26

Secretary, Department of Chemicals & Petrochemicals – Govt. of India

27th Nov 2018

Presentation by P. Raghavendra Rao

Chemicals & Petrochemicals: Advantage India

27

Qatar

UAE USA

Germany

S. Korea

JapanUK

Russia

Bahrain

*Size of sphere indicates population

High growth-High Population Economies

Global Economic Snapshot - 2017

1.34

1.39

1.46

1.25

1.3

1.35

1.4

1.45

1.5

2017 2020 2025

Population (In Bn.)

Robust Indian Economy – One of the fastest growing economies in the world

GDP Nominal

2017 2025

$2.6

trillion$5

trillion

Will be among the 5 largest

world economies by 2025

India is on the move: Cities are

likely to house 42.5% of Indian

Population by 2025

2017 2025

Source: IMF Data, World Bank Data, Economic Research Service, USDA (United States Government) and NITI Aayog,

6.36.0 5.9 5.8 5.7 5.6

5.0 5.0

7.7 7.8 7.9 8.17.8 7.6 7.4 7.3

3.0 3.0 2.9 2.9 2.9 2.9 2.8 2.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2018 2019 2020 2021 2022 2023 2024 2025

CHINA INDIA WORLD

Demographics

2017 Population: 1.34 billion

Median Age:

27.9 years

Demographic

Dividend will

continue to be the

growth engine of the

economy

Rea

l G

DP

Gro

wth

Rate

s in

%

India will surpass China

and become the most

populous country by 2025

India is expected to maintain a growth rate of over 7% in

coming years. It has already overtaken china in growth rate.India - One of the fastest-growing

countries globally

-$15.00

$5.00

$25.00

$45.00

$65.00

$85.00

$105.00

$125.00

0.00 2.00 4.00 6.00 8.00 10.00GD

P -

PE

R C

AP

ITA

(P

PP

) (

In '0

00

)

GDP growth (annual %)

India

China

Brazil

28

Importance of Indian Chemical & Petrochemical Industry in Indian Economy

Source: RBI Handbook of Statistics, Annual Survey of Industries, Tata Strategic analysis, MOSPI, National Accounts Statistics 2017

Indian CPC Industry - 2017

On a global scale, it accounts for only ~3% of the global chemicals industry

Employs ~2 million

people

Contributes 13.38%

of manufacturing

GVA and 2.39% of

National GVA

Vital Component of

daily life. Covers >

80,000 products

Contributes >10%

in India’s exports7.8 % weight on IIP

Contributes 4% to

total FDI Equity

Inflows

29

Strong Growth Drivers for Indian Petrochemical Sector

Source: ICIS Report, MoSPI, World Bank Data

Fast

Economic

Growth

Accelerating

Urbanization

Increase in

Industrial

Demand

Construction

Packaging

Agriculture

Consumer

Goods

Automotive

Textile

2nd Largest

Population

Main Consuming Sectors Petrochemicals

Synthetic

Rubber

Synthetic Fibre

Synthetic

Detergent/

Intermediates

Performance

Plastic

GDP: $2.6 trillion

Annual Growth rate: 6.62%

Population: 1.34 billion

Annual Growth rate: 1.17%

IIP Growth rate: 3.53%

Urbanization Rate: 33.5%

Annual Growth rate: 0.4%

Polymers

Electric&

Electronics

Growth Drivers

LLDPE, LDPE,

HDPE, PP, PS,

PVC, etc.

PBR, SBR, EVA,

EPDM etc.

Polyester Fibre,

PSF, Acrylic, etc.

LAB, Ethylene

Oxide, Propylene

Oxide, etc.

ABS, Nylon-6,

MMA, PMMA,

PET, etc.

Health Care

~ 8.1%

~ 9.2%

~ 12%

~ 11%

~ 8.7%

~ 10.1%

~ 4.2%

~ 16.5%

In 2017In 2017

30

Government of India Flagship programmes to boost further demand

Source: Primary interactions, Secondary research, Tata Strategic Analysis

Notes : 1) Exchange Rate: INR 67/USD 2) Upside calculated by considering the estimated increase in the growth rate after the initiatives 3) Growth Rates till FY25

Swachh Bharat

Smart Cities

Agricultural

Reforms &

Farmer’s Welfare

Make in India

Initiative Government Support

Financial target of

USD 4.48 Bn. for FY19

Budget estimation of

USD 8.36 Bn. in FY19

Funding of

USD 30.44 Bn. for FY18

100% FDI under automatic

route

Surfactants &

Water Treatment

Chemicals

Construction

chemicals

PVC &

Agro-

chemicals

Pharma, Textiles,

Automobiles, etc

End-use industries benefited Business Impact3

Boost Chemical industry

growth >9%

Surfactants & water treatment

chemicals estimated to grow at

15%

Market for construction

chemicals expected to grow at

15%

Market for PVC expected to

grow at a CAGR of 12% &

agrochemicals by 7.5%

31

Indian chemical industry is poised to grow at a CAGR of 9.3% till FY25

Indian Chemical Industry (USD Bn.)

Source: Tata Strategic Analysis

With strong growth drivers, Indian Chemicals & Petrochemicals Industry is projected to

grow much faster than the Global Chemicals and Petrochemicals Industry

107163

304

2011 2018 2025

+6.2%

+9.3%

Global chemical industry (USD Tn.)

