Nation's Petrochem industry to see an upward curve; expected to improve global competitiveness

Department of Petrochemicals in India accepted a threefold proposal to reduce the excise duties on polymers, plastics and petrochemicals; reduce import duty on naphtha and relaxation in duty on export of polymers. Adoption of this threefold policy will not only see India develop into a noteworthy center in the global petrochemical industry by pushing cross border sales but also cut cost, further the domestic demand and have a constructive impact on several downstream industries relying on the petrochemical products. However, to reduce tariff barriers a further duty reduction in polymers, intermediaries and plastics is required to make the domestic industry globally competitive. Further, the polymer capacity expansion is to expand by over 30% in the coming three years thanks to the plans by Reliance (Jamnagar), Haldia Petrochemicals and ONGC (Mangalore), among others, would likely stimulate the polymer output to 7 mln tons in three years. In this scenario, a duty cut for polymers will spell foresightedness by easing the tariff barriers. Apart from this, the global petrochem industry is altering with regards to the feedstocks used and the demographics of the industry. In light of the rising naphtha costs, there is a widespread wave of using natural gas in place of naphtha as a feedstock for to enhance the petrochemical economies. Taking this into considerations, the recent gas finds in the Krishna-Godavari basins and further expectations for gas availability will result in an upwards curve for the petrochemical industry in India.
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