Page 46 - Policy Economic Report - October 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

In the address, the Minister, spoke about a substantial rise in India’s petrochemical capacity, projected to
increase from approximately 29.62 million tonnes to 46 million tonnes by 2030.

Highlighting the initiatives rolled out by government to accelerate growth within the industry, the Minister
mentioned about key policies including the development of Petroleum, Chemicals and Petrochemicals
Investment Regions (PCPIRs), Plastic Parks, and Textile Parks, alongside facilitating 100% Foreign Direct
Investment (FDI) through automatic routes.

The growing Indian population and rapidly expanding economy are major drivers of increasing demand
for petrochemical products, said the Minister. As more citizens enter the middle class, the demand for a
diverse range of products—many of which are derived from petrochemicals—is set to rise significantly.
Additionally, he said the government's focus on clean energy is contributing to heightened demand for
petrochemical solutions.

The Minister said that the petrochemical sector in India is projected to attract investments exceeding USD
87 billion in the next decade, representing over 10% of global petrochemical growth. Under the new PCPIR
Policy 2020-35, a combined investment of ?10 lakh crore (approximately USD 142 billion) is targeted by
2025, underscoring the government's long-term vision for the industry.

The chemical industry plays a crucial role in India's economy, contributing around 6% to the GDP and
generating employment for over 5 million people. India is the second-largest exporter of chemical dyes
and agrochemicals globally, accounting for about 3% of global chemical sales. However, the country is also
a net importer of chemicals and petrochemicals, with a dependency on imports for around 45% of
petrochemical intermediates. Bridging this gap between domestic demand and supply through local
production remains a priority.

Minister emphasized the pivotal role of the chemical and petrochemical industries in serving as the
backbone of numerous sectors, including agriculture, electronics, infrastructure, automobiles, and
textiles. With a robust focus on sustainability, the government is committed to reducing reliance on
imports and enhancing infrastructure.

The specialty chemicals sector, experiencing a 12% compound annual growth rate (CAGR), is also
reshaping India’s economic landscape. However, a low-carbon strategy is essential for sustainable growth
in the petrochemical industry.

To further enhance growth, the Minister encouraged the Indian chemical industry to learn from global
chemical hubs such as the Port of Antwerp, Port of Houston, and Jurong Island. By synergizing within
clusters to share feedstock, achieve economies of scale, and create common facilities for innovation and
skill development, the industry can accelerate its development.

With a strong starting point and supportive government policies, Shri Puri said India has the potential to
become the next global chemicals manufacturing hub. He expressed confidence that with collaboration
from domestic and international investors, the petrochemical sector will contribute to India’s goal of
becoming a $5 trillion economy and achieving "Viksit Bharat" status by 2047.

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