The country is heavily dependent on the import of chemicals - used in a wide range of sectors, from agriculture to plastics to pharmaceuticals. Key chemical products accounted for a trade deficit of US$ 31 billion in 2023, according to NITI Aayog.

The Bharat Audyogik Vikas Yojana Rasayan (BHAVYA Rasayan), approved by the Union Cabinet in July, aims to reduce this import dependence, and will be implemented from FY2026–27 to FY2030–31.

Under the policy, three new chemical parks will come up at a cost of ₹3,030 crore. But can these sites bring about more robust domestic value chains?

“A chemical park turns into an ecosystem when the output of one company can be the input for the other; shared utilities, environmental facilities, logistics and the technical services lower the manufacturing costs and complexity of manufacturing,” Siraj Saiyed, Director at Payal Industrial Parks, Arete Group, told The Secretariat.

Beyond Import Dependence

Methanol illustrates India’s import dependence in chemicals. It is a major industrial building block used to make chemicals such as formaldehyde and acetic acid.

India consumed 3,309 kilo tonne per annum (KTPA) of methanol in FY2024–25, with 85–90% of this demand met through imports. This is projected to continue through FY2029–30.

A chemical industry expert said India should aim to make domestic capacity economically and technically feasible even as some feedstock will still have to be imported.

“The industry should concentrate not just on reducing imports but also on increasing export capabilities and making the export value chain more competitive,” the expert said.

Infrastructure Alone Not Enough

The BHAVYA Rasayan policy promises up to ₹1,000 crore per park in the Central budget and at least ₹500 crore per park from the states. All parks should have a minimum area of at least 8 sq km in a contiguous block of land with no encumbrance.

Each park will include facilities like waste treatment, water systems, solvent recovery, steam networks, and storage and logistics. The selection framework gives 50 out of 100 marks to land and proximity to sea and transport connectivity.

BHAVYA Rasayan, however, has not confirmed anchor investors or upstream and downstream commitments.

Its guidelines cover testing and technical-support infrastructure, but not first-adopter trials or commercialisation funding yet.

“It is important for parks to think about support for first adopters through subsidised trials, shared pilot facilities, demonstration funding or other risk-sharing schemes,” Vaishali Kulkarni, founder and director of KBCols Sciences, which produces biocolours.

Implementation Is Key

India’s experience so far points to implementation challenges rather than policy failure.

Infrastructure, investment, and downstream capacity need to be on the same page for a cluster to be an integrated value chain.

Singapore’s Jurong Island has become a benchmark for what such integration can look like in practice, connecting chemical producers through shared utilities, pipelines, and logistics. The challenge for India is to create such connections while planning new parks.

India’s experience with Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), however, does not bear this out.

The three operational areas at Dahej, Visakhapatnam-Kakinada and Paradip have seen significant activity. A parliamentary reply reported 2,246 working chemical units, ₹3,49,192 crore worth of investment, and 3.7 lakh jobs in the region.

But while these figures reflect significant industrial development, they do not establish how far the regions have deepened downstream linkages, increased domestic value addition, or replaced imports.

“For development to be successful, we need to have coordinated progress in land availability, anchor investments, utilities, environmental infrastructure, logistics, and downstream industries, all of which have to come together,” Saiyed said.

From Lab To Commercial Production

A chemical innovation may work in a laboratory yet struggle to become a commercially viable product. “The biggest gap is between proving that something works and proving that it works repeatedly at industrial scale,” Kulkarni told The Secretariat.

Beyond experimental batches, there is need for pilot equipment, process support, quality testing, and safety systems, as well as customers ready to try out new products. Small production runs can be difficult to arrange, while prospective buyers may hesitate if a new product initially costs more than established alternatives. Such barriers can slow the investment process despite the promise of the technology itself.

BHAVYA Rasayan currently lacks the support of pilot-scale production facilities, subsidised first trials or commercialisation grants. These are still potential shortfalls in the scheme’s declared benefits.

The Real Test

Whether or not the three parks will link inputs, infrastructure, technology, and customers to create more competitive goods in India will be the real test - not simply whether the parks are built.

Building commercially viable manufacturing networks will mean identifying locations near viable target value chains rather than land readiness, besides realistic feedstock access, anchor demand, and clear plans for downstream production.

“The support required may vary from one value chain to another, and a one-size-fits-all approach may not be suitable,” the chemical industry expert said.

This requires identifying domestic manufacturers, potential investors, technologies available, and specific gaps before investing resources. Support from the first adopters and pilot-scale validation could also facilitate the transfer of technologies to commercial production.

The progress evaluation should go beyond the investment announcement and number of units created. The time to start production, utilisation of capacity, value added within the country, industry linkages, and exports would provide a better understanding of the long-term industrial benefits of the parks. The focus should be on a coordinated development of the value chain, Saiyed added.