01-Oct-26
New polypropylene unit will strengthen India's domestic PP supply and deepen IndianOil's transition from a fuel-focused refinery to an integrated petrochemical complex
IndianOil's Gujarat Refinery at Koyali, near Vadodara, is expected to commence polypropylene (PP) production by the end of FY2026-27, with the new plant having a capacity of 500,000 tonnes per annum (TPA).
The development forms part of IndianOil's major expansion of the Koyali refinery and petrochemical complex. The refinery's crude-processing capacity is being expanded from 13.7 million tonnes per annum (MMTPA) to 18 MMTPA, alongside investments in petrochemical and lube-oil facilities. (The Financial Express)
The new PP unit is designed to use IndianOil's INDMAX technology, which is intended to maximise propylene production from refinery feedstocks. (The Financial Express)
A significant addition to India's PP production capacity
The 500,000-TPA Koyali PP plant represents a sizeable addition to India's domestic polypropylene supply.
Polypropylene is one of India's most widely used polymers, with applications spanning:
IndianOil already manufactures polypropylene at its Panipat and Paradip petrochemical complexes and markets its polymer portfolio under the PROPEL brand. Its PP grades are used in applications including flexible and rigid packaging, automotive components, agriculture, infrastructure and healthcare.
The Koyali investment therefore represents a further strengthening of IndianOil's position in the domestic polymer market.
Import substitution and supply security
One of the principal objectives of the Koyali PP project is to meet growing domestic demand and reduce India's dependence on imported polypropylene.
India's polymer consumption has continued to expand with the growth of packaging, automotive, consumer goods, infrastructure and other manufacturing industries. Additional domestic PP capacity can provide converters with another local source of resin and potentially reduce dependence on imported material during periods of international supply disruption.
For polymer processors, the implications could include:
Greater domestic availability: An additional 500,000 tonnes/year of production should strengthen India's overall supply position once the plant reaches stable commercial operation.
Reduced import dependence: Higher domestic output can reduce the need for imported PP, particularly when international freight, currency movements or geopolitical disruptions make imports less competitive.
Regional supply advantage: Koyali's location in Gujarat places the plant close to one of India's largest petrochemical and plastics-processing clusters, as well as major industrial and port infrastructure.
Impact on India's polymer market
The new capacity is also significant from a market-structure perspective.
Additional supply does not automatically translate into lower PP prices. Prices will continue to depend on crude and propylene costs, international PP markets, domestic demand, producer operating rates, imports and exports.
However, when the plant reaches full production, 500,000 tonnes/year represents a meaningful increment to domestic PP availability.
This could increase competition among domestic producers and provide converters with a broader choice of local suppliers.
For Indian PP producers, the development also underlines the importance of producing higher-value and application-specific grades, rather than relying purely on commodity volumes.
Koyali is becoming more than a refinery
The PP project is part of a broader transformation of the Koyali complex.
This reflects a broader trend among Indian refiners: as the long-term growth outlook for transportation fuels becomes less certain, refiners are looking to capture more value from petrochemicals and specialty products.
What this means for plastic processors
For India's plastics-processing industry, the Koyali PP project could create opportunities beyond simply increasing resin availability.
A larger domestic PP ecosystem can support growth in:
Packaging: films, containers, caps, closures and food packaging.
Woven products: fertilizer bags, cement bags, FIBCs and industrial sacks.
Automotive: bumpers, interior components, battery-related components and other lightweight applications.
Consumer products: appliances, household articles, luggage and storage products.
Specialty compounding: application-specific PP compounds for automotive, electrical and consumer applications.
For polymer distributors and buyers, the addition of another large domestic source also makes supplier diversification and regional procurement strategies more feasible.
A changing Indian polypropylene landscape
Koyali is not the only new PP capacity being developed in India. Several refinery and petrochemical expansion projects are adding or planning significant polypropylene capacity across the country.
The result is likely to be a continued increase in India's domestic PP availability over the coming years.
For processors, this is positive from a supply-security perspective
Source: IndianOil, Financial Express and industry sources
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