INDIA ADDA – Perspectives On India

IBEF works with a network of stakeholders - domestic and international - to promote Brand India.



Dikshu C. Kukreja
Dikshu C. Kukreja
Mr. V. Raman Kumar
Mr. V. Raman Kumar
Ms. Chandra Ganjoo
Ms. Chandra Ganjoo
Sanjay Bhatia
Sanjay Bhatia
Aprameya Radhakrishna
Aprameya Radhakrishna
Colin Shah
Colin Shah
Shri P.R. Aqeel Ahmed
Shri P.R. Aqeel Ahmed
Dr. Vidya Yeravdekar
Dr. Vidya Yeravdekar
Alok Kirloskar
Alok Kirloskar
Pragati Khare
Pragati Khare
Devang Mody
Devang Mody
Vinay Kalantri
Vinay Kalantri

Expansion Opportunities for Petrochemicals in India

Expansion Opportunities for Petrochemicals in India

As India approaches a US$ 5 trillion GDP by 2024-25, the petrochemical and derivatives sector will become even more important, as it is the backbone of agriculture, infrastructure, manufacturing, and services. The chemical and petrochemical industries are critical to India's economic development and are projected to remain a vital engine of growth in the future. Volatile feedstock prices and sulky demand are the main drivers of this business not just in India but worldwide. The Indian Chemicals and Petrochemicals sector is currently valued at US$ 190 billion. India is not only the world's sixth-largest chemical manufacturer and Asia's fourth, but it also exports chemicals to more than 175 nations. It accounts for 13% of the overall exports from India. The Indian petrochemical sector has gone a long way since its inception in the 1970s and is primed for transformational growth.

In the following decades, it is predicted to cater for over 10% of the incremental growth in worldwide petrochemical demand. The Indian chemical sector is growing at a rate that is 1.2-1.5 times the GDP. Going forward, as the chemical market in India grows to US$ 300 billion from its current estimate of US$ 178 billion, it is anticipated that the coming decade will bring in investments worth more than US$ 87 billion. Moreover, India is predicted to account for more than 10% of global petrochemical growth. The government has implemented many initiatives to stimulate this sector, including 100% FDI via automatic pathways, PCPIR (Petroleum, Chemicals, and Petrochemicals Investment Region) zones, and the establishment of infrastructure such as 10+ plastic parks. The new PCPIR strategy, which will be implemented between 2020 and 35, is estimated to generate a total investment of more than US$420 billion (Rs. 34 lakh crore) for the sector.

Petrochemical Industry

The petrochemical sector in India has been one of the fastest-expanding industries in the country. Since its inception, the Indian petrochemical sector has grown at an impressive rate. Petrochemicals are downstream hydrocarbons generated from crude oil and natural gas that include plastics and the majority of other compounds. These hydrocarbons are a precious resource that serve as essential raw materials in industry. This industry also contributes significantly to the country's economy and the growth and development of the manufacturing industry. Value-added petrochemical products are used to meet the needs of textiles and clothing, agriculture, packaging, infrastructure, healthcare, furniture, autos, information technology, power, electronics, and telecommunications, among other industries. It serves as the foundation for manufacturing industries such as building, packaging, medicines, agriculture, and textiles, among others.

The Indian petrochemical sector is extremely consolidated and oligopolistic in nature. Even up till recently, the industry was dominated to a considerable extent by just four big companies: Reliance Industries Ltd. (RIL), Indian Petrochemicals Corporation Ltd. (IPCL), Gas Authority of India Ltd. (GAIL), and Haldia Petrochemicals Ltd. (HPL). However, the recent merger of IPCL and RIL has further concentrated the industry, with the two companies accounting for more than 70% of the country's entire petrochemical capacity. However, the situation is somewhat different in the downstream petrochemical sector, which is highly fragmented, with over 40 businesses operating in the market.

The fundamental petrochemical polymer sector is now self-sufficient as a result of investments made in capacity additions by Indian petrochemical corporations. Petrochemical intermediates are a vital link in the Indian chemical industry since they are the principal feedstock to produce specialised chemicals, which are required for the production of practically all consumer and technological products. Polymer intermediates such as ethylene oxide, propylene oxide, polyols, phenol, styrene, and rubber derivatives are utilised in the production of a wide range of consumer goods.

