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The opening of the economy in 1991 has lead to good
growth in India. The petrochemical industry has particularly shown
an impressive growth with substantial capacity additions. Ethylene
capacity has gone from less than 0.5 million tonnes in 1992 to almost
2.5 million tonnes by the turn of 2002. Similarly, the capacities
of propylene have also gone up. Infact, consumption of polymers
has touched approximately 4 million tonnes by 2002. Despite the
impressive growth, no new major investments have been seen after
the Haldia Petrochemical project. Some investments have been made
in PET and PS projects. There is a distinct possibility of some
investments in PVC.
However, no multinationals are seriously considering investments
in India. Investments, however, have been considered in other countries
of Asia. Multinationals seem to be more interested either in the
Middle Eastern regions on account of an access to cheap feedstock
or in China on account of significantly larger consumption and very
impressive growth potential. Besides China, Singapore is also attracting
huge investments, particularly in cracker and PE/PP plants. Shell
is considering developing a 1 million tonne cracker at Singapore
after the successful completion of 800kt Exxon Mobil project a couple
of years ago.
The question about lack of investment by multinationals in India
possibly has a few answers. First is the relatively poorer infrastructure
facilities. The cost of capital, although has been reducing in the
last few years, is still higher than Singapore or China. The inflexible
labour laws and slow decision making as well as rigid burecarcy
make multinationals select either Singapore or China as the preferred
Asian regions for investments in petrochemical industry.
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