Indian petrochemical output to grow to an estimated US$200 bln from US$83 bln in the decade

23-Nov-12

India's petrochemical industry has been one of the fastest growing industries in the Indian economy. It provides the foundation for manufacturing industries such as pharmaceuticals, construction, agriculture, packaging, textiles, automotive, etc. The major accelerator for the growth of the petrochemical industry in India is its ongoing economic development. As per Taiyou Research, the Indian petrochemical industry faces a number of challenges for sustained growth, putting India at a competitive disadvantage in the competition with China. India's ethylene capacity is far smaller than China's and is unlikely to rise above its Asian rival's levels in the next 5-7 years. This will make it impossible for India to develop applications further downstream. Other major issues faced by the Indian petrochemical industry are lack of low cost feedstock and dependence on western countries for technology. New crackers and derivatives projects announced are making slow progress and their coming onstream might be further delayed. The petrochemical industry in India is oligopolistic with four main players dominating the market, namely Reliance Industries Ltd. (RIL) along with Indian Petrochemical Ltd. (IPCL), Gas Authority of India Ltd (GAIL), and Haldia Petrochemicals Ltd. (HPL). One of the major advantages that this industry has to itself is a competitive range of labor cost and a huge trained talent pool. Meanwhile, insufficient basic infrastructure, prevalence and use of old technology and high feedstock cost in comparison to Middle East countries are some setbacks it continues to face. However, it is anticipated that the output growth of almost US$200 bln from the current US$83 billion will be made within the coming decade. The future of the Indian petrochemicals industry is bright with domestic demand driving the market for products. With Government support slowly falling into place, the future could see more investments from multinationals as well as domestic companies.