Leading the future of India’s petrochemical industry: Five winning principles for 2047

Leading the future of India’s petrochemical industry: Five winning principles for 2047

Strategic planning, differentiated GTM strategy, collaborative ecosystem, policy interventions, and sustainability can support the country in leading the petrochemicals revolution

  • By Saurabh Singh, Sudeep Maheshwari and Anand Mantri , Partner, Kearney | August 13, 2023

India’s petrochemicals industry is a vital part of the country’s ambition of becoming an economic superpower. The industry is expected to continue its healthy growth trajectory, surpassing US $75 billion by 2030 and US $150 billion by 2047. However, it is still lagging global peers in terms of per capita plastic consumption (12 kg versus a global average of more than 35 kg). Tailwinds such as an expanding population, urbanization, and changing demographics, supported by the availability of low-cost skilled manpower and enabling regulations, will drive up demand. To realize its full potential, the industry will need to navigate a variety of headwinds, including the availability of competitive feedstock, access to world-class production technologies, and intense competition from cheap imports.

India’s demand for petrochemicals across molecules is expected to grow faster than the global average. With growing domestic demand, there is also an opportunity to capture the global petrochemicals market as the China+1 sentiment is becoming more prevalent across major economies. Net imports are about 10 percent of demand, and the supply–demand gap is even more acute at a product-grade level, with almost 100 percent import dependence in intermediates such as styrene and acrylonitrile.

To cater to the gaping demand for many petrochemicals molecules, India’s hydrocarbon industry will need to commission 20 world-scale crackers by 2047.

While the industry is poised for robust growth, it uniquely lends itself to two national goals: Atmanirbharta and Sustainability.


In its push toward Atma Nirbhar Bharat, the Indian government has identified the petrochemical industry as high priority because of its strategic relevance. Various favourable policies have been announced and implemented to fuel the industry’s growth, including 100 percent FDI allowed through automatic routes, setting up petroleum, chemicals, and petrochemicals investment regions (PCPIR), and lower effective tax rates. While investments worth about US $13 billion are under implementation and more than US $85 billion are under consideration, concerted supply planning at a product-grade level will be imperative as the industry becomes self-reliant. Supply–demand challenges persist, and a dichotomy of oversupply and undersupply is strangling India’s petrochemicals industry. The shift of the fertilizer industry, the major consumer of naphtha, to natural gas resulted in a naphtha surplus, which pushed refiners to integrate petrochemicals complexes for naphtha-based petrochemicals building block production. These expansions have resulted in a surplus of products such as butadiene and benzene, with India being a net exporter of these petrochemicals. On the other hand, downstream petrochemical intermediates lack a domestic supply chain, especially for derivatives such as styrene and acrylonitrile etc. Even though select petrochemicals building blocks are in oversupply, specialized grades of polyethylene such as metallocene, a low-density polyethylene film, continue to be imported due to limited domestic production. Over the next decade, the surplus of petrochemicals building blocks is expected to shrink, and India will become a net importer by 2030 for these petrochemicals.


At the COP26 summit in Glasgow in 2021, Prime Minister Narendra Modi laid down the action plan for India to reach net zero by 2070. The petrochemicals industry is uniquely positioned to support this vision by driving the transition of carbon feedstocks from fuels to petrochemicals. Hence, increasing the Petrochemicals Intensity Index (PII) serves twin goals for industry participants: enhanced profit pools and a reduction in scope 3 emissions. (Using naphtha as the fuel source results in greenhouse gas emissions of more than 3,600 kg of CO2 compared with more than 2,800 kg of CO2 per ton of naphtha when used for petrochemicals production.)

Going forward, crude oil to chemicals (COTC) is emerging as the ultimate level of integrated pet-chem complexes. The technology is still novel, having reached a maximum 50 percent of COTC conversion. It has the potential to produce chemicals amounting to 70 to 80 percent of the barrel opposed to about 10 percent in a non-integrated refinery complex. The technology advancement in using green feedstocks such as bio-naphtha and bioethanol, green processes such as crackers with CCUS and electric crackers, or combination of both could be crucial in progressing toward sustainability.

Lastly, a circular economy is another important vehicle in the sustainability cause. Plastic polymers can be recycled and reprocessed, thereby reducing the use of virgin fossil fuels. A circular economy can help transitioning a simple linear model into a complex circular model where the molecule life is extended in the value chain. The world has always looked at this industry as a linear model of extract, produce, and waste. A circular economy can address these end-of-life emissions. India has a strong established recycling value chain with most of it still existing as an informal industry and focused mainly on mechanical recycling. Reducing end-of-life emissions will require investing in chemical and biological recycling facilities.

