Refinery expansion to boost plastic processing units in Northern India

Business Standard reported that with major refineries in Northern India expanding their raw plastic producing capacity, the plastic processing units in states like Rajasthan, Punjab, Haryana, Uttarakhand, Jammu & Kashmir and Himachal Pradesh are expected to grow based on increased availability of feedstock and higher focus on manufacturing sectors.

The total plastic production capacity is expected to go up to 2.5 million tonne per annum by 2014 to 2015 in the region, according to a Knowledge and Strategy Paper prepared by FICCI with the help of TATA Strategic Management.

In Northern India, Indian Oil Corporation Limited and Gas Authority India Limited are the 2 plastic producers with plastic production capacity of 1.25 million tonne per annum and 0.5 million tonne per annum respectively. IOCL commissioned its Panipat in Haryana cracker in February 2011. While GAIL has plans to double its plastic production capacity by 2014. Also, Mittal- Hindustan Petroleum's Bathinda Polypropylene plant having capacity 0.44 million tonne per annum was commissioned in 2012. In addition to this, the upcoming petrochemical complex at Barmer in Rajasthan can also spurt the sector in the region.

The availability of 2.5 million tonne per annum of plastics in Northern region may result in spur of investments in downstream plastic processing. Moreover, since the Northern region does not have access to ports, hence the import/export potential is restricted because of additional cost of transportation.

This could result in ensuring a self sufficient demand supply scenario for the north as the optimal solution, according to the study. It is worth mentioning that the total consumption of plastics in India was 10 million tonne per annum. Western India has traditionally been the largest consumer of plastic accounting for almost 47% of the total consumption.

Out of the total, Northern India accounted for 23%. Bulk of the consumption in Northern India is from end use industries of Auto, packaging, plasticulture applications, electronic applications etc.

According to the study, the consumption in Northern India is low in comparison to Western India primarily because of lack of availability of raw material. Reliance Industries, the largest petrochemical player in India had all its cracking units in West and this facilitated the growth of downstream plastic processing Industry in Western region.

However with IOCL Panipat and HMEL Bathinda polypropylene plant the availability of plastic is not expected to be constraint and hence facilitate downstream plastic processing units. Experts believe so there are immense opportunities in the sector for the prospective entrepreneurs.

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