The India Mono Ethylene Glycol (MEG) market is expected to grow at a compound annual growth rate (CAGR) of 6.72 per cent through 2030, MEG is a key raw material in the production of polyester fibres and polyethylene terephthalate (PET) resins, which are extensively used in the textile industry—including apparel and home furnishings—as well as in packaging applications such as bottles and films. In India, around 60-65 per cent of polyester production is allocated to textile applications. As the world’s second-largest polyester producer after China, India significantly contributes to the increasing demand for MEG, driven by the rapid expansion of its polyester manufacturing sector.

Demand & Supply Dynamics

Growing Demand: In FY2023-24, India’s MEG demand was estimated at approximately 2,819 KT. Despite registering a marginal contraction in demand at a projected growth rate of -0.02 per cent for the fiscal year, MEG prices witnessed a pronounced decline—from ₹73 per kg in January 2022 to ₹53 per kg by December 2023. This price correction was primarily attributed to subdued demand from downstream sectors, driven by macroeconomic headwinds and destocking measures by major end-users. However, by April 2024, MEG prices rebounded to around ₹64 per kg, likely supported by a revival in economic sentiment and renewed inventory replenishment. This recovery in pricing and resurgence in demand are expected to drive a growth trajectory, with the MEG market projected to expand at a CAGR of 4.55 per cent in FY2025-26 suggesting ongoing growth in the coming years.

Domestic Capacity vs. Production: With an installed capacity of 2,335.6 KT in FY2023-24, production was 1,656.2 KT in FY2022-23, potentially pointing to operational inefficiencies or feedstock constraints.

Production Recovery: Following a dip in FY2022-23, domestic production rebounded to 1,683.7 KT in FY2023-24. It is anticipated to rise to 1,847 KT by FY2025-26.

Policy & Regulatory Initiatives

  • Quality Control Orders (QCOs): The Indian government has enforced QCOs on MEG and polyester products to ensure import quality, encourage domestic production, and elevate brand value for Indian textiles globally.
  • Duty Protection & PLI Scheme: The Production Linked Incentive (PLI) scheme for man-made fibres aims to enhance domestic manufacturing, attract investments, and reduce reliance on imports.