“India's per capita polymer consumption is one third of global average. This points to the enormous potential, especially with the kind of development and urbanization that is currently underway. With the kind of growth trajectory that India is on, there is a huge demand for chemicals, hygiene, diapers, smart cities, and infrastructure piping material etc. Infact, there are many overseas players that are setting up their units to tap this potential," says Sanjiv Sharma, Executive Director - Corporate Planning and Economic Studies, Indian Oil Corporation Limited.

The petrochemicals are in net deficit as the imports continue to happen. It shows that India requires a lot of petrochemicals and a lot of scope for investments,” commented Sharma.

“The key issues that hamper the growth of petrochemicals are capital intensive costs and power blending costs which are 8.85% in India, compared to 3.35% in the United States. Another challenge is feedstock disadvantage. We are using Naphtha whereas globally Ethane is being used. We have lower import duty and from the investor point of view, it is a disadvantage for those who want to set up shop here. There is also a regional imbalance of petrochemical plants as far as demand is concerned. We require policy changes to remove the impediments. We have potential for high margins and value additions. There have to be plans for domestic players. The development of industrial parks and investment zones, and plastic neutrality are the way forward,” added Sharma.

Sharma spoke at the panel discussion ‘Unlocking Capacity and Capability: Opportunity for Investment in the Downstream industry’ along with other speakers at the Indian Chemicals and Petrochemicals Conference (ICPC) 2021 organized by the Confederation of Indian Industries (CII).

"With the hike in Naphtha feedstock cost, refineries will have to take a call on the adoption of renewables. They will need to move towards adoption of green hydrogen technologies. With crude to chemical clusters in demand, defining the contours of an optimal transition becomes necessary. The pivotal technologies are available such as steam cracking, hydrocracking, and catalytic cracking. The approach needs to be refined as achieving 85% petrochemicals is a big challenge," says T. N. K. Bapiraju, CGM - Technical, Chennai Petroleum Corporation Limited.

“Plastic industry employs 15 million people in India but there are few exports. The lack of access to ports is a great impediment to exports. Comparatively, China is 40-50 times bigger exporter than India. The places near ports are expensive and it is difficult to set up large capacity units that require space. It is difficult to operate if you don’t get good quality power. Discoms ask us to amend the processes which are high cost. Government has to amend the existing set of rules. Managing the large complexes with 80,000 people is a huge challenge as the labor policies are not friendly. With businesses suffering due to unionism, owners get fearful about operating at such levels. The value add of plastics is not very high and the government could do well in terms of PLI for the industry. Export oriented with land around ports, labor policies, and quality power supply are the few ingredients of achieving turnover of Rs. 8-10 lakh crore in the next 10 years. This will add huge value. Many new players can come to the business and help the country to take off and build a plastic business,” says V. K. Taparia, Executive Director, The Supreme Industries Limited.

“We have been exporting US $10 billion dollar plastics and we want to achieve US $12.8 billion exports in 2022, in alignment with the government's US $400 billion export target. The import volumes are rising but not as compared to the exports. The export of value added products witnessed a growth of 47.5% growth during April-October, 2021 in comparison to 14.5% for plastic raw materials. From US $6 - 8 billion this year, we are targeting US $25 billion exports in the next five years. China and Korea are way ahead of India. Chinese exporters get a wide range of government incentives aimed at encouraging firms to produce almost exclusively for the foreign market. South Korea has 17 FTAs with ASEAN. Smaller economies like Vietnam and Malaysia are also catching up. Polymers are expensive in India. Main reason is cost, insurance, and freight (CIF) prices for India are 10-15% higher than prices offered to China and NEA countries. Main reason is India is highly dependent on import of plastic raw materials to manufacture value added products both for domestic and export markets. Now if India buys expensive polymers, how can we be competitive in world markets? Government needs to look at CIF," says Arvind Goenka, Managing Director,  RMG Polyvinyl India Limited.

“The plastic processing capacity has been 55 million tons, growing at 8.85% CAGR in the last 5 years. There is US $10 billion investment in the last 10 years and we still do Rs. 45,000 crore worth import per annum. China is exporting a lot of finished products to India and accounts for 40% of plastic imports in India. The cheap Chinese products have a direct impact on local craftsmen in India. Chinese products such as telecom, toys, mobiles etc. have a huge demand in India. Unavailability of latest technology to produce the plastics can be tackled by adopting latest technologies to produce finished goods. The plastic process industry can get additional Rs. 45,000 crore by creating the domestic options. The demand for plastic processing machines is real and there is potential for employing 250,000 people,” says Arvind Mehta Chairman, Governing Council, AIPMA and Managing Director, Welset Plast Extrusion.

“Plastic industry will play a critical role in the US $5 trillion economy and is therefore expected to grow at a significant rate. However, recycling of the plastic too has to be part of this process. Currently, while the recycling rate is growing at 3%, the polymer consumption is 12% and there is a deficit of 9%. There will be environmental consequences if we don't devise the disposal of plastics. Plastic polymers increase and Naphtha will increase but there is no focus on increasing the ratio of disposal. Land bound plastic is increasing and by 20250, we might be sitting in plastic homes. The industry must look at the issues. Recycling industry is at the nascent stage and there is a mismatch between the polymer manufacturing and recycling. There is excitement about the advanced recycling but is still way behind in terms of actual requirement. One of the challenges is that manufacturers are expecting good quality of recycled plastics and that is affected by the bad quality of scrap that reaches them. It is the time industry should encourage the recycling industry and the government must help in setting up clusters for the recycling companies and provide them incentives,” says Hanumant Saraf, Business Head - Plastic Gemcorp Recycling.