Page 172 - CW E-Magazine (1-7-2025)

Special Report Special Report

A $30-bn window: India’s next big leap in petrochemicals Conversely, India continues to import recycling indicate early momentum. 2. Zero-based budgeting;
high-end grades and downstream Compliance with Extended Producer 3. Digital procurement;
ndia is poised to become a pivotal growth, fueled by key end-use sectors UDEEP AGARWAL derivatives such as metallocene poly- Responsibility (EPR) regulations 4. AI-enabled manufacturing;
force in the global petrochemicals like packaging, infrastructure, textiles, Principal, Kearney ethylenes, polycarbonates, and butyl demand incumbents to take action. 5. Inventory and receivables manage-
Iindustry. With strong domestic de- and automotive. From a demand base rubber. ment; and
mand, a growing consumer base, and of 27-mt in 2019, consumption is ex- Fragmented demand Dynamic regulatory environment 6. Digital capex project controls.
signifi cant industrial expansion, the pected to nearly triple by 2040. How- With over 30,000 plastic processing Feedstock fl exibility emerges India’s regulatory framework for
country is expected to contribute over ever, India’s current capacity cannot SMEs, India’s customer base is Historically reliant on naphtha, trade is expected to stay dynamic. As Domestic players should seek global
10% of global petrochemical demand keep pace. A signifi cant import depen- highly fragmented. Sales are credit- India is exploring alternate feedstocks domestic production catches up, ad- partners for technology and capital, while
growth over the next decade. Yet, this dence persists, pointing to a supply- intensive, with over 90-day cash cycles. like ethane and propane. Reliance, for ditional protective tariff s or non-tariff global fi rms should tap into India’s distri-
golden opportunity emerges amid global demand gap that may require over 10 Distribution primarily fl ows through instance, has built ethane import in- barriers may be implemented to shield bution and market know-how. Vertical
headwinds including shifting trade new world-scale assets by 2040. del-credere agents (DCAs), enabling frastructure and integrated dual-feed local manufacturers from volatile integration through M&A can create
dynamics, sustainability imperatives, producers to control brand presence crackers. Further downstream, Deepak global supply gluts. end-to-end value chains, especially in
and the threat of supply overcapacity. Five defi ning features of India’s and pricing tightly. Nitrite signed a long-term agreement underserved downstream sectors.
petrochemicals market with Petronet LNG to off take propylene Strategic imperatives for market
This article highlights the critical Import parity pricing pressure and hydrogen possibly weaning away participants Companies must proactively align
trends defi ning India’s petrochemicals Refi nery-integrated capacity Domestic prices follow Asian im- from current refi nery sources. Players must analyse molecular with circular economy goals by invest-
journey, the unique market dynamics at About 80% of India’s petrochemi- port parity benchmarks. However, re- chain dynamics, feedstock availability, ing in recycling, bio-feedstocks, and
play, and the strategic imperatives for cal capacity is tied to refi neries due to cent capacity additions have fl ipped Forging alliances market size, and competition to sustainable branding.
players seeking to thrive in this evolv- feedstock limitations. This has sup- pricing from “premium” to “discount” Domestic and global players are craft fl exible, future-proof portfolios.
ing ecosystem. ported cost competitiveness and shaped levels, compressing margins for global forging strategic alliances. Notable Special attention should be given to A ‘Made for India’ growth playbook
an oligopolistic market, with players exporters to India. examples include Sibur’s joint venture downstream derivatives like glycols, India’s petrochemicals sector sits
A landscape of opportunity amid like Reliance and IOCL controlling with Reliance for butyl rubber; and polyurethanes, and specialty poly- at the cusp of transformation. The
global disruption majority of domestic production. Large To support local producers, India Aramco’s interest in BPCL’s upcom- mers. country’s domestic demand, favourable
With fuel demand stagnating glob- new capacities by HRRL (Barmer) and imposes customs duties and anti-dump- ing AP complex and ONGC’s Gujarat investment climate, and rising policy
ally, oil and gas majors are turning BPCL (Bina & potentially AP) are also ing tariff s. For instance, PVC duty rose refi nery. Digital-fi rst, no-frills sales models support position it as a global hotspot.
toward petrochemicals for growth. Tech- slated to be integrated with refi nery. from 7.5% to 10% in 2019, immedi- are essential to counter margin pres- However, market participants must
nologies such as crude-to-chemicals ately enhancing domestic competitive- Sustainability pressures sure in commodities. For specialties, navigate regulatory unpredictability,
(COTC) are accelerating this shift, driving Commodity focus ness. Sustainability pressures from global deeper customer relationships, techni- evolving customer expectations, and
increased investments in integrated The market has largely concentrated customers, NGOs, and regulators are cal services, and value-based selling the sustainability mandate.
petrochemical-refi ning complexes. on BB+1 or BB+2 derivatives – one These structural realities shape both likely to scale recycling capacity in India will be critical. Players should balance
or two steps downstream from primary the opportunities and the challenges despite slow-down in the short-term. traditional DCAs with large distributors A ‘Made for India’ approach, built
India, despite being underpene- building blocks (BB) (e.g., ethylene to that defi ne the next chapter of the While India’s recycling infrastructure off ering value-added services. on bold portfolio moves, go-to-market
trated in per capita plastic consump- polyethylene). As a result, intermedi- industry. remains informal and nascent, initiatives (GTM) innovation, digital enablement,
tion (~10-kg, versus global average of ates and specialty chemicals remain such as Reliance’s 1-mtpa circular poly- A six-pronged strategy can drive partnerships, and green agendas, will
~30-kg), is witnessing rapid demand underdeveloped and are often imported. Undercurrents in India’s petrochemi- mer by 2030 target, launch of brands operational excellence: separate winners in this high-stakes,
cals wave by HMEL and startups in chemical 1. Analytics-driven pricing; high-growth journey.

Capacity surge
Domestic refi ners are aggressively
expanding petrochemical assets. Bet-
ween 2025-2035, polymer capacity
is projected to grow over 40% (~10-
mtpa). Major investments include
HRRL (Barmer), RIL (Dahej), IOCL
(Paradip & Panipat), and BPCL (Bina).

Oversupply & defi cit dichotomy
While the industry overall faces a
defi cit, some products (e.g., polyethy-
lene) show surpluses in specifi c grades.

172 Chemical Weekly July 1, 2025 Chemical Weekly July 1, 2025 173

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