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India-US, EU FTAs Boost Chemical Sector Competitiveness, Report Finds

A report by Centrum states that the India-US and India-EU Free Trade Agreements enhance the competitiveness of India's chemical industry by providing a level playing field with other developing nations and a duty advantage over China. The sector's outlook, however, will vary by company based on product diversification and operational strength. The report also notes that China's potential measures to address overcapacity could improve the global commodity chemicals outlook in the coming years. Despite uneven performance recently, factors like stable input costs and new capacity ramp-ups have provided some support to the sector.

Key Points: India-US & EU FTAs Level Playing Field for Chemical Industry

  • FTAs improve export competitiveness
  • Duty differential benefit vs. China
  • Outlook remains company-specific
  • China policy may ease overcapacity
2 min read

India-US, India-EU FTAs provide level playing field to domestic chemical sector, outlook improves: Report

Report says India-US and India-EU FTAs improve export competitiveness for domestic chemical sector, offering duty benefits versus China.

"clarity on India-USA and India-EU FTA provides India a level playing field with other developing nations - Centrum Report"

New Delhi, February 18

The export competitiveness of the domestic chemical industry has been improved as India-USA and India-EU Free Trade Agreements provide Indian chemical companies a level playing field with other developing nations and also offer benefits from duty differential with China, according to a report by Centrum.

The report stated that these trade agreements, by reducing tariffs, create more favourable market access. This is expected to strengthen India's position in global chemical supply chains and support long-term growth for the sector.

It stated, "While outlook will have a company-specific element to it, clarity on India-USA and India-EU FTA provides India a level playing field with other developing nations and also benefits from duty differential with China".

The report noted that the overall outlook for the chemical sector will remain company-specific, depending on factors such as business mix, product portfolio, and operational strengths. Companies with diversified products and strong execution capabilities are likely to benefit more from emerging opportunities.

The report also highlighted ongoing discussions around China's Anti-Involution Policy, which could improve the outlook for commodity chemicals over the next 2-3 years if the issue of overcapacity is addressed.

China's overcapacity has been a major concern for the global chemical sector, as excess supply has put pressure on prices and demand across key value chains.

If China takes steps to reduce overcapacity, it could help restore the balance between supply and demand, leading to improved pricing conditions and better profitability for chemical companies globally, including those in India.

The report highlighted that 3QFY26 was another quarter where performance remained uneven. While some companies reported strong profitable growth in select areas, others continued to face pressure due to global supply-demand imbalances.

However, certain positive factors supported the sector during the quarter. These included strong profitable growth in select pockets, ramp-up of recently created capacities backed by dedicated orders, stable raw material (RM) prices, and lower freight costs. These developments helped offset some of the pressures faced by chemical companies.

These strengths are expected to help companies improve efficiency, develop specialised products, and maintain competitiveness despite global challenges.

- ANI

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Reader Comments

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Priya S
Good step, but execution is key. We've signed trade pacts before with mixed results. The report itself says the outlook is company-specific. Only firms with strong R&D and diversified portfolios will truly benefit. Government must ensure MSMEs in the sector aren't left behind.
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Rohit P
Finally some positive news for the manufacturing sector! If China addresses its overcapacity, it will help everyone. Our chemical parks in Gujarat and Maharashtra need more investment in green tech to stay competitive long-term. Make in India getting a boost! 💪
S
Sarah B
Interesting read. From a global supply chain perspective, diversifying away from over-reliance on any single country is smart. India has a chance to become a more reliable partner for US and EU companies. Stability in raw material prices is a big plus.
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Vikram M
Hope this translates to more jobs for chemical engineers and technicians. The sector has huge potential but needs skilled workforce and better infrastructure. Lower freight costs mentioned are a relief for logistics.
K
Karthik V
A respectful criticism: The report mentions "uneven" performance. We must be careful. FTAs are not a magic bullet. Domestic issues like clear environmental policies, steady power supply, and easier compliance are equally important for growth. Let's not put all eggs in the FTA basket.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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