OVERVIEW

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 (ealstomers), 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 five naphtha and three gas cracker complexes in operation with combined ethylene capacity of about 2.6 million tonnes per annum. In addition, there are four aromatic complexes in operation with a combined Xylene capacity of about 2.1 million tonnes. The production performance of major petrochemicals during 2001-02 to 2005-06 is as follows :Presently there are five naphtha and three gas cracker complexes in operation with combined ethylene capacity of about 2.6 million tonnes per annum. In addition, there are four aromatic complexes in operation with a combined Xylene capacity of about 2.1 million tonnes. The production performance of major petrochemicals during 2001-02 to 2005-06 is as follows :

                                                                                                           Units in Kilo Tons                  

Products

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.  

Policy

Policy Parameters

III.1 Industrial Policy

The New Industrial Policy announced on 24^th 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.

B. Locational Policy: 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 except the following fall under the RBI automatic approval route for FDI/NRI/OCB investment upto 100 %.

i)                    All proposals that require an industrial licence which includes (1) the item requiring an industrial licence under the I(D&R) Act 1951. 2) foreign investment being more than 24%  in the equity capital of units manufacturing items reserved for small scale industries; and all items which require an industrial Licence in terms of the locational policy notified by Government under the New Industrial Policy of 1991.

ii)                   All proposals in which the foreign collaborator has previous venture/tie up in India.  The modalities prescribed in Press Note No. 18 dated 14.12.1998 of 1998 series, shall apply to such cases.

iii)                  All proposals relating to acquisition of existing shares in an Indian company in favour of a foreign/NRI/OCB investor.

iv)                All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.

 For other industries, Government approval is accorded through Foreign Investment  Promotion  Board (FIPB).

The Guidelines for trading activity have been laid down at S.No 8 of  Annexture IV - Sector Specific Guidelines for Foreign Direct Investment.

III.3 Project Import under Custom Tariff

Under Chapter 98.01 of Customs Tariff Act 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

IV. PRESENT  STATUS  

Perspective Planning

Demand Projections for 11th five Year Plan (2006-07 to 2011-12).

         

Opportunities

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 Government has announced a Policy Resolution for Petrochemical (http://chemicals.gov.in/dpco300407.pdf). Further a policy on Petroleum, Petrochemicals Investment region has been approved (http://chemicals.gov.in/PCPIRPolicy.pdf).

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 Task Force on Petrochemicals has envisioned the following :

• 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 to cater to the needs of the industry by adopting a mission mode approach.

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