• Overview
• Products
• Policy
• Olefinic Complexes
• Perspective Planning
• Opportunities

Petrochemicals are derived from various chemical compounds, mainly from hydrocarbons. These hydrocarbons are derived from crude oil and natural gas. Among the various fractions produced by distillation of crude oil, petroleum gases, naphtha, kerosene and gas oil are the main feed stocks for petrochemical industry. Ethane, propane and natural gas liquids obtained from natural gas are the other important feedstock used in the Petrochemicals industry. Petrochemical industry plays a vital role in economic growth and development of manufacturing sector. The value addition in the petrochemicals industry is higher than most of the other industry sectors.

The Petrochemical industry, which entered in the Indian industrial scene in 1970s, registered a rapid growth in the 1980s and 1990s. Petrochemical industry mainly comprise of synthetic fibre / yarn, polymers, Synthetic Rubber (elastomers), Synthetic detergent intermediates, performance plastics and plastic processing industry. Today, petrochemical products permeate the entire spectrum of daily use items and cover almost every sphere of life like clothing, housing, construction, furniture, automobiles, household items, agriculture, horticulture, irrigation, packaging, medical appliances, electronics and electrical etc.

Presently there are eleven naphtha and/or/dual feed cracker complexes in operation with combined ethylene capacity of about 7.05 million tonnes per annum. In addition, there are six aromatic complexes in operation with a combined Xylene capacity of about 5.5 million tonnes. The production performance of major petrochemicals during 2012-13 to 2016-17 is as follows:.

DOWNSTREAM PETROCHEMICAL PROCESSING SECTOR

The annual consumption of virgin grade polymers for the year 2017-18 was 15.9 Million Tonnes. Demand for Plastics in India is currently growing at an average rate of 8.9% for the past 4 years (2013-14 to 2017-18). It is expected to reach 24 Million Ton by 2022-23 and 35 Million Ton by 2027-28.

There are more than 50,000 processing units in organized and unorganized sector (around 33,500 are in organized segment) having 1,53,500 Plastics processing machines for producing a diverse range of plastic products. The processing capacity is estimated to be 45.1 Million tonnes per annum. This processing capacity had been growing @ 8.8% CAGR during last 4 years and the processing industry is expected to invest $10 billion during the next 5 years to enhance the capacity to 62.4 Million Ton and 86 Million Ton by 2027-28.

II. PRODUCT GROUPS

II.1. Manufacturing of Building Blocks

• Naphtha/Gas cracker with down streams processing to produce Ethylene; Propylene, Butadiene, etc.
• Aromatic complexes to produce: Benzene, Toluene and Xylene.

II.2. Building Blocks to

• Polymers (LDPE, LLDPE, HDPE, PP, PVC, Polystyrene, ABS, Engineering Polymers, Performance Polymers etc.) And Intermediates (EDC/VCM, Styrene, etc.)
• Synthetic Fibre Intermediate (ACN, DMT, PTA, Caprolactum, MEG)
• Elastomers (SBR, PBR, NBR, Butyl Rubber etc.)
• Surfactant intermediates. (LAB, EO etc.)
• Other petrochemicals (solvents, basic as well as intermediate chemicals)

II.3. Fibre intermediate to Synthetic Fibres (PSF, PFY, NFY, NIY, AF etc.)

II.4. Polymers to Plastic processed articles..

III.1 Industrial Policy

The New Industrial Policy announced on 24th July 1991 exempts industrial undertaking from licensing requirements, subject to the following conditions.

The proposed article(s) of manufacture is/are not included in:

• List of items reserved for the public sector;
• List of items which are subject to compulsory licensing;
• List of items reserved for small scale sector.

The proposed project is not located within 25 kms of the standard urban area limits of a city with a population of more than 10 lakhs according to 1991 census. This condition will not apply, provided these are located within the area designated as "Industrial Area" by the State Government before July 25, 1991. If the unit is proposed to be located in a restricted location industrial license may have to be obtained. For following petrochemicals, industrial license is required:

• 281119.01 Hydro cyanic acid and its derivatives. {This includes Arcylonitrile (ACN), Methyl Metha Acrylate (MMA) and Poly Methyl Metha Acrylate (PMMA) etc.}
• 281210.01 Phosgene and its derivatives. (This includes Polycarbonate)
• 292910.09 Isocynate and di-isocyanates of hydrocarbon not elsewhere specified (example Methyl isocyanate)

III.2 Foreign Direct Investment (FDI) Policy

The procedure has been simplified for facilitating foreign direct investment. Petrochemical items / activities fall under the RBI automatic approval route for FDI/NRI/OCB investment up to 100 %..

