New Delhi, Dec 29 (NationPress) The growth of India’s petrochemical consumption is projected to remain strong at 6-7 percent annually in the medium term, fueled by economic growth and the demand for downstream products, as stated in a report published on Monday.

In light of this, reducing dependency on imports is seen as a crucial strategic objective. As a result, both public and private sector companies have formulated ambitious plans to boost their petrochemical capacities, according to the CareEdge Ratings report.

The capacity for polypropylene is anticipated to increase by 1.8 times between FY25 and FY30, exceeding the projected demand growth of 1.4 times, which could largely eliminate import reliance by FY30, the report indicates.

“Nonetheless, enhancing cost competitiveness, which leads to a recovery in the trajectory of spreads and ensures reasonable returns on investments, will remain a critical focus for domestic petrochemical players,” stated Rabin Bihani, Associate Director of CareEdge Ratings.

In the short term, prices and spreads in the domestic petrochemical market are expected to remain subdued due to global oversupply. A slight recovery in spreads during H1FY26 could support an approximate 200 basis points improvement in EBITDA margins for FY26.

“However, a consistent recovery and achieving optimal operating profitability will depend largely on cost competitiveness, the global demand-supply landscape, and necessary support from the government, especially considering substantial global capacity expansions, particularly from China, which have affected Indian manufacturers' profitability for an extended period,” noted Hardik Shah, Director of CareEdge Ratings.

The report highlights that the consumption of major petrochemicals, including polymers such as Polypropylene (PP), High Density Polyethylene (HDPE), Low Density Polyethylene (LDPE), Linear Low Density Polyethylene (LLDPE), Polyvinyl Chloride (PVC), aromatics, and elastomers, has experienced healthy growth in India over recent years and is expected to continue in the future. However, domestic capacity additions during this timeframe have been limited, resulting in significant import reliance to meet the surge in domestic consumption.

On a global scale, there has been considerable capacity addition in the petrochemical sector, predominantly led by China, over the last few years. This occurred while global demand did not keep pace, creating a demand-supply imbalance that led to weak product spreads and exerted pressure on the operating profitability of Indian manufacturers due to competition from cheaper Chinese imports, the report elaborated.