Imperative Resilience

India's petrochemical sector is facing existential risks from cheap Chinese imports, global oversupply, and structural disadvantages—necessitating urgent reforms to reclaim self-sufficiency

- SHISHIR PRIYADARSHI

India's petrochemical sector, a critical foundation for industrial growth, manufacturing, and consumer products, is under serious threat. While its long-term fundamentals—rising per capita consumption, expanding downstream industries, and robust demand from sectors like construction, packaging, and automobiles—remain strong, the domestic industry is increasingly being undermined by a flood of cheap, dumped imports, particularly from China.

Unless urgent steps are taken to protect and promote domestic capacity, India risks repeating the mistakes made by Europe in the energy sector—becoming critically dependent on external supply chains that could be disrupted during global tensions or conflicts.

A Global Glut with Local Consequences The global petrochemical industry is suffering from a historic supply glut, driven by aggressive capacity expansions, particularly in China and the Middle East. Between 2022 and 2024 alone, global ethylene capacity surged by over 42 million tonnes, while demand rose by just 14 million tonnes, according to industry reports.

This oversupply has triggered a collapse in global prices and margins, putting immense pressure on domestic producers. This is impacting the financial viability and strategic planning of even the largest players including the Public Sector Undertakings.

In the PVC segment, India has been particularly hard-hit by Chinese exports. India's PVC imports from China have jumped over 400 per cent in the last five years, reaching over 500,000 tonnes in FY24, according to data from the Ministry of Commerce.

In total, over 1.2 million tonnes of PVC was imported into India in FY24, with China emerging as the largest single source.