III.3 Project Import under Custom Tariff

Under Chapter 98.01 of Customs Tariff Act, 1975 Import of capital goods are permitted at the standard rate of duty 20% and other applicable duties). The provision permits following description of articles:

"All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified: Industrial Plant" .

Presently there are eleven crackers, in operation with combined ethylene capacity of about 7.05 million tonnes per annum as given below:

Perspective Planning

In order to boost domestic production capacities as a part of PCPIRs policy, a perspective planning for the petrochemical industry has been initiated to study demand supply scenario keeping in view the existing and under execution capacities. A Committee under the co- chairmanship of Secretary, MoP&NG and Secretary, DCPC has been constituted to examine the issues of Petrochemicals demand and supply over the next 15 to 20 years and recommend policy options to the Government including recommendations regarding amendments to the existing PCPIRs policy of the Government. Four meetings of the Committee have been held in this regard to prepare a roadmap.

OPPORTUNITIES IN PETROCHEMICALS

The economic reforms initiated in 1991 brought about significant changes in the domestic petrochemical industry. Delicensing and deregulation allowed the market forces to determine investment and growth. It is now established globally that ethylene (the main building block for petrochemicals) consumption and polymer consumption in the downstream plastic articles have strong correlations with the growth of Gross Domestic Product (GDP). Polymer consumption has strong backward and forward linkages and an increase in polymer consumption has a multiplier effect on the GDP Growth.

The annual consumption of virgin grade polymers for the year 2017-18 was 15.9 Million Tonnes. Demand for plastics in India is currently growing at an average rate of 8.9% for the past 4 years (2013-14 to 2017-18). It is expected to reach 24 Million Ton by 2022-23 and 35 Million Ton by 2027-28. There are more than 50,000 processing units in organized and unorganized sector (around 33,500 are in organized segment) having 1,53,500 Plastics processing machines for producing a diverse range of plastic products. The processing capacity is estimated to be 45.1 Million tonnes per annum. This processing capacity had been growing @ 8.8% CAGR during last 4 years and the processing industry is expected to invest $10 billion during the next 5 years to enhance the capacity to 62.4 Million Ton by 2027-28.

VISION

Keeping in view the potential of the domestic petrochemical industry and the growth opportunities provided by the global shift in production and demand, the Petrochemical Sector envisioned

• Development of value added, quality petrochemical products at globally competitive prices using eco-friendly processes and technologies.
• Innovation of newer applications and products with focus on sustainable development.

Petrochemicals have to play a vital role in addressing our basic needs in the fields of food and water security, shelter, clothing and textiles, health care, social and physical infrastructure, information, communication and entertainment.

The thrust areas for the plastic industry include modern farming through plasticulture, packaging for processed foods and consumer non-durables, better performing plastics for automobiles and consumer durables, infrastructure development through cost effective plastics and innovative products for telecommunications and information technology services sector.

The future growth areas in synthetic fibers are in Polyester fibers and yarn, and Acrylic Fibers. There is also substantial potential for growth in technical textiles including performance fibers.

The vision is to be achieved through promotion of Research and Development and Human Resource Planning and Development in the field of Polymers & Plastics with the support of Central Institute of Plastics Engineering & Technology (CIPT).

Setting up of Plastic Parks

The scheme aims at setting up of need based plastic parks, an ecosystem with state-of-the-art infrastructure and enabling common facilities through cluster development approach, to consolidate and synergize the capacities of the domestic downstream Plastic Processing Industry. The larger objective of the scheme is to contribute to the economy by increasing investment, production, export in the sector and also generation of employment.

Under the scheme, Government of India provides grant funding up to 50% of the project cost, subject to a ceiling of Rs. 40 crore per project. The remaining project cost is funded by the State Government or State Industrial Development Corporation or similar agencies of State Government, beneficiary industries and loan from financial institutions. The details of setting up of Plastic Parks may be seen here

Setting up of Centres of Excellence (CoE) in Polymer Technology

The scheme aims at improving the existing petrochemicals technology and research in the country and to promote development of new applications of polymers and plastics.The details of Centres of Excellence (CoE) may be seen here

National Awards for Technology Innovation in Petrochemical and downstream Plastic Processing Industry

The Department is implementing an Award Scheme to provide incentive for meritorious innovations & inventions in various fields of petrochemicals and downstream plastics processing industry. Central Institute of Plastic Engineering and Technology (CIPET) is entrusted with the task of seeking and short listing nominations for the scheme. The Department has been providing a grant-in-aid to CIPET each year for administering the award scheme.

The National Awards for Technology Innovation are given in various categories for innovation in areas such as Polymeric Materials, Polymeric Products, Polymer Waste Management and Recycling Technology and related areas. The prize money for winners is Rs 3 lakhs and for the runners up is Rs 1 lakh

The details of National Awards may be seen here