India is set to expand its petrochemical production significantly, a move that could alter supply dynamics across Asia, according to S&P Global Ratings, reported by ANI. India’s strategy mirrors China’s earlier steps to cut reliance on imports and build a stronger domestic manufacturing base. Ker Liang Chan, a credit analyst at S&P, said India’s capacity additions are expected to intensify competition within the broader Asian petrochemical market over the coming years.
Implications for regional exporters
S&P Global Ratings noted that India’s and China’s drive for self-sufficiency will likely put pressure on petrochemical exporters across Asia. Countries that currently supply much of the two markets’ chemical imports may find their export volumes shrinking as both economies produce more at home. For these exporters, finding alternative destinations such as the United States may not be easy, given tariff barriers and higher transport costs. The ratings agency said this shift could weigh on earnings and push some producers towards consolidation. India’s expansion, involving both public and private investment, is aimed at reducing dependence on imported raw materials used in common products such as plastic packaging and automobile parts.
India’s petrochemical growth is being driven by its close link with large refinery projects. Many state-run and private refineries are adding downstream petrochemical units as they expand, allowing them to make better use of crude oil and earn higher margins. Experts say this model will not only make Indian production more competitive but also strengthen the country’s long-term industrial ambitions.
Domestic demand offers a buffer
Even as global oversupply remains a concern, India’s large and growing domestic market is expected to keep demand strong. The country is projected to overtake the United States as the second-largest consumer of polyethylene, a key material in plastics manufacturing. Shawn Park, another S&P analyst, said that while China’s and India’s self-sufficiency targets may add to structural overcapacity in the sector, strong local demand and ongoing industrial growth could help India maintain balance.