Major Petrochemicals

Basic Major Petrochemicals





Synthetic Fibres

Acrylic Fibre

Polyester Staple Fibre Filament

Nylon Filament Yarn

Nylon Industrial Yarn/Tyre Cord

Polyester Filament Yarn

Polyester Staple Fibre

Polypropylene Filament Yarn

Polypropylene Staple Fibre

Polyster Industrial Yarn

Elastomeric/Spandex Filament Yarn




Low-Density Polyethylene

High-Density Poly Ethylene

Poly Styrene

Polypropylene (Inc. CoPolymer)

Expandable Poly Styrene

Poly Vinyl Chloride

Linear Low-Density Poly Ethylene

PVC Compound



Synthetic Rubber Elastomers)

Styrene Butadiene Rubber (SBR)

Poly Butadiene Rubber (PBR)

Nitrile Butadiene Rubber (NBR)

Ethyl Propylene Dimers (EPDM)

Ethyl Vinyl Acetate (EVA)

Butyl Rubber



Synthetic Detergent Intermediates

Linear Alkyl Benzene (LAB)

Ethylene Oxide (EO)



Performance Plastics

Acrylonitrile Butadiene Styrene (ABS) Resin


Nylon 6,6

Poly Methyl Methacrylate (PMMA)

Styrene Acrylonitrile (SAN) Resin

Polytetrafluoroethylene(P TFE)

Polyester Chips/PET Chips



  • Petrochemicals are quickly overtaking petroleum as the primary driver of world oil consumption. The industry is expected to contribute for more than a third of the increase in oil demand by 2030, and nearly half by 2050, surpassing the transportation sector. Meanwhile, increased climate change demands put a strain on fossil fuel consumption, resulting in a mix of improved fuel economy, alternative fuels, and electrification. Thus, the stagnant worldwide demand for fuel, as well as overall expansion, along with the profitability of petrochemical products over the next two decades, will contribute to the future of the petrochemicals industry as a key relevance for both global energy security and the environment.
  • Since the EU's petrochemical growth has been stagnating for several years due to high plastic usage, the Asia and Middle East regions have enjoyed long-term growth, leading in the establishment of petrochemical hubs. The combination of a growing economy for emerging countries, rising population, increasing skill base, and technological improvement has resulted in an increase in demand for petrochemical plastic products.
  • India has the potential for more consistent fuel demand, on top of rapidly expanding petrochemical requirements, as its plastic usage accounts for around one-third of worldwide plastic consumption.
  • In an effort to lessen considerable import dependence and meet the rapidly increasing demand for polymer products, domestic public and private oil corporations in India have solidified their intentions to invest in petrochemical capacity. Given the lack of around 12–14 global-scale petrochemical cracker capacity to satisfy India's increasing demand potential, the Indian petrochemical sector is predicted to grow at a CAGR of 9–10% over the course of the next 20 years. Due to advantageous geopolitical circumstances and the availability of affordable resources, the China Plus One business strategy is gaining momentum and expanding operations into other progressive developing countries like India.
  • Major foreign corporations, such as Saudi Aramco, BASF, Rosneft, ADNOC, Borealis, and a few others, have formed joint ventures and made sizeable investments that may transform the image of the India petrochemical industry. 

Government Initiatives

  • National Policy on Petrochemicals
    • Setting up of Plastic Parks

The programme intends to establish need-based plastic parks, an ecosystem with cutting-edge infrastructure, and common amenities through a cluster development model, in order to consolidate and synergize the capacities of the domestic downstream Plastic Processing Industry. The scheme's overarching goal is to support the economy by boosting sectoral investment, production, and exports while also creating jobs. Ten Plastic Parks have been authorised under the Scheme in the States of Madhya Pradesh (two), Odisha, Jharkhand, Tamil Nadu, Uttarakhand, Chhattisgarh, Assam, Uttar Pradesh, and Karnataka.

    • Setting up of Centres of Excellence in Polymer Technology

The scheme's goal is to improve the country's existing petrochemical technology and research, as well as to encourage the development of new polymer and plastic applications. In phase-I of the Scheme, which was in place from 2013 to 2017, the Government of India provided financial support up to a maximum of 50% of the project's overall cost, subject to a cap of US$ 7,25,448 (Rs. 6 crore) over a period of three years. The Scheme was extended until 2020 with updated parameters in 2016-17, with the goal of fostering applied research and technology transfer from lab to industry. So far, 13 Centres of Excellence (CoE) have been approved and built within the facilities of prestigious educational/research institutes.

