Material Insights · Understanding the Material World

Methanol and Pharmaceuticals

Methanol is a crucial solvent for making and purifying drug intermediates and APIs, and India imports over 90% of the methanol it uses, mostly from the Middle East, so a Gulf supply shock reaches Indian drug makers directly.

Methanol (chemical) and Pharmaceuticals (industry): 3 relationships.

How they are linked

1. Process solvent

Physical flow · Strong · Methanol → intermediate and API synthesis

Drug intermediates and APIs are made in solution and purified by crystallisation and washing, and methanol is a cheap, versatile polar solvent for these steps and a feedstock for other chemicals used in drug making; key starting material and intermediate makers rate it 5 of 5 on criticality.

  • 1 enterprise type that depends on it
  • 5 of 5 criticality for key starting material and intermediate makers

Where a registered process specifies a solvent, a plant generally cannot swap in another without revalidation, which helps explain the high rating. In April 2026 the Department of Pharmaceuticals described methanol as a crucial solvent in the pharmaceutical value chain when West Asia disruption threatened supply.

Enterprise types that depend on it:

  • Key starting material and intermediate makers: solvent (criticality 5 of 5)

Sources: Material Insights; India Today NE

2. Import dependence

Shared risk · High in India · Middle East methanol → Indian drug makers

India makes little methanol, so most of it comes by sea from Gulf producers and a disruption to that trade reaches drug plants directly.

  • 3.12 Mt India's methanol consumption, FY2024-25
  • 0.18 Mt India's domestic methanol production, FY2024-25
  • over 85% share of India's 2025 methanol demand met by Middle East suppliers

Imports rose about 13.5% to nearly 3.4 Mt in 2025; Oman supplied about 1.6 Mt and Saudi Arabia about 0.95 Mt. Iran's share of imports fell from about 17% in FY2023-24 to about 4% in FY2024-25 as US sanctions bit, so buyers have already had to switch origin once; a wider Gulf disruption would leave few alternatives.

Sources: Alchempro; S&P Global Commodity Insights

3. Supply security for medicines

Policy · Medium · Government action → methanol for pharma

Because drug output depends on imported solvents, the government treats methanol supply as part of medicine security.

  • 0% customs duty on methanol imports, 2 April to 30 June 2026, down from about 2.75%

In April 2026, amid West Asia disruption, the government engaged domestic producers Assam Petro-Chemicals and Gujarat Narmada Valley Fertilizers and Chemicals, which began moderate supplies to drug makers, and exempted 40 petrochemical products, methanol among them, from customs duty for three months. NITI Aayog has noted that about 90% of India's methanol requirement is met by imports and has promoted a methanol economy with more domestic production, which would reduce this exposure if built.

Sources: India Today NE; NITI Aayog; S&P Global Commodity Insights

For investors

Key learnings

  1. Methanol is a hard input for API and intermediate makers, so the main risk is a physical shortfall that stops production rather than a modest price rise.
  2. India's methanol use is over 90% imported and Middle East suppliers met over 85% of 2025 demand, so Gulf shipping and sanctions are a direct risk for Indian bulk drug output.
  3. The government turned to domestic producers such as Assam Petro-Chemicals and GNFC in April 2026, which shows their strategic value whenever Gulf supply is disrupted.

What to track

  • Methanol import price, CFR India: Solvent cost and availability for API makers (Weekly · Argus, ICIS, Chemical Weekly)
  • India methanol imports by origin: Concentration of supply and effect of sanctions (Monthly · DGCI&S, Ministry of Commerce)
  • Gulf shipping disruptions and Iran sanctions: Risk of physical shortfall (As announced · news, US Treasury OFAC)

For policymakers

Key learnings

  1. Medicine security depends on solvents as well as on APIs and KSMs, and methanol is the clearest example.
  2. With about 0.18 Mt of domestic output against 3.12 Mt of use in FY2024-25, India has almost no domestic buffer.
  3. Strategic stocks, more import origins or more domestic methanol capacity would each reduce the exposure.

What to track

  • Domestic methanol capacity and output: Size of the domestic buffer (Yearly · Department of Chemicals and Petrochemicals)
  • Customs duty and import measures on methanol: Cost relief for drug makers during supply shocks, and when it lapses (As announced · CBIC, Ministry of Finance)

India

India consumed about 3.12 Mt of methanol in FY2024-25 against 0.18 Mt of domestic output, importing mostly from Oman, Saudi Arabia and other Gulf states; its large API and intermediate industry is one of the users that cannot easily do without it.

Sources

  1. Pharmaceuticals: materials, Material Insights (2026)
  2. Sanctions fallout: how US policy on Iran affects India's methanol supply, Alchempro (2025)
  3. India data: India diversifies methanol supply as sanctions hit Iranian imports, S&P Global Commodity Insights (2026)
  4. Centre in talks with Assam Petrochemicals to secure methanol supply for pharma, India Today NE (2026)
  5. India: leapfrog to methanol economy, NITI Aayog
  6. India exempts customs duty on several petrochemicals products for three months, S&P Global Commodity Insights (2026)