Five Imperatives for Strategic Success in 2047

The next quarter century will be characterized by substantial opportunities, innovations, and disruptions for India’s petrochemicals industry. Five strategic imperatives for incumbents, new entrants, policymakers, and other allied stakeholders can support the country in leading the petrochemicals revolution.

Strategic Planning: Investing in the right molecule chains and creating a robust product portfolio will differentiate players in the long term. Before making strategic long-term bets, incumbents and new entrants will need to carefully assess the market dynamics, capability requirements, business model fit, competitive landscape, and potential disruptions. R&D investments to develop indigenous technologies—new catalysts, additives, and related technologies—can help in setting up domestic supply chains for petrochemicals and improve production costs. A robust portfolio strategy will need to build flexibility to account for product evolution over time, product switches for netback optimization, and synergistic offerings for high-value propositions. Strategic investments in sustainable technologies such as green crackers and biofuel production will future-proof their portfolios.

Adopt a Differentiated GTM strategy: India’s go-to-market (GTM) models have evolved in response to the highly fragmented, credit-starved base of downstream petrochemicals customers. Indian GTM models have seen limited innovation or differentiation, and most channel partners and other intermediaries add limited value beyond expanding customer reach and extending credit to customers. To counter margin pressure, commodity sales will need to start moving toward low-overhead, no-frills, and digital-first models. To drive differentiation and create customer stickiness in direct sales of specialty products, producers will need to evolve from being product marketers to solution providers. This can help Indian manufacturers capture a larger share of customers’ wallets and boost domestic production.

Create a Collaborative Ecosystem: An ecosystem enables stakeholders to contribute and collaborate, enhancing industry wide value creation. India’s vision to become atma nirbhar will require a strong infrastructure, such as strengthening of plastic parks, supply chain infrastructure around cryogenic pipelines, and warehouses. In addition, domestic petrochemicals players can partner with other domestic producers of downstream derivatives or global manufacturers to create a long-term strategic advantage. M&A activities among complementary domestic players can help create world-scale businesses and mutual benefits. For sustainable growth particularly, an ecosystem around recycling infrastructure and green feedstocks will be essential.

Push for Policy Interventions: A favorable policy landscape and government interventions will help shape the industry in an Atmanirbhar and sustainable way. Policies that incentivize investments such as tax incentives, rebates to promote capacity expansions, support to adopt non-conventional feedstocks-based technologies such as coal to chemicals, and crude to chemicals could boost the inflow of capital. Given the nascent status of technologies for both circularity and sustainable manufacturing, such a positive governmental push will encourage more R&D investments and help India transition from being a licensee to a licensor. In parallel, stringent norms to discourage low quality can boost domestic producers’ competitiveness on the global stage. Intra-government agreements and interactions on technology licensing can also help set up the supply chain for petrochemicals.

Embed Sustainability into Ways of Working: Forward-thinking companies will be stewards of sustainability, and this approach will help avoid business disruptions, such as from a sudden decline in demand because of a plastic ban. Companies can explore multiple routes toward sustainability, including mechanical, chemical, and biological recycling or renewable feedback platforms. An industry consortium can be developed to engage in positive public relations among key stakeholders, defining the industry’s value proposition and the intended positioning for sustainability brand equity.

India’s petrochemicals industry is poised to continue its transformative growth journey, and it is uniquely positioned to drive two national goals of atma nirbharta and sustainability. While India has come a long way in creating atma nirbharta in the country, there is still headroom for more development. The country’s dependence on imports for multiple petrochemicals products makes a strong case for driving the Make in India movement in the industry. The industry is also well-positioned to support the wider petroleum industry in its decarbonization journey. The petrochemicals industry can provide an economic energy transition route for refineries given its smaller carbon footprint. Scope 3 emissions, which form the majority of a refinery’s carbon footprint, are well-addressed by the petrochemicals industry while increasing the gross refinery margins. To drive this, stakeholders across India’s petrochemicals industry will need to come together and play their respective parts. Unlocking the right mix of strategies will help catalyze the next phase of growth for the industry.

Authors: Saurabh Singh, Partner and Asia Pacific Head of EPI, Kearney; Sudeep Maheshwari, Partner and Chemicals Co-Lead, India, Kearney and Anand Mantri, Principal, India, Kearney

Caption: L-R: Sudeep Maheshwari and Saurabh Singh (Top), Anand Mantri (Bottom)

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