    • Petrochemicals Research & Innovation Commendation Scheme 2023

The scheme for establishing Plastic Parks, the scheme for establishing Centres of Excellence, and the National Petrochemicals Awards Scheme have been reviewed/revised and renamed the Petrochemicals Research & Innovation Commendation Scheme with effect from January 2023. The Department's vision is to be realised through the promotion of R&D and human resource planning and development. The policy intends to institutionalise the Petrochemicals Research & Innovation Commendation Scheme in order to achieve this goal.

  • Revised Petroleum, Chemical and Petrochemical Investment Regions (PCPIRS) Policy (2020-35)

Under the PCPIR Policy, 2007, four Petroleum, Chemical, and Petrochemical Investment Regions (PCPIRs) are being implemented in the states of Andhra Pradesh (Vishakhapatnam), Gujarat (Dahej), Odisha (Paradeep), and Tamil Nadu (Cuddalore and Nagapanam) to promote investment and industrial development in these sectors. The PCPIR policy is being extensively revamped. The new PCPIR Policy 2020-35 aims to attract a total investment of US$ 142 billion (Rs. 10 lakh crore) by 2025, US$ 213 billion (Rs. 15 lakh crore) by 2030, and US$ 284 billion (Rs. 20 lakh crore) by 2035 in all PCPIRs across the country. The amended policy will reduce the size of each investment region from 250 square kilometres to 50 square kilometres, with a specialised cluster integration approach. The Centre is intended to offer Viability Gap Funding (VGF) of up to 20% for infrastructure projects in PCPIRs under the new policy. The PCPIRs are designed in a cluster strategy to boost the petroleum, chemical, and petrochemical sectors on a big scale in an integrated and environmentally beneficial manner. The four PCPIRs are estimated to create jobs for around 33.83 lakh people. Around 4.21 lakh people have been employed in direct and indirect PCPIR-related activities. The Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIR) initiative will also attract an estimated US$ 276.46 billion (Rs. 20 lakh crore) investment by 2035.

  • Chemical (Management and Safety) Rules (CMSR)

The fifth draft of the Chemical (Management and Safety) Rules (CMSR) has been released by India. The regulation will supersede two previous rules: the Manufacture, Storage, and Import of Hazardous Chemical Rules (1989) and the Chemical Accidents (Emergency Planning, Preparedness, and Response) Rules (1996). Manufacturers, importers, or Authorised Representatives must register chemicals that need to be registered when they are manufactured, brought into the country, or placed on Indian Territory.

  • Extended Producer Responsibility (EPR)

It is the Extended Producer Responsibility (EPR) of Producers (including Brand owners and importers) to manage their products in an environmentally sound manner up until the completion of their lives. It is a step towards more sustainable waste management. For waste management, the Indian government has published an EPR Policy.

  • Others
    • 100% FDI in the petrochemical sector through automatic route.
    • The government has granted several tax benefits for the petrochemical industry, including exemptions or reduced rates for excise duty, customs duty, and value-added tax (VAT) on specific petrochemical products such as polymers, plastics, and synthetic fibres.

Road Ahead

The chemical business is both knowledge-intensive and capital-intensive. It is a vital component of the expanding Indian industry. It contains basic chemicals and their derivatives, petrochemicals, fertilizers, paints, varnishes, gases, soaps, fragrances, toiletries, and pharmaceuticals. India's strong economic success, backed by solid macroeconomic fundamentals, and population expansion are key enablers for the petrochemical manufacturing cluster. The government offers assistance to this industry through major initiatives like Make in India and the Aatmanirbhar Bharat Abhiyan, which also foster an atmosphere that will draw in more investments. There are potential investment opportunities worth US$ 30 billion in the coming decade, and the Government of India is proactively tackling current difficulties and launching various landmark projects to improve the industry's overall competitiveness, quality, and output.

The future integration of the Indian petroleum industry into petrochemicals and subsequent polymer derivatives has the potential to transform the game. The security of feedstock availability and intermediate products for downstream polymer businesses will improve, resulting in value maximisation across the entire value chain of polymer molecules. The demand for chemicals and petrochemicals in India is predicted to nearly triple and reach US$ 1 trillion by 2040. Approximately 80% of India's petrochemical capacity is integrated with petroleum refineries. As a result, India has a competitive advantage in terms of petrochemical feedstock security.