Europe’s Chemical Industry Crisis: A Snapshot
Europe’s chemical industry that is vital to its entire industrial and strategic framework, is facing one of its toughest challenges in decades. Hit hard by skyrocketing energy prices, complex regulations, and tough global competition, the sector saw a 12 per cent drop in production between 2019 and 2023.

A major culprit is natural gas, which now costs 3.3 times more in Europe than in the US. This spike is driven by factors like the end of Russian gas transits via Ukraine, cold winters, and lower renewable output which has made production expensive, dampened investment, and pushed 2025 growth projections below 0.5 per cent, a steep fall from 2.5 per cent in 2024.

These energy costs have not only raised the cost of living but also weakened industrial competitiveness, prompting plant closures (like the BASF plant in Germany) and job losses. The European Chemical Industry Council has raised alarms, calling for urgent policy action: lower energy prices, clearer regulations, trade protection, and targeted funding.

As production slows or halts, especially in energy-intensive segments like melamine, methanol, caprolactam, and steam cracking, a clear opportunity emerges for Indian chemical players, who offer cost efficiency, reliability, and growing capacity at a time when Europe struggles to stay afloat.

India’s Big Opportunity in Europe’s Chemical Crisis
As Europe’s chemical sector faces a deepening crisis, driven by soaring energy costs, regulatory burdens, and plant shutdowns, India is emerging as a strong alternative and trusted partner. Already the 7th largest chemical producer in the world (3rd in Asia) and 5th largest chemical exporter to the EU (valued at €11.9 billion in 2023), India is well-positioned to grow its footprint further in the region.

What makes India stand out is its 10–15 per cent cost advantage from low labour and energy, a robust manufacturing base, and most importantly, a growing reputation for quality and reliability. These traits are gaining weight in Europe, especially as companies seek dependable suppliers amid global uncertainty.

India’s current market size is $260 billion, and after this expansion to the EU and the investments in India, it can go up by another $20–25 billion. The chemical industry also supports ~2 million direct jobs and produces over 80,000+ chemical products and derivatives, showcasing its scale and diversification.

A key competitor in this space is China, which offers aggressive pricing and massive scale with over $150 billion in chemical exports. However, European buyers are increasingly looking beyond just low cost. India’s stable regulatory environment, democratic governance, and track record of consistent quality offer reassurance that is becoming more valuable than just the lowest bid. As supply chains shift towards resilience, India’s slightly higher prices are often justified by stronger trust, long-term dependability, and a transparent business climate—something which China struggles to match.

Indian chemical firms are already responding. Aarti Industries, for example, is setting up its own nitric acid plant to ensure supply security and better cost control. Nitric acid in India is also produced by Deepak Fertilisers, GSFC, and GNFC. Aarti has pointed out that Europe’s production issues are creating real opportunities for Indian players—a trend that is already starting to reshape the competitive landscape.

For global chemical investors or manufacturers looking to diversify away from Europe or China, India offers a compelling case. The country is home to several strategic industrial hubs with strong infrastructure and global connectivity, including:

  • Dahej (Gujarat) – an integrated chemical and petrochemical hub with its own port.
  • Mangaluru (Karnataka) – a coastal zone with significant refinery and chemical capacity
  • Visakhapatnam (Andhra Pradesh) – a fast-growing east coast SEZ with strategic access
  • Panipat (Haryana) – a well-established petrochemical base near northern consumption centres
  • Paradeep (Odisha) – strategic location with a major port, good infrastructure

Backed by supportive policies like the Production Linked Incentive (PLI) scheme, and with the Indian chemical industry expected to hit $300 billion by 2025, the stage is set for India to not just fill the gap but take a lead.