Petrochemical
Industry
Overview
The chemical industry contributes significantly to the economic
stability and development of a country. It provides key linkages in terms of
products and technical solutions to several downstream industries like engineering,
automotive, consumer durables, food processing, etc. The global chemicals
industry is the largest manufacturing industry in the world, with sales of
approximately USD 2.5 trillion in 2010; the Indian chemical sector was
estimated to stand at US $91 billion in 2011 and has the potential to reach US
$134 billion by 2015.
Growth potential of the chemicals sector is immense, considering
the current low per-capita consumption in the country. It is one of the fastest
growing domestic sectors, comprising of both small and large scale enterprises,
and is currently in a state of restructuring and consolidation. This movement
aims to achieve product innovation, branch building, improved technical
services and marketing abilities to stand through global competition. A recent
report by global consultancy firm McKinsey suggests that around $350bn of the
estimated $1tn world specialty chemical industry would move eastwards to Asia
to meet manufacturing costs and downstream demand.
The petrochemical sector has been one of the fastest growing
sectors in the Indian economy. From its modest beginnings in mid-sixties, this
industry has come a long way. Today, plants of global capacities operate in
specialized categories and supply to both local and global markets. Four main
players dominate the petrochemical sector, namely, Reliance Industries Ltd.
(RIL), Indian Petrochemical Ltd. (IPCL), Gas Authority of India Ltd. (GAIL),
and Haldia Petrochemicals Ltd.
The Indian petrochemical industry is presently valued at $40bn and
is expected to grow at 12-15% annually over the next five years, according to a
report from the Associated Chambers of Commerce and Industry of India
(Assocham). The sector currently employs more than 10 lakh people.
Factors that will drive growth in the chemical and petrochemical
sectors
·
Compared to US and
China, India’s per capita consumption of polymers (PO +PVC) is still in nascent
stage. Opportunity to reach out to a large population and sustain the current
economic growth would drive India’s polymer consumption.
·
Asia and Middle East,
which provide abundant sources of petrochemical feedstock, are fast becoming
hubs for foreign investments.
·
Indian government
plans to establish new petroleum, chemical and petrochemical investment regions
(PCPIRs) in states like Tamil Nadu and Karnataka.
·
Low cost
infrastructure that India can offer will drive exports projected to reach
$300bn by 2015.
·
Large unexplored
reserves of oil and gas stand to create new opportunities.
