With a rich history of crude oil trade, Indian petrochemical industry is now exploring strategic partnerships to enhance domestic production.

The chemical export to India by Gulf Cooperation Council (GCC) has tripled over the years between 2006-2019, with fertilizers retaining

lion share and export revenue reaching US $7.2 billion in 2019. At the same time, GCC chemical import from India has tripled over the past decade, rising with petrochemicals and inorganic chemicals being the largest product segments.

As per Dr. Abdulwahab Al-Sadoun, Secretary-General, Gulf Petrochemicals & Chemicals Association, GCC is moving from trade-focused relations to investment-focused relations with India.

“Investment protection and lowering of barriers to investment will improve the transparency of foreign investment policies and ensure that foreign-invested enterprises participate in the market competition on an equal basis and increase convergence and consolidation opportunities. Collaboration in research and innovation between the GCC and India is increasing and will depend on the innovation ecosystem, IP protection, and joint R&D programs. The collaboration will require participation from all parties: academia, industry, and governments,” said Al-Sadoun.

Globally, oil products demand is flat at best, whilst petrochemical feedstock demand is the only growth driver in oil demand in the long term, says Stefano Zehnder, Vice President, Refining & Petrochemical Feedstock, ICIS, Italy.

“By contrast, India still has the potential for more prolonged fuel demand, on top of fast-growing petrochemical requirements. New and existing refineries in India will also need to increase integrated petrochemical production. Focusing on Olefins, the opportunity to leverage domestic Refineries does not exclude options for accessing incremental light NGLs when competitively priced. A competitive positioning will secure feedstocks to domestic petrochemicals, and open opportunities for selected incremental exports,” added Zehnder.

India will remain in a deficit of petrochemicals as the demand has outgrown the supply despite the new initiatives to boost manufacturing as it will take many years to produce these due to long gestation period, mentions Janardhanan Ramanujalu, Co-Chairman, FICCI National Petrochemical & Plastic Committee & Vice President, Regional Head - South Asia & Australia, SABIC.

“Indian petrochemical industry is on strong foundation. There are many reforms that are being undertaken by the government. While feedstock and shell gas will help in exports, India will also have demand from domestic demand,” added Ramanujalu.

Sharing his views on the impact of COVID-19 on the global and Indian Petrochemical Industry, Ajay Shah, President Polymer Chain, Reliance Industries Limited said, “Industry faced structural issues. Disruption was aggravated by COVID-19. Indian petrochemical industry was affected badly and as a result, there was the loss of livelihood, closure of units. Major chemical-consuming businesses witnessed a downturn. The rubber industry had to deal with a double whammy, and so did the auto sector due to lower demand due to restrictions. However, it brought learning such as increased preparedness for exports.”

David Lines, General Manager – GCC & Global Business Development Manager – Petrochemicals, Astra Polymers said, “Industry has done well, particularly supply in healthcare and food packaging sector. Those areas where companies are interested in investment. There are very good companies in India in those areas. Ease of investment and FDI has improved for downstream industries as well. Astro Polymers are looking at expanding their business in India as the markets are already there. Not only for the domestic market but exports from India to other regions as well.”

Opportunities are multiplying in India particularly in petrochemicals, says Avinash Verma, Managing Director, ONGC Petro Additions Ltd. “It has doubled between 2010 to 2020. Our consumption is expected to go up in the backdrop of the fastest-growing economy with demand for petrochemical products. Along with consumption, India will be under compulsion for turning to a circular economy. I can foresee a lot of innovations and significant investments. Among trends, there are first-time entrepreneurs and mechanical recycling which is rather strong in India. There are a lot of new capacities coming up across India.”

Busting myths about Indian petrochemicals industry

There are a lot of misconceptions about the Indian market, says Prabh Das, Chairman of FICCI Petrochemicals Committee and MD & CEO, HMEL Mittal.

“Many say there is no demand in India. Years from 2013 to 2015 were bad years and it was thought to be the end of the market but we came out well. At this time, the growth for petrochemicals is 11% and for petrochemical products 5-6%. In the future, petrochemical will be 8-9% and petrochemical products 5-6%. So this country will require at least one additional cracker each year based on demand. Another problem that is highlighted that environmental clearances are difficult. But has any project been shelved?” commented Das.

Das feels that if the projects are fine, the regulation will come along. “Few say that Ease of doing business is not there and it is difficult to set up a business. We have set up a petrochemical plant in one and a half years. These are perceived problems and not real ones. Indian companies have put 150 million tons of refining capacity in the last 15 years. If international companies will not put it, Indian companies will, both public and private sector. Therefore, it is the best time for GCC to invest in India.”

As our standards of living increase, the demand for chemical and petrochemical products too shall witness an increase, opines Sunil Kumar, Joint Secretary (Refinery), Ministry of Petroleum and Natural Gas.

“The demand for petrochemicals has increased 1.5 times of our GDP. India needs a cracker every year. Changing market dynamics clearly indicate the fact that petrochemicals are a necessity but a choice. There is a need for synergies between petrochemicals and refineries for cost-saving and sharing of utilities and hydrogen. Technology allows conversion of crude oil to high-value oil instead of the traditional routes. Reconfiguration of refineries, an array of technologies for conversion of oil to chemicals will help the industry in making rapid strides to grow and become a hub,” added Kumar.