India is well-positioned to emerge as a regional consolidator in the petrochemicals sector, backed by strong domestic demand and growing manufacturing capacity, according to a report released on Monday by the Boston Consulting Group (BCG).
The report, titled “Preparing for the Next Wave of Petrochemical Consolidation,” outlines that the global petrochemical industry is heading toward a phase of significant consolidation. This shift is being driven by prolonged low margins, overcapacity, and changing regional growth dynamics.
It calls on Indian petrochemical firms to reassess their business portfolios, prepare for multiple market scenarios, and act early to seize strategic advantages.
The report notes a sharp decline in sector profitability, with the average return on capital employed (ROCE) dropping from 8 per cent in 2019 to around 4 per cent in 2024. Meanwhile, capacity expansions in several regions continue to outpace demand growth, prompting a wave of rationalisation and consolidation among global players striving to remain competitive.
“With this strategic window of opportunity, Indian petrochemical players must look beyond organic growth to targeted mergers and acquisitions (M&A), vertical integration, and investments in technology and sustainability,” the report stated. It underlined India’s strengths — particularly robust domestic consumption and a rapidly expanding manufacturing base.
Kaustubh Verma, Managing Director at BCG, said: “As the global petrochemical landscape enters a new consolidation phase, India stands at a strategic inflection point. With strong domestic demand and growing manufacturing capabilities, Indian companies can carve out regional leadership by pursuing targeted M&A, securing critical feedstock, and strengthening their technology and sustainability credentials.”
“To stay ahead, companies must proactively reassess their portfolios and plan for multiple market outcomes. Those who act decisively now will be better positioned to capture long-term value,” he added.
The report also notes that margin pressure is likely to persist, as slow demand growth coupled with rising global production capacity continues to squeeze profitability. As a result, capacity rationalisation and strategic consolidation are expected to dominate boardroom agendas in the coming years.
— IANS