Recent Searches
In brief
The chemicals and petrochemicals sector is entering a defining decade. The future of the chemicals sector in 2026 and beyond will be shaped by a confluence of structural shifts—ranging from geopolitical realignments and energy transition to disruptive technologies and evolving consumer expectations. Together, these forces are redefining the petrochemicals industry outlook globally while creating a distinct opportunity for India to emerge as a strategic growth hub.
One of the most significant trends in the chemicals industry is the realignment of global demand and supply. Persistent overcapacity in key petrochemical chains such as ethylene, propylene and aromatics—largely driven by China-led capacity additions—has compressed margins and accelerated consolidation. Europe is witnessing asset rationalization and divestments, while the US and Middle East continue to leverage feedstock advantages. Against this backdrop, trends in the India chemical sector stand out, supported by strong domestic demand and planned large-scale investments, positioning the country as a key beneficiary of petrochemicals market evolution.
At the same time, value creation is increasingly shifting toward high-growth value pools. Advanced polymers, specialty and next-generation chemicals, sustainable and green chemicals, and energy transition-related products such as battery chemicals and low-carbon hydrogen are expected to outpace traditional segments. These ‘New Age’ chemical segments are poised to represent a market opportunity nearing US$1 trillion by 2030, underscoring their role as the most dynamic value pools within the global chemical sector. These growth opportunities reflect a broader value chain transformation, where companies are moving away from pure volume play toward differentiated, higher-margin offerings.
Technology disruption is another defining force reshaping the sector. Artificial intelligence and advanced analytics are no longer optional; they are becoming central to competitiveness. Across R&D, AI-driven material discovery and polymer design are significantly accelerating innovation cycles. In manufacturing and supply chains, predictive maintenance, process optimization and demand forecasting are delivering measurable EBITDA improvements. A leading global chemicals manufacturer is leveraging an advanced generative AI platform to accelerate the identification and verification of new application opportunities, leading to a two-fold increase in the number of new applications discovered. A leading global chemicals company is implementing digital twin technology across its manufacturing facilities in Norway and the Netherlands to enhance operational visibility and data-driven optimization. This digital shift also enables greater resilience, end-to-end visibility and customer-centric innovation, all of which are essential amid global demand shifts and geopolitical uncertainty.
Energy transition dialogues
Industry leaders share insights and perspectives in energy transition through dialogues that address global challenges and opportunities with a shift towards renewables. Learn more here!
Sustainability imperatives are equally transformative. The chemical industry remains one of the largest industrial emitters, making decarbonization a strategic imperative rather than a compliance exercise. Companies are pursuing multiple pathways—energy and process efficiency, low-carbon energy integration, greener feedstocks, and carbon capture and removal. Circularity, recycled plastics and bio-based chemicals are moving from pilot stages to scaled investments, fundamentally altering portfolio strategies. Leading global specialty and advanced materials companies are increasingly adopting bio-based feedstocks in chemical production to reduce dependence on fossil fuels and advance low-carbon manufacturing pathways. In India, leading players are following Extended Producer Responsibility (EPR) norms and investing in advanced recycling, r-PET facilities while decarbonizing their feedstocks and process heat. For India, this creates an opportunity to leapfrog legacy models by embedding sustainability into new assets and ecosystems from the outset.
Responding to these forces requires bold strategic transformation. Leading players are reassessing asset footprints, especially in high-cost regions, while redirecting capital toward Asia. Leading global chemicals manufacturers are increasingly targeting high-growth markets like India, Indonesia and Vietnam—both as export destinations and potential manufacturing bases. Business model innovation is gaining momentum, with companies exploring service-led models, digital platforms, ecosystem collaborations and vertical integration. M&A is increasingly focused on portfolio specialization, access to sustainable technologies and strengthening positions in growth markets.
The article is authored by Puneet Kumar, Partner, Energy & Petrochemicals, EY-Parthenon India.
The future of the chemicals industry in India will be defined by how effectively companies navigate petrochemical industry trends while embracing change. Success in the chemicals sector in 2026 will depend on aligning strategy with industry trends—leveraging technology disruption, addressing sustainability imperatives and responding to global demand shifts. Those that proactively drive value chain transformation, pursue strategic transformation and unlock growth opportunities through business model innovation will not only strengthen resilience but also shape the next chapter of the petrochemicals industry outlook in a rapidly evolving global landscape.
How EY can help
EY-Parthenon energy strategy consulting teams help C-suites drive future value-creation. Learn more.
Read moreDiscover EY energy transition insights, people and services, and how they can help your business unlock the opportunities of an uncertain future.
Read moreExplore EY's Hydrogen Toolkit for market analysis, carbon tracking, and LCOH insights to optimize your hydrogen strategy and sustainability.
Read moreRelated articles
How CCTS is accelerating India Inc.’s race to decarbonize
India’s Carbon Credit Trading Scheme drives industrial decarbonization, tightening benchmarks and raising risks for companies delaying low-carbon transition.
Odisha’s roadmap for clean energy transformation
Odisha is accelerating clean energy growth through renewables, grid modernization, and industrial electrification, supporting India’s net-zero and Viksit Bharat goals.
Eigenvectors of net zero: Building a resilient energy future
Explore how India’s clean energy transition to 2070 must balance growth, equity, security, sustainability with AI-led smart grids, renewables, digital energy and green investments.
