approach could allow India to target specific chemical categories based on demand and competitive opportunities in individual markets.

“Agrochemicals, water-treatment and construction chemicals could be targeted in African markets, while Latin America could offer opportunities for agrochemicals, specialty chemicals, dyes and pigments. Asean markets could be explored for surfactants, polymers and industrial intermediates, while Europe could offer opportunities in specialty, green and pharmaceutical chemicals,” the first person cited above said.

Official data underscores the sector's shifting export trajectory over recent years. According to DGCIS (directorate general of commercial intelligence and statistics) figures submitted to the Rajya Sabha by the minister of state for chemicals and fertilizers, India's chemical exports rose sharply from ₹2,79,337 crore in fiscal year 2021 (FY21) to ₹3,68,597 crore in FY22—a growth of nearly 32%. Growth slowed to 3.2% in FY23 ( ₹3,80,493 crore) before contracting 2.1% in FY24 ( ₹3,72,535 crore). Exports bounced back in FY25, rising 5.4% to reach ₹3,92,769 crore.

To build long-term momentum, government think tank Niti Aayog has targeted scaling annual chemical exports to $81 billion by 2030. This includes $45 billion from specialty chemicals, $26 billion from petrochemicals, and $5-10 billion from inorganic chemicals. The initiative forms part of a broader vision to move India toward a net-zero importer stance by FY30 while expanding the overall industry scale toward $1 trillion by 2040.

Such a strategy could also support the industry’s transition from relatively lower-value bulk chemicals towards higher-value, application-specific products, allowing Indian manufacturers to move into more profitable segments.

To lower reliance on the US, India must adopt a targeted product-region export strategy, according to Dr Ram Singh, professor and head at IIFT, New Delhi. He noted that India should focus on agrochemicals, water treatment, and construction chemicals in Africa, while pitching agrochemicals, specialty chemicals, dyes, and pigments to Latin America. Meanwhile, Asean presents strong demand for surfactants, polymers, and industrial intermediates, while Europe offers key opportunities for specialty, green, and pharmaceutical chemicals. “Simultaneously, India must shift from bulk chemicals to higher-value, application-specific products to enter higher-profit segments,” Singh added.

On the import side, India faces significant supply-chain risks due to heavy reliance on a single market. China accounted for 41.8% ($560 million) of India’s $1.34 billion organic chemical imports in April 2026, a sharp rise from 29.4% a year earlier, underscoring the country's growing geopolitical and supply-security risks.

The second person cited above, a senior government official, said, “Diversifying sourcing geographies and encouraging alternative supply chains could therefore improve supply security and reduce concentration risks. Targeted financial incentives could further encourage manufacturers to explore and develop substitute sourcing arrangements.”

The proposed export diversification strategy comes as the chemicals and petrochemicals sector faces several structural challenges, including long-gestation projects, weak operating margins, global oversupply, import dependence and geopolitical vulnerabilities, according to a government assessment reviewed by Mint.

The sector is facing global oversupply and weak spreads, with the operating margin of the chemical industry at its lowest level since 2008, according to the assessment. In this environment, capacity commissioning needs to be linked more closely to demand growth to avoid adding capacity ahead of market requirements. Integrated crude-to-chemical complexes could also play a role by enhancing operating efficiency, improving feedstock economics and strengthening resilience across commodity cycles, the assessment said.

Given the extended asset lives and payback periods of such projects, financing structures may need to be aligned with project tenures, while greater participation by patient capital providers such as pension funds, insurance companies and sovereign investors could help bridge the funding gap, the assessment said.

Queries emailed on Friday to spokespersons for the ministry of finance, the ministry of commerce and industry, and the department of chemicals & petrochemicals remained unanswered at the time of publishing.