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About Petrochemicals


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:.

Sub-group 2012-13 2013-14 2014-15 2015-16 2016-17
Synthetic Fiber 3124 3144 3527 3554 3595
Polymers 7509 7876 7558 8839 9163
Elastomers (S.Rubber) 96 105 172 242 285
Synthetic Detergent Intermediates 627 597 596 566 664
Performance Plastics 1691 1685 1591 1700 1799
Total 13047 13406 13443 14900 15506
(Source: S&M Division)


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.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" .

Olefinic Complexes

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

Naphtha Crackers Ethylene Capacity (MTs)
Reliance Industries Ltd., Vadodara, Gujarat 1,75,000
Reliance Industries Ltd, Hazira, Gujarat 8,87,000
Haldia Petrochemicals Ltd, Haldia, West Bengal 7,00,000
Indian Oil Corporation Ltd., Panipat, Haryana 8,00,000
Sub- Total 25,62,000
Natural Gas Crackers
Reliance Industries Ltd., Nagothane, Maharashtra 4,21,400
Gas Authority of lndia Limited, Pata, UP 8,50,000
Reliance Industries Ltd, Dahej, Gujarat 4,00,000
Sub- Total 16,71,400
Dual Feed Crackers
Brahmaputra Cracker and Polymer Limited (BCPL), 2,13,100
ONGC Petro additions Ltd. (OpaL)* 11,00,000
Sub- Total 13,13,100
Off Gas Cracker
Reliance Gas industry, Jamnagar 15,00,000
Sub- Total 15,00,000
Total 70,46,500

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.



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.


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).

Assam Gas Cracker Project implemented by Brahmaputra Cracker and Polymer Limited

The Assam Gas Cracker Project (AGCP) was initiated in pursuance of the Memorandum of Settlement signed between Central Government and All Assam Students Union (AASU) and All Assam Gana Sangram Parishad (AAGP) on 15th August 1985. This Project is of economic significance for the States of Assam and North East Region. Cabinet Committee on Economic Affairs (CCEA), in its meeting held on 18th April, 2006, approved the setting up of the Assam Gas Cracker Project (AGCP) at a project cost of Rs. 5460.61 crore (fixed cost). A joint venture company namely M/s Brahmaputra Cracker and Polymer Limited (BCPL) was formed to implement the project and to produce about 2.8 lakh MT polymers per annum. Owing to various reasons, the project witnessed time and cost overruns. The Revised Cost Estimate (RCE-I) of Rs. 8920 Crore (on “as built basis”) was approved by the CCEA on 16th November, 2011 with mechanical completion by July, 2013 and commissioning by December, 2013.

2. Due to time and cost overruns the Revised Cost Estimate-II (RCE-II) was approved by the Hon’ble Minister (C&F) in July, 2016, is Rs.9965 crore comprising capital subsidy of Rs. 5,239.45 crore, debt of Rs. 3,307.88 crore and equity of Rs. 1,417.67 crore as against the approved project cost of Rs.8,920 crore (RCE-I) with the Revised schedule of commissioning of the project by December, 2015.

3. The Project has been commissioned on 2nd January, 2016 and dedicated to the nation on 05.02.2016 by Hon’ble Prime Minister. The plant has produced 212569 MT of Polymers during 2017-18 and Rs 4,999.00 Cr. released towards capital subsidy by the Govt of India. The plant has been operating at optimum capacity .

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 setting up of 10 Plastic Parks (including current four Plastic Parks already approved) at a cost of Rs. 405 crore has been approved for implementation during 12th upto March 2020 .

Currently under the scheme of Plastic Parks Plastic Parks in States of Madhya Pradesh, Odisha, Tamil Nadu and Assam are being set up. Another Six Parks are being planned.

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 Department has set up five Centres of Excellence (CoE) within the premises of reputed educational/research institutes at a cost of Rs.6 Cr each during the 11th & 12th Five year Plans. The details are as below :-

  • National Chemicals Laboratory (NCL), Pune – CoE for Sustainable Polymer Industry through Research, Innovation & Training (CoE-SPIRIT);
  • Central Institute of Plastics Engineering & Technology (CIPET), Chennai – CoE for Green Transportation Network (GREET),
  • IIT, Delhi – CoE for Advanced Polymeric Materials,
  • CIPET, Bhubaneswar- CoE on Sustainable Green Materials and
  • IIT, Guwahati – CoE for Sustainable Polymers

The assets created under CoE-SPIRIT at NCL, Pune have resulted in a boost to contemporary research in Polymer science, and also contributed to the training of several members of polymer industry and academia. The CoE- GREET at CIPET, Chennai and CoE on Sustainable Green Materials at CIPET, Bhubaneswar have given outputs are in terms of promoting academic, research and educational excellence through partnership between CIPET, India and University of Toronto, Canada and Michigan State University, USA. At IIT, Delhi and IIT, Guwahati, the resources and capabilities are being strengthened for furthering research activities in Advanced Polymeric Materials and Sustainable Polymers, respectively.

The scheme is now extended up to March 2020 and 3 new Centres at a total cost of Rs 15 crore proposed.

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. For the 7th National Awards for Technology Innovation-2016-17, a total of 415 nominations were received, amongst whom 16 Winners and 7 Runners-up were selected and awarded by the Honorable Minister for (C&F) in a function held on 1st March 2017 in Vigyan Bhavan New Delhi. These awards were given in eight categories and three sub-categories of Awards in each category, covering (i) individual/ team (ii) industry, and (iii) R&D institutions. The award prize money given for winners in each category for 7th National Award was Rs. 2 lakh.

The 8th National Award proposes awards in six categories of New Polymers, New Applications of Polymers in various fields, viz., New Polymer Processing Machines including Energy Efficiency, Innovation in Polymer Waste Management & Recycling , Green / Bio-degradable Polymer, Innovation in Packaging covering 22 sub-categories. Unlike the previous editions of awards, in the 8th edition the distinction of individual, industry and institutions as separate categories have been done away with focus on the innovation. Further the prize money for winners have been enhanced to Rs 3 lakhs, while for the first time the runners up are also been proposed to be given prize money of Rs 1 lakh each .