3.5

5.0

7.2

20182011 2025

+5.1%

+5.5%

32

Current & Future Supply Demand Scenario-Major Petrochemicals

41

31

47

07

14

44

16

08

14

3

46

72

44

60

31

58

19

85

39

0

76

83

83

85

14

82 24

00

47

0

10

43

0

94

40

58

85

30

73

80

3

0

2000

4000

6000

8000

10000

12000

PE PP PVC MEG SBR/BR

KT

PA

Production - 2017 Demand -2017 Production - 2025 Demand- 2025*

Gap : 541

Gap : 2747

Gap : (-247)

Gap : 1055

Gap : 1714

Gap : 4403

Gap : 377

Gap : 673

Gap : 247Gap : 333

*Including Petrochemical Plants under construction:

1. HMEL, Bhatinda (1200 KTPA Ethylene)

2. Rajasthan Refinery (890 KTPA Ethylene)

3. PDPP - BPCL, Kochi

Source: DCPC, Ministry of Chemicals and Fertilizers, Govt of India

33

Demand for petrochemicals intermediates offers Make in India Opportunity

Demand-Capacity gap in FY21 (‘000 TPA)

Source: DCPC Data and Tata Strategic Estimates; Exchange Rate I USD = 73 INR (Oct’2018)

• To meet the growing demand, India will need 5 crackers by 2025, and additional 14 by 2040.

• Investment potential in petrochemicals alone for these crackers is approximately ~ USD 65 Bn.

34

Saudi ARAMCO and ADNOC in Ratnagiri Refinery; The largest overseas investment in the Indian refining sector…

Source: PIB, Ministry of Petroleum & Natural Gas, Govt. of India

Project

Capacity

▪ Saudi Aramco and ADNOC signed an MoU in June 2018 to jointly develop and build

an integrated refinery and petrochemicals complex at Ratnagiri, Maharashtra.

▪ The project will be implemented by Ratnagiri Refinery & Petrochemicals Ltd (RRPCL);

a consortium of India Public Sector Units.

▪ Estimated project cost - USD 44 billion.

▪ Processing capacity of 1.2 million barrels of crude oil per day (60 million metric

tonnes per annum).

▪ Capacity of producing approx. 18 million tonnes per annum of petrochemical

products.

▪ One of the largest Projects in the world, expected contribution to India’s GDP

improvement of around 2%.

▪ Saudi Aramco & ADNOC as overseas strategic partners; this will bring together

crude supply, resources, technologies, experience and expertise.

▪ The Refinery will provide feedstock for the integrated petrochemicals complex.

Significance

35

Focus Area

Several actions taken by government to facilitate the required investment

Dahej, Gujarat

(453 sq. km)

Cuddalore & Naghapattinam,

Tamil Nadu (257 sq. km)

Vishakhapatnam, Andhra Pradesh

(640 sq. km)

Paradeep, Odisha

(284 sq. km)

Skilled manpower &

Labour law

Regulations & LicencesInfrastructure

Mega Investment Regions

Tax system

36

12 Players

12.26 mmta

Polymer

Capacity

70 kta

0.7% share

500 kta

4.1% share

5730 kta

46.7% share

1420 kta

11.6% share

1250 kta

10.2% share

440 kta

3.6% share

360 kta

2.9% shareChemplast

280 kta

2.3% share

270 kta

2.2% share

90 kta

0.7% share

1040 kta

8.5% share

810 kta

6.6% Share

3 of 7 Fortune Global 500 Indian companies (2017) are in Petroleum and Petrochemicals Sector

2017 Fortune

Global 500 rank.

148RIL

137IOC

197ONGC

HMEL adding 1750 KT capacity (PE and PP) in next 4 years

HPCL Rajasthan Refinery Ltd adding 1810 KT capacity (PE and PP) in next 4 years

Large existing players in India provide good opportunity for Joint Ventures

Source: Industry Associations

Capacity in kta

37

India-GCC Historical Ties

Indian Diaspora in the Gulf

• About 8.5 million people of Indian origin in the GCC

• UAE and Saudi Arabia are alone hosting 3 million each

• India receives remittances to the tune of $40 billion annually from the region

India’s dependence on the Middle East for energy

• The GCC supplies 60 per cent of India’s total energy imports

• GCC exports to India have grown at an annual rate of 43 percent over the last decade

India’s Commercial Relations with the Gulf

• India is the largest exporter of food to the GCC among its South Asian neighbours, providing both packaged products and staples like rice, wheat, sugar, and live animals.

• India’s exports include halal products, precious metals, gems and jewellery, fruits, cereals, garments

• India’s imports include crude oil, mineral fuels, bituminous substance, iron and copper• Many Indian companies are active in sectors like construction and technology, such as L&T,

ESSAR, Punj Lloyd, Engineers India Ltd etc.

38

Synergies between India – GCC Countries: A win – win story…

What GCC has… What India has…

Oil reserves in GCC. India’s proximity to the Middle East ensures easy access to GCC reserves.

A strong pool of financial resources and access to capital enables GCC to invest in India.

India is the world’s 3rd largest consumer of polymers, 6th largest producer of chemicals, thereby having a huge domestic demand. It also has a business-friendly environment and a large talent pool to make investments successful.

To diversify the economy GCC needs cooperation in the field of science and technology, services, manpower and access to emerging markets for their capital.

India is a pioneer of innovation, has a constantlygrowing manufacturing sector, and is going through a demographic dividend.

39

39Save the date…

40

Thank You