Indian chemical sector’s aspirations will face roadblocks

Following global supply chain disruptions caused by the COVID-19 pandemic and amid simmering US-China political tensions, Indian chemical companies, especially those making pharmaceutical ingredients and specialty chemicals, have been striving to position themselves as a go-to for firms seeking to diversify suppliers beyond China.But those intentions were dashed in 2025, partly because the US imposed nearly 50% tariffs on Indian goods, including many chemicals. Headwinds from the tariffs will continue to affect the Indian chemical industry through 2026, experts on the sector say. Ajay Joshi, founder of an eponymous advisory firm for chemical companies, says that post-COVID-19, the Indian chemical sector experienced a transient period of growth driven by rising exports. Donald J. Trump's election and subsequent trade policy caused that growth to grind to a halt. “The US was a big market. It looks like the tariffs will continue to exist in 2026, making it a tough year for the Indian chemical sector overall,” Joshi says. And it's not just tariffs. In a blog post, Scimplify, a start-up that connects Indian specialty-chemical manufacturers with buyers, notes that India offers abundant opportunities, especially as international firms seek to diversify away from China. And India’s low labor costs, coupled with a young workforce, make it an attractive destination.But Scimplify warns that the road ahead is riddled with challenges. The company cites India’s heavy dependence on other nations for raw materials as a limitation on the growth of its chemical industry. A 2025 report by the National Institute for Transforming India (NITI) Aayog (PDF), the Indian