Major Japanese chemical companies such as Mitsui Chemicals and Sumitomo Chemical are moving away from dependence on the Chinese market and accelerating a strategic shift to India. In response to geopolitical risk and structural changes in the Chinese market, investment plans for new production and sales bases in India have been announced one after another.
Mitsui Chemicals aims to begin local production by 2030 of polyolefin elastomer (EVA) used for India's solar panel market. The company has already established a coating technology center in Gurugram and plans to build full formulation development capability for polyolefin and polyurethane dispersions by 2027. Sumitomo Chemical, meanwhile, is steadily proceeding with its withdrawal from China, including transferring its large-scale liquid crystal display polarizing film business in China to a local manufacturer in April 2024. The number of Japanese-affiliated companies with a presence in India reached 1,434 as of October 2024, an increase of 35 from the previous year.
Behind Japanese chemical makers' interest in India lie the strengthening of manufacturing-attraction measures under the Indian government's "Make in India" policy and the rapid expansion of India's solar power market. India has a target of 500GW of renewable energy capacity by 2030 and is promoting domestic production of solar panels, which aligns with the materials and components needs of Japanese chemical makers. In addition, while intensifying competition and price-decline pressure in China are directly hitting the earnings of Japanese companies, brand trust in Japanese products is high in India, making premium pricing possible there.
1. Consider obtaining subsidies and tax incentives by leveraging India's manufacturing policies, such as the PLI scheme. 2. Starting with the establishment of a technology center in a hub for Japanese-affiliated companies such as Gurugram, Pune, or Chennai allows for a phased entry with reduced risk. 3. Entry into India's renewable energy and EV-related value chain can be said to represent the biggest opportunity right now for materials, chemical, and component manufacturers. It is recommended to start by using information from JETRO's India offices and the Japanese Embassy in India, beginning with market research by industry.
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