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Key Points

The Indian specialty chemicals sector is poised for a modest 7-8% revenue growth in the upcoming fiscal year, primarily driven by volume increases. Crisil's report highlights potential challenges from trade-related uncertainties and export market volatility. Companies with diversified portfolios are likely to be more resilient in navigating these economic complexities. The forecast suggests a gradual recovery with domestic revenues showing more promise than export segments.

Key Points: Crisil Forecasts Indian Specialty Chemicals Sector Growth

  • Specialty chemicals sector faces volume-driven growth with profitability challenges
  • Domestic market remains stronger than export segments
  • Trade uncertainties may impact sector performance
  • Manufacturing expected to grow 9% annually through 2031
2 min read

Indian specialty chemicals sector's 7-8 pc revenue growth in FY26 to be volume-driven

Crisil predicts 7-8% revenue growth in specialty chemicals, driven by volumes amid trade uncertainties and global economic challenges

"Domestic revenues are expected to grow 8–9 per cent - Anuj Sethi, Senior Director, Crisil Ratings"

New Delhi, March 31

The Indian specialty chemicals sector’s 7-8 per cent revenue growth next fiscal (FY26) will be largely volume-driven with realisations under pressure, according to a Crisil report.

Trade-related uncertainties stemming from US tariff actions could upend the recovery in profitability of India's specialty chemicals sector.

Companies with balanced portfolios or catering to resilient end-user sectors are likely to better absorb shocks, while those reliant on exports or commoditised segments may face increased margin risk due to price volatility, said the report.

According to Anuj Sethi, Senior Director, Crisil Ratings, domestic revenues, forming 63 per cent of the pie, are expected to grow 8–9 per cent, while exports, may see 4–5 per cent growth.

Profitability pressures will continue but vary across companies, influenced by end-user exposure, revenue mix and demand-supply dynamics.

The report looked into 121 companies rated by Crisil Ratings, representing about one-third of the highly fragmented sector valued at Rs 4 lakh crore.

Meanwhile, the country’s real gross domestic product (GDP) growth would be steady at 6.5 per cent in fiscal 2026, despite uncertainties stemming from geopolitical turns and trade-related issues led by US tariff actions, according to another Crisil report this month.

The forecast is based on two assumptions. These include another spell of normal monsoon and commodity prices continuing to remain soft. Cooling food inflation, the tax benefits announced in the Union Budget 2025-2026, and lower borrowing costs are expected to drive discretionary consumption, the report mentioned.

Growth is now returning to pre-pandemic rates as fiscal impulse normalises and the high-base effect wears off. Even with that, the high frequency Purchasing Managers Index (PMI) data reveals that India maintains its pole position among major economies.

According to the report, manufacturing growth is expected to average 9.0 per cent per year over fiscals 2025-2031, up from 6 per cent on average in the pre-pandemic decade. The services sector will remain the primary growth driver. As a result, the share of manufacturing in GDP will increase to 20 per cent from 17 per cent in fiscal 2025, the report predicted.

- IANS

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Reader Comments

R
Rajesh K.
This is encouraging news for our chemical industry! Volume-driven growth shows strong domestic demand. Hope the government continues supporting this sector with favorable policies. 🇮🇳
P
Priya M.
Interesting analysis but I wish the article had more details about which specific chemical segments will perform best. The 8-9% domestic growth projection seems optimistic given global uncertainties.
A
Amit S.
The manufacturing growth predictions are impressive! 9% average for 7 years would be transformative for our economy. Fingers crossed about those normal monsoons though 🌧️
S
Sunita R.
As someone working in this sector, I can confirm the pressure on margins is real. Companies really need to focus on innovation and value-added products rather than competing on price alone.
V
Vikram J.
The US tariff situation is concerning. We need to diversify our export markets and reduce dependency on any single country. Maybe focus more on Europe and emerging markets?

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