Critical Chemical Shortages Disrupt Industries in India—What's Missing and Why

It seems almost unreal, but right now, even buying paracetamol isn’t guaranteed in some Indian pharmacies. Why? The answer lies way upstream—entire supply chains are being shaken up by critical chemical shortages India has never faced on this scale. If you haven’t heard much about this, you’re not alone. Media loves to talk about chip shortages or petrol prices, but there’s less noise when it comes to industrial and pharmaceutical chemicals. The consequences, though, are huge: prices rising for everyday products, gaps appearing in medicine stocks, and farmers stuck waiting for fertilizers that simply aren’t there. So what’s going on? Let’s break it down from the inside out.

How India's Chemical Industry Hit a Breaking Point

India’s chemical industry is a powerhouse—sixth largest in the world, and it’s on track to be worth $300 billion by 2025. This industry doesn’t just produce things for labs; it’s the backbone for everything from farming to mobile phones. Over 80,000 chemical products flow out of Indian factories each year. But there’s a catch: a lot of India’s production still relies on imported raw materials, particularly from China. Once COVID-19 started locking down Chinese ports and shutting factories, India’s supplies slowed to a crawl.

To get a sense of scale, check out this table below. Just last year, 70% of India’s pharmaceutical ingredients were imported from China, according to India’s Department of Pharmaceuticals. And it’s not just about pharmaceuticals. Everything from dyes for textiles to key building blocks for pesticides comes from outside India’s borders.

Now, imagine global freight costs exploding—shipping costs nearly quadrupled in 2021, and the effects are still felt today. By the time raw chemicals make their way out of the blocked Suez Canal or get processed in a jammed Chinese port, Indian factories are choking on thin inventories. Factories run short, prices double (or worse), and everyone from big city hospitals to small-town cotton farmers gets squeezed.

This overreliance on imports looks pretty risky in hindsight, right? It’s not just about external shock: everyday issues like stricter environmental rules in China, fluctuating currency exchange rates, and India’s own logistics hold-ups pile on the trouble. There have even been months when one missing chemical from China has shut down entire Indian pharma production lines. Suddenly, a small policy shift in another country can leave Indian shelves and farmland dry.

Pharma’s Pain: Why Your Medicine May Not Be in Stock

Most of us don’t think twice about what goes into a handful of paracetamol. But the thing is, paracetamol and many other life-saving medicines (like antibiotics, diabetes medications, and antipyretics) depend on what’s called Active Pharmaceutical Ingredients, or APIs. Right now, the API supply is probably the weakest link in India’s massive pharma industry—and that’s saying something, given that India is the world’s "pharmacy."

Here’s the wild part: Nearly 80% of the APIs Indian pharma companies use are imported, and China supplies most of that. During the pandemic, China tightened raw API exports, triggering instant shortages in Indian production. Speculation took over, prices shot up 2-3x for basic drugs, and even big names like Cipla and Sun Pharma were left scrambling. Some hospital buyers started stockpiling whenever shipments trickled in. Even as late as February 2025, pharma insiders reported delays of three to six months on some common medicine stocks.

Shortages have spread beyond APIs. Simple chemical ingredients like acetic acid (used in antibiotics), citric acid, and certain solvents have become tough to find, despite India having dozens of chemical plants. Smaller pharma players feel the pinch hardest. They can’t outbid bigger competitors for limited stock, so their shelves stay empty or they’re forced to buy substandard, grey-market chemicals just to keep up.

And patients? We're seeing it first-hand—prescriptions going unfilled, and people bouncing from pharmacy to pharmacy just to find a basic fever reducer or heart pill. Several states have even started central monitoring to track which medicines are about to run out, hoping they can ration what’s left more fairly. The knock-on effects don’t stop there. Prices jump for intermediates like excipients (the inactive parts of tablets and syrups), which means the cost of making the pill goes up, even before it gets to you.

