The Indian dyes and pigments (D&P) industry maintained its recovery momentum in FY25, in line with CareEdge Ratings’ expectations. Leading manufacturers achieved volume-driven revenue growth exceeding 10%. Improved demand conditions and better operating leverage supported this growth.
PBILDT margins expanded by around 110 basis points, driven mainly by stronger gross margins and softer raw material prices. This performance closely aligned with CareEdge’s earlier forecast of 10% topline growth and 150–200 bps margin improvement.
The recovery followed a prolonged slowdown during FY23 and early FY24, especially in the textile sector, which remains the industry’s largest end user.
Export Weakness to Drive FY26 Contraction
CareEdge Ratings expects the D&P industry to contract by 5–7% in FY26, primarily due to export-related challenges. During H1 FY26, exports declined by over 5% year-on-year.
Lower textile production in key importing markets such as China and Turkey reduced demand for Indian dyes. Several textile-producing countries also expanded their domestic dye manufacturing capacity, which lowered import dependence.
In addition, global buyers increasingly sourced low-cost Chinese dyes, putting pressure on Indian exporters. Inventory destocking and deliberate volume cuts to protect margins further weighed on exports.
US Tariffs to Intensify Pressure in H2 FY26
The imposition of US tariffs on select D&P products is expected to add further stress in H2 FY26. CareEdge Ratings projects exports to decline by nearly 10% compared to H1 FY26.
Overall, export volumes for FY26 are likely to fall by approximately 12% year-on-year. Weak realisations may persist as global competition remains intense.
Domestic Demand Offers Partial Cushion
Despite export headwinds, domestic demand remains resilient. Growing indigenous textile consumption continues to support baseline volumes.
This domestic strength is expected to partially offset export declines and limit the overall contraction of the industry in FY26.
PBILDT margins are likely to remain stable, supported by soft raw material prices. Most key inputs derive from crude oil, which has seen price moderation over the past two years.
Industry Structure and Market Size
CareEdge Ratings estimates the Indian D&P industry size at ₹45,000–₹50,000 crore, with annual volumes of around 14 lakh tonnes. India accounts for 10–15% of the global market.
Dyes and dye intermediates form 75–80% of total industry output, while pigments contribute the balance. The textile sector consumes over 70% of dye production.
Exports represent 35–40% of total output, with the US, China, Turkey, and Bangladesh as major destinations. Imports remain largely confined to dye intermediates, mainly sourced from China.
Financial Profile Remains Comfortable
Leading D&P players continue to maintain a healthy financial position. Industry-wide leverage stood at around 0.25x at the end of FY25.
Interest coverage remained strong at above 6x, supported by stable profitability and lower borrowing costs. With no major debt-funded capital expenditure planned, solvency indicators are expected to remain comfortable in FY26.
CareEdge Ratings’ Outlook
Commenting on the outlook, Nikita Goyal, Associate Director, CareEdge Ratings, stated that export pressures will drive the FY26 contraction. However, domestic demand and stable margins will help contain the downside.
Kalpesh Patel, Director, CareEdge Ratings, added that strong balance sheets will allow leading players to manage volatility. He cautioned that some mid-sized companies with concentrated product portfolios may continue to face pressure.