Indian Economy News

India to become petrochemicals powerhouse with Rs. 3,28,227 crore (US$ 37 billion) capex push: S&P

India is set to emerge as a major force in the global petrochemicals industry, with planned capital expenditure of Rs. 3,28,227 crore (US$ 37 billion) aimed at enhancing self-sufficiency, according to S&P Global Ratings. The report, titled First China, Now India: Self-Sufficiency Goals Will Add To Petrochemicals Supply, highlights that India’s aggressive capacity expansion, following China’s earlier moves, could intensify oversupply pressures in the Asia-Pacific petrochemical sector. By 2030, India is expected to account for a third of global capacity additions. The expansion includes Rs. 2,21,775 crore (US$ 25 billion) in public sector investments linked to refinery projects and Rs. 1,06,452 crore (US$ 12 billion) in private sector capital expenditure. This move reflects India’s strategy to reduce import dependence on chemicals used across everyday goods, from plastics to automotive components.
Despite potential overcapacity, strong domestic demand, particularly for polyethylene, is expected to cushion Indian producers, even as global players face pricing pressures and potential consolidation. Analysts note that self-sufficiency efforts in India and China are likely to challenge Asia-Pacific exporters, especially as more than 50% of their chemical imports come from the region. Options to divert exports to the United States (US) are constrained by tariffs, potentially pressuring earnings and driving industry consolidation. Nevertheless, India’s robust domestic consumption is expected to protect local operators’ revenues, with the country projected to surpass the US as the world’s second-largest consumer of polyethylene by 2030. This shift underscores India’s growing prominence in global petrochemicals while signalling rising competition for regional exporters.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.