Growth in Revenue for Indian Specialty Chemicals Sector to Reach 7–8% in FY26 Driven by Volume

Synopsis

The Indian specialty chemicals sector is set to experience a revenue increase of 7-8% in FY26, primarily driven by volume despite pressures on realizations. Companies with diverse portfolios are better positioned to manage potential risks from trade uncertainties.

Key Takeaways

Expected growth of 7-8% in FY26 driven by volume.
Domestic revenues to rise by 8-9%.
Export revenues may grow 4-5%.
Profitability challenges will vary by company.
Manufacturing growth expected at 9.0% annually from 2025-2031.

New Delhi, March 31 (NationPress) The Indian specialty chemicals industry is expected to achieve a revenue growth of 7-8 percent in the upcoming fiscal year (FY26), primarily driven by volume, as indicated by a report from Crisil.

Trade-related uncertainties arising from US tariff policies could disrupt the profitability recovery of India's specialty chemicals industry.

Companies with diversified portfolios or those serving resilient end-user markets are likely to better withstand shocks, while businesses dependent on exports or commoditized products might experience higher margin risks due to price fluctuations, the report states.

Anuj Sethi, Senior Director at Crisil Ratings, noted that domestic revenues, which account for 63 percent of the total, are projected to grow by 8–9 percent, while exports may see a growth of 4–5 percent.

Challenges to profitability will persist but will vary among companies, influenced by factors such as end-user exposure, mix of revenues, and supply-demand dynamics.

The report analyzed 121 companies rated by Crisil Ratings, which represents approximately one-third of the fragmented sector valued at Rs 4 lakh crore.

In a related finding, the country’s real gross domestic product (GDP) growth is anticipated to remain stable at 6.5 percent for fiscal 2026, despite uncertainties from geopolitical changes and trade-related issues stemming from US tariffs, as per another report from Crisil this month.

This forecast relies on two key assumptions: the occurrence of another normal monsoon and the continuity of low commodity prices. Factors such as reduced food inflation, tax incentives outlined in the Union Budget 2025-2026, and lower borrowing costs are expected to bolster discretionary spending, as noted in the report.

Growth is returning to pre-pandemic levels as fiscal stimuli normalize and the effects of a high base diminish. Nevertheless, the high-frequency Purchasing Managers Index (PMI) data indicates that India retains its leading position among major economies.

The report anticipates that manufacturing growth will average 9.0 percent annually from fiscals 2025 to 2031, an increase from the 6 percent average seen in the pre-pandemic decade. The services sector is expected to continue leading in growth. Consequently, the share of manufacturing in GDP is projected to rise to 20 percent from 17 percent in fiscal 2025, according to the report.