NITI Aayog recommends creation of chemical hubs, port clusters to boost manufacturing

Time of India

16 hours ago

India should establish chemical hubs and develop eight port-infrastructure clusters to expand its role in global chemical manufacturing, a NITI Aayog report said on Thursday.
In a report titled Chemical Industry: Powering India's Participation in
Global Value Chains
, the policy think tank said the country is targeting $1 trillion in chemical output by 2040.
GVC share, job creation, and trade deficit
According to the report, India aims to increase its share in Global Value Chains (GVC) from 3.5 per cent in 2023 to 5–6 per cent by 2040, with the potential to create 700,000 additional jobs by 2030.
India's current share in global chemical value chains and a
chemical trade deficit
of USD 31 billion in 2023 reflect its dependence on imported feedstock and specialty chemicals.
'Targeted reforms encompassing a range of fiscal and non-fiscal interventions will enable India to reach a $1 trillion chemical sector and achieve a 12 per cent GVC share by 2040,' the report stated.
Port, environmental, and policy interventions
The report called for the formation of an empowered committee at the Central level and the creation of a chemical fund with a budgetary outlay for shared infrastructure and viability gap funding. It also recommended that an administrative body manage each chemical hub.
It proposed a Chemical Committee for ports to advise on and address infrastructure gaps in chemical trade, along with the development of eight port clusters with high potential.
Other suggestions include incentivising incremental production of chemicals based on import bills, export potential, single-country dependence, and end-market needs.
On regulatory aspects, the report recommended fast-tracking environmental clearance. 'Simplify and fast-track EC clearance process through setting up an audit committee under DPIIT to monitor timelines and compliance, and publish periodic reports and give more autonomy to EAC,' it said.
The report also noted that India could consider Free Trade Agreements (FTAs) with provisions specific to the chemicals industry, including tariff quotas and selective duty exemptions on raw materials and petrochemical feedstocks.
Challenges identified
India's chemical sector faces structural challenges, including reliance on imported feedstock, infrastructure gaps, outdated industrial clusters, and logistics costs. These factors have contributed to cost disadvantages compared to other countries.
The report highlighted that India's
investment in R&D
is 0.7 per cent, lower than the global average of 2.3 per cent, affecting innovation in high-value chemicals.
It also cited regulatory delays, particularly in environmental clearances, and a shortfall of 30 per cent in skilled professionals in areas like green chemistry, nanotechnology, and process safety.
'By addressing the existing challenges and leveraging the proposed interventions, India can enhance its competitiveness, attract investments, and build a chemical sector capable of leading the global value chain,' the report said.