Boosting Growth: India's PCPIRs

3 Years agoIndia's Petroleum, Chemicals and Petrochemicals Investment Regions are engines of growth for Make in India. Read on to know more.

India’s Petroleum, Chemicals and Petrochemicals industry is well established and has grown steadily over the years. The industry is crucial for the development of manufacturing sector in India as it provides building blocks for various downstream sectors such as pharmaceuticals, agriculture, textiles etc. In FY 2016-17, the country produced 6,740 thousand Metric Tonnes (MT) of major chemical products (till November 2016), registering an annual growth of 3.2%. Petrochemicals sector registered an annual growth of 7.2% by producing 10,423 thousand MT of basic petrochemicals in FY 2016-17.1

At the 9th edition of biennial IndiaChem International Exhibition and Conference in September 2016, Union Minister for Chemicals & Fertilizers Ananth Kumar said that India’s chemical sector is expected to become a USD 226 Billion industry by 2020, growing from a USD 147 Billion industry in 2015.2

Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) were conceptualised to sustain the growth of the sector by providing quality infrastructure, competitive business environment and Viability Gap Funding (VGF). The PCPIRs would bring together manufacturing facilities, logistic and other services, required infrastructure, residential and administrative areas etc. They are envisaged to generate better efficiency on account of using common infrastructure and support facilities.

Currently, four coastal states host PCPIRs in the country.4 Each PCPIR will have one refinery or petrochemical company as an anchor tenant along with other manufacturing units. It can also include already existing industrial parks. Special Economic Zones (SEZs) and export units.5

Since the announcement, the states of Tamil Nadu, Gujarat, Andhra Pradesh and Odisha have created PCPIRs which are at the different stages of implementation. All projects have created combined employment of around 273,000 in these regions. 7 Each PCPIR has an investment region of about 250 sq. km with at least 40% of the area dedicated to the processing activities. Till September 2016, all four PCPIRs have attracted investments worth USD 26 Billion from various oil and gas sector giants. With these investments, significant infrastructure is expected to be created at PCPIRs.8

Prominent companies in oil and gas sector such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL), Indian Oil Corporation Limited (IOC) and Nagarjuna Oil Corporation Limited (NOCL) have joined PCPIRs as anchor tenants by investing heavily in the infrastructure of the region. The respective state governments have also taken an initiative to boost infrastructure at PCPIRs through various nodal agencies.9

Strategically positioned to the east of Delhi-Mumbai Industrial Corridor (DMIC), the PCPIR at Dahej, Gujarat has received infrastructure investment of USD 2.42 Billion from Gujarat Infrastructure Development Corporation (GIDC). The anchor tenant ONGC has invested USD 4.07 Billion in the project which is expected to create total employment of 90,000 once completed.10 11

At Paradeep, PCPIR in Odisha, USD 1.47 Billion has been invested in basic infrastructure while IOCL has already commissioned a 15 Million Metric Tonnes Per Annum (MMTPA).12 PCPIR at Andhra Pradesh covers six Special Economic Zones (SEZs). These units have already made investments of approximately USD 5.38 Billion. Further, around USD 284 Million has been invested in the infrastructural development of the PCPIR.13

India’s long coastline and large refining capacity will further complement the growth of the PCPIRs. The current infrastructure and facilities in the PCPIRs are being marketed through various exhibitions, road shows and interactions in order to attract investments from foreign as well as domestic players. Upon its completion, the four PCPIRs in India are expected to attract investments worth USD 117 Billion and create 3.4 million jobs.14