India’s consumption of vital petrochemicals has increased consistently over the past few years and is anticipated to continue its upward trajectory, according to a report by CareEdge Ratings.
Yet, domestic capacity additions for the same — consisting of polymers like Polypropylene (PP), High-Density Polyethylene (HDPE), Low-Density Polyethylene (LDPE), Linear Low-Density Polyethylene (LLDPE), Polyvinyl Chloride (PVC), aromatics, and elastomers — have trailed, leaving India significantly reliant on imports to satisfy increasing demand.
Globally, China has dominated current petrochemical capacity additions, forming a supply glut that surpassed demand. “Operating profitability, moreover, enhanced marginally in H1FY26, mostly due to decrease input expenses led by a decline in crude oil prices,” the document notes. Indian producers have confronts 3 years of extreme pressure from cheaper imports, specifically from China.
Imports have surged, increasing from an average of 6-million tons throughout FY19–FY22 to about 9-million tons in FY23–FY24, led by sturdy domestic demand, restricted local capacity, and less expensive worldwide supplies.
This surge dented domestic capacity usage, even as FY25 noticed a gradual decline in imports after the authorities imposed a Quality Control Order (QCO) on polyethylene in January 2024. The QCO was later rescinded in November 2025 to reinforce domestic supply and assist downstream competitiveness, which may cause a medium-term influx of imports.
India stays significantly depending on imports for PVC, Polypropylene, and Polyethylene. About three-fourths of PVC demand is met by imports, whilst PP and PE depends on imports for roughly fifth of domestic consumption, according to CareEdge Ratings.
To reduce import dependence, domestic players have declared bold enlargement plans. Polypropylene capacity is ready to rise 1.7x, even as PVC capacity should rise 2.5x relative to current stages. In spite of those plans, extensive ramp-up timelines mean imports will remain to be essential in the near term.
“The domestic market stays reliant on imports in the near to term to satisfy domestic demands,” the report observes.
Spreads for main petrochemical products surged at some point of FY21–FY22, fueled by pandemic-era demand and low feedstock costs. Moreover, oversupply from China’s aggressive capacity additions has stored spreads subdued for the past three and a half years.
Global ethylene capacity, as an instance, jumped from ~183 million tons in 2019 to ~231 million tons by the end of CY24, with China contributing as much as 66% of the additions. While falling crude prices have barely stepped forward profitability in H1FY26, sustaining margins remains a challenge.
“India’s petrochemical consumption growth is anticipated to stay strong at 6–7% per annum within the medium term, driven by economic growth and downstream product demand. Against this backdrop, decreasing reliance on imports is viewed as a main strategic target,” stated Rabin Bihani, Associate Director, CareEdge Ratings.
Polypropylene capacity alone is anticipated to rise 1.8x between FY25–FY30, outpacing projected demand growth of 1.4x and potentially removing import dependence by FY30.
Moreover, cost competitiveness will remain essential. “Prices and spreads within the domestic petrochemical area are anticipated to stay vulnerable in the near term due of global oversupply.
“While there has been marginal recovery in spreads in H1FY26 which could support ~200bps improvement in EBITDA margin in FY26, sustained recovery and accomplishment of optimum operating profitability could hinge more on their cost competitiveness, global demand-supply scenario and need-primarily based guide from the Government given sizeable worldwide potential additions specially by China, which has effected the profitability of Indian producers for an extended period of time,” stated Hardik Shah, Director, CareEdge Ratings.
