I.1 Petrochemicals are chemicals manufactured from petroleum feed stocks naphtha, natural gas LPG and kerosene. Petrochemical manufacturing involves following stages

II. PETROCHEMICALS & THEIR CONTRIBUTION TO ECONOMIC DEVELOPMENT OF INDIA

II.1 Petrochemicals provide cost effective substitute of natural products like wood, metals, and natural fibres etc., which not only help conserving our natural resources but also spur economic growth. In addition to the substitution of natural resources, superior properties of petrochemicals help to develop newer applications propelling economic growth and development. The development of newer applications create multiplier effect, which gives impetus to economic growth. The petrochemicals have come to occupy the centre stage of development and growth of economy.

II.2 The petrochemicals of common use are plastics, synthetic fibre, elastomers & bulk chemicals. The major usages of petrochemical products are as follows:

III.1 The Petrochemical sector has been growing at the rate of 14-15 %, which is more than the double of GDP growth rate. The current consumption of commodity plastics, synthetic fibres, and elastomers are estimated at 3 million tonnes, 1.6 million tons and 1.1 lakhs tons respectively. Despite very high growth in consumption of petrochemicals, our per capita consumption is much below the world average. In case of plastics, our per capita consumption is 3 kg as against the world average of 17 kg. Similarly, in case of synthetic fibres, our per capita consumption is about 1.6 kg vis-à-vis world averages of about 4 kg. There is large unsatisfied demand of petrochemicals. The current growth in demand of plastics, which is the prominent segment of petrochemical industry, warrants setting up of a cracker every year, year after year. Thus there is tremendous opportunity for investment in cracker complexes.

III.2 Presently there are eight cracker complexes in operation with combined ethylene capacity of about 2.4 million tonnes per annum. The installed capacity of commodity plastics and important synthetic fibres are 4.0 and 1.6 million tonnes per annum respectively. The details of consumption of are at Annexure II.

IV. 1 Petrochemical sector is considerably deregulated. The items which require compulsory licence are Hydrocyanic acid and its derivatives; Phosgene and its derivatives; Naphtha /Gas cracker complexes producing ethylene, propylene, Butadiene; Aromatic complexes manufacturing Benzene, Toluene & Xylenes – o- Xylene, p-Xylene, m-Xylene, Mixed Xylene isomers; Ethylene Glycol/ Ethylene Oxide and polyethylene having a specific gravity of less than 0.94 (LDPE).

IV.2 Policy for Foreign Direct Investments (FDI) facilitates approval through automatic route. The following categories of FDI proposals are only approved through Foreign Investment Promotion Board (FIPB).

V.1 Given below are the growth projections of synthetic fibres (Table V.1) and polymers (Table V.2).

V.2 Considering that the gestation period for setting of a cracker along with downstream unit is about three years, there is immediate need for substantial investment to meet the growing domestic demand of plastics.