Petrochemical investments to generate 2.2 million jobs in India

06 December 2017 Authored by

The petrochemical industry in India, which is currently growing faster than the GDP of the country, has the potential to draw investment of as much as Rs. 30,000 crore in just over a decade from now, according to a new report from Deloitte. Investment opportunities will be concentrated largely in the eastern regions of the country.

A new report from Big Four professional services firm Deloitte, titled, ‘Petrochemical: The Sunrise Industry of the East,’ has revealed the growth-potential that lies in the petrochemicals industry of India, and highlights the range of industries in which such potential can be harnessed. The report was released at the ‘Petrochemicals Investors Conclave:2017,’ by the Minister for Petroleum and Natural Gas, as well as for Skill Development and Entrepreneurship, Dharmendra Pradhan. 

As per the report, the petrochemicals industry in eastern India, particularly Odisha, has the potential to grow at 11% to Rs. 30,000 by 2030. The industry is currently valued at $50 billion (Rs 3 lakh crore), and is expected to grow substantially. In addition, this investment is expected to create as many as 2.2 million employment opportunities in the country.

The reason for eastern India being the focus for investors is that the region lags behind the rest of the country in terms of per capita polymer consumption. As elucidated by Debashish Mishra, Partner at Deloitte India, “Per capita polymer consumption in eastern India is less than five kg compared to the pan India average of 10 kg. The global average for polymer consumption is 32 kg. There are huge opportunities in eastern India for investments in petrochemicals space.”

Petrochemicals investments to generate 2.2 million jobs in India

Within the sector, products in the plastics cluster are due to attract investments of between Rs. 14,000-16,000 crore, while products in the textiles cluster are due to draw investments of between Rs. 12,000-15,000 crore. On the back of this investment, the industry hopes to drive the per capita polymer consumption up to 30 kg by 2030, just short of the global average.

However, the growth highlighted by Deloitte remains in potential form, and a number of measures need to be taken at an institutional level for it to be realised. Areas in the eastern parts of India still lack the necessary infrastructure to manufacture petrochemicals at such an industrial scale. Odisha, for example, suffers from high power costs, which would be immediately detrimental to investment prospects.

According to Mishra, the best strategy for these regions is to establish industrial parks, where targeted innovation can be used to generate customised models for investors, complete with incentive packages. The goal is to create feasible opportunities for investors in spite of poor infrastructural support.

In addition, Mishra suggests that incubating entrepreneurial ventures is key to the success of the industry, primarily through skill training. Entrepreneurs entering the industry have a whole range of options in front of them from both the plastic as well as textile clusters. Some of these include masterbatches, films, auto-components, looms, packaging, and even spinning & weaving.

The industry is growing in tandem with the entire economy, which is projected to grow at high levels over the next few decades to become the second largest economy in the world, driving economic growth for the whole region of Asia in the process.