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As per World Economic Forum, global economic activity is picking up with a long-awaited cyclical recovery in investment, manufacturing, and trade. World growth is expected to rise from 3.1 % in 2016 to 3.5 % in 2017 and 3.6 % in 2018. Stronger activity, expectations of more robust global demand, reduced deflationary pressures and optimistic financial markets are all upside developments.

As per Asian Development Bank, it is estimated that Indian GDP would accelerate in FY 2017-18 pegged at and around 7.4%, as economic activity is likely to bounce back on the back of strong fundamentals still in place, implementation of reforms, easing monetary policy and credit conditions and infrastructure spending. India’s medium-term growth prospects are also favorable, with growth expected to rise to about 8% over the medium term due to implementation of key reforms. The Indian chemical and petrochemical industry is expected to be an active catalyst in this growth with major impetus coming from infrastructure, agriculture, automobiles and consumer and retail goods sectors.

The global chemical and petrochemical demand is currently estimated to be around 590 MMT and is expected to reach 700 MMT by 2020. China is expected to contribute almost 40% of this rise in demand while rest of Asia including India is expected to contribute 15-16%. The world average per capita consumption of Polymers is currently about 35 Kg/person.

The Indian chemical and petrochemical industry demand growth has consistently outperformed the GDP growth rates of India – growing at around 1.5 times the GDP growth rate. Major chemical and petrochemical demand in India is currently estimated to be around 30 MMT and growing at a CAGR of 9%. The total chemical and petrochemical market in India is currently valued at approximately $50 billion and had registered a growth of 11% per annum during the FY11-FY15 period. Despite this high growth, average domestic per capita consumption of Polymers is only about 10 Kg/person. Therefore, India is expected to witness a high growth trajectory in chemicals and petrochemicals consumption, driven by high GDP growth and low per capita consumption.

To satiate this exponentially increasing chemicals and petrochemicals demand, a number of big ticket investments are required in the Indian chemical and petrochemical industry. The current level of import of chemical and petrochemicals in India is estimated to be around 10 MMT and is expected to reach a gargantuan figure of 46 MMT by 2030.

Automobiles is expected to be one of the most important propeller of petrochemicals growth. With expected CAGR of 8-9% in two wheelers and 18-19% in passenger vehicles coupled with increased focus on improving fuel efficiency and reducing carbon footprints, only petrochemicals can tick all boxes. Similarly, rising per capita income is expected to fuel demand in consumer goods like appliances as well as retail goods including processed foods, which are again major consumers of petrochemicals.

The Government of India is committed to double farmer’s income by 2022. Agriculture accounts for approximately 70 % of the global freshwater withdrawals and approximately 90 % of its consumptive use. Increasing productivity with decrease in output cost is the need of the hour to accomplish this dream. Micro irrigation is going to play a pivotal role in achieving this. As per a Federation of Indian Chambers of Commerce and industry (FICCI) report (2015), total potential of micro irrigation (drip + sprinkler) is estimated to be around 69 million hectares, of which only 8 million hectares have come under micro irrigation. Therefore, an immense potential is yet to be tapped. Recently, the Government of Maharashtra has made it mandatory to use drip irrigation for sugarcane cultivation. Initiatives like this can help in swift coverage of untapped potential of micro irrigation.

The Government of India initiatives like Atal Mission for Urban Transformation & Rejuvenation (AMRUT), Digital India, Pradhan Mantri Krishi Sichayee Yojana, Swachh Bharat, Smart Cities are all expected to push demand for petrochemical goods such as geotextiles, permanently lubricated (PLB) ducts, optical cables, drip Laterals and sprinkler pipes for micro irrigation, pipes for water distribution etc.

In addition to the required feedstocks and intermediates, technology availability, economics and sustainability remain prime concerns that need to be addressed. Modern, energy efficient, sustainable and cost-effective technologies are required to ensure that the Indian industry remains competitive globally. Similarly, technology upgradation has become a necessity for sustenance in the downstream segments as well. With new applications gaining ground, without path-breaking developments in downstream sector, the overall competitiveness of the Indian industry will always remain under the cloud of a question mark vis-à-vis external competition.

With advantaged feedstock availability such as Shale Gas and Ethane in the US, rapid expansion of petrochemical capacities in the USA is taking place. It is expected that the USA will add an additional steam cracker capacity of close to 12 MMTPA till 2022. Majority of the products coming from these capacities will be focused for exports especially to India and China. Similarly, China and the Middle East would not be far behind in terms of petrochemical capacity expansion. With cheaper feedstock availability in the USA, the Middle East and China (Coal – CTO), this will surely pose a challenge for domestic manufacturers.

The 6th edition of the prestigious Petrochemical Conclave is intended as a forum for industry experts and captains to discuss and deliberate the envisaged issues so as to draft an India Petrochemical Vision 2030 incorporating challenges, opportunities and way forward for the Indian petrochemicals industry.

© 2017