Want another staggering detail? The cost of paracetamol’s main ingredient shot up by 220% between 2021 and 2024, which led to many smaller manufacturers just halting production. Turns out, chemical shortages aren’t just an industrial problem—they’re now a public health issue, too.

Farmers and Fertilizers: The Silent Victims

If you ask a farmer in Punjab, Maharashtra, or Odisha what hurts most during sowing season, you’ll rarely hear them complain about the weather. Instead, it’s always about the price—or the lack—of fertilizers and pesticides. India, despite having the world’s largest area of cropland after China, still imports almost 60% of the chemicals that go into making core fertilizers. No nitrogen, potassium, or phosphorus—no crops. Simple as that.

Let’s zero in on fertilizer. Phosphoric acid is critical for DAP (diammonium phosphate) fertilizer, the lifeblood for millions of farmers. Most of it comes from Morocco, and shipments have slowed since late 2023 due to geopolitical issues. Meanwhile, prices for raw potash soared by 80% after global sanctions hit Belarus and Russia, major exporters. Farmers, especially smaller ones, don’t really have buffer stocks—they buy just before the sowing season. This shortage means they often get stuck in bumper-to-bumper queues at distribution centers, sometimes overnight, hoping to grab even half the fertilizer they need.

Chemical pesticides tell the same story. Imported active ingredients have doubled in price, or just aren’t coming at all. The result? More farmers are turning to black-market suppliers, risking their crops (and health) on unregistered, substandard product. This isn’t about minor inconvenience—reduced pesticide means more crop loss to pests, which means less income after an already expensive planting season.

Meanwhile, the government has scrambled to step in. Subsidies have been increased, import duties slashed, and stockpiling programs launched. But it’s a bit like putting a plaster on a broken leg—without steady imports of raw chemicals, these measures only partially help. As crop yields risk falling, there’s real fear about food prices and inflation staying high.

Something few outside the sector realize: agricultural chemical shortages echo for months. What’s sown in June becomes food for millions in October. When the supply chain breaks, the impact can stretch far beyond just one harvest.

Future Trends and What Can Be Done About Shortages

So, how long until things get better? Honestly, there’s no magic fix, but there are interesting moves happening. The Indian government has begun rolling out what it calls a ‘Production Linked Incentive’ (PLI) scheme. This program is meant to nudge domestic companies into making more APIs, pesticides, and specialty chemicals at home, with special subsidies and fast-track approvals. Fourteen types of critical APIs have already been marked for urgent local production—the goal is to break dependency before the next crisis strikes.

Some big local manufacturers are answering the call. Gujarat and Andhra Pradesh are seeing huge investments in new chemical plants, promising to cut down imports by up to 25% in under five years. Tech startups are also in the mix, using AI to create replacement ingredients from alternate sources or more sustainable raw materials—think plant-based solvents or recycled phosphates.

Here are a few tips and observations, straight from people in the trenches:

• If you’re a pharma operator, source from multiple countries—not just China. Having a Plan B can save your business when geopolitics get tense.
• Farmers should team up in cooperatives to buy fertilizers and pesticides together, which helps negotiate bulk deals and better prices.
• Policy experts say India must fast-track environmental clearances for chemical factories (while staying safe, of course)—red tape is still slowing things down.
• Smaller chemical buyers can tap new B2B chemical marketplaces, where local producers are more likely to have surplus stocks in a pinch.
• Factories and traders need real-time inventory management now, not later—chemical hoarding and panic buying are only making things worse.

It’s tempting to hope Indian innovation will fix all this, fast—historically, every time there’s been a global shortage, someone somewhere finds a clever workaround. But real resilience means change up and down the chain. Unless alternative sourcing, better storage, and streamlined approvals kick in, India will keep feeling every ripple when the next global crisis hits. The chemical story—once hidden way behind the scenes—is suddenly hitting the average Indian right in the pocket, and occasionally, in the pharmacy queue. That’s a shortage you can definitely feel.