Prospects of Plastic and Petrochemical Sector in North East India- Gateway to ASEAN & BBIN Countries
Pranjal Kumar PhukanChief Manager (C & P)
Contracts and Procurement
Brahmaputra Cracker and Polymer Limited
Lepetkata Post Office
Dibrugarh, Assam

The idea of "Growing" and "Reforming" India has not just enticed the Indian businesses but also enthused foreign investors to make India as investment destination with expectations. Plastics and Petrochemicals plays a vital role in the growth of Indian economy and will continue at the expected growth rate of 8% till 2030. Plastic and Petrochemicals Sector has become the ubiquitous workhorse of the modern economy - manufacturing products with peerless functional properties and optimum cost. The uses of plastic products have increased twenty-fold in the last two decades and is expected to double again in the next five years. This sector offers a new vision and roadmap to overcome the boundaries of today's incremental improvements and fragmented initiatives which will align with the principles of the circular economy, to unlock future growth opportunities with an unequivocally systemic and shared approach. The aim of this sector is to move the plastics value chain into a positive spiral of stronger economics, capture value and better environmental outcome- while creating a shared sense of direction and igniting the spark of innovation.

India faces massive demand for polymers and petrochemicals fueled by a robust economic growth. An ambitious dream was nur tured by the country's flagship oil & gas companies in Nor th East India in setting up first of its kind petrochemical industry by supplying feedstock for conver ting it into polymers. The petrochemical complex has the competitive advantage of consistent supply of feedstocks viz., Naphtha and Natural gas. Built with the facility which integrates the world's best technologies producing 280 KTPA of polymers, such a capacity will alter the polymer market dynamics of North East by easing the supply positions and providing the customers with quality product options. The worldwide consumption of per capita of plastic is approx. 27 kg. India's per capita is 9 kg but Nor th East per capita is less than 4 kg per year. Packaging industry in India has seen a strong penetration of plastics as compared to global standards. However, agriculture sec tor still hasn't explored the benefits of plastics to a large ex tent. Global average for plastics demand in agriculture is ~8% while India is substantially lower at only 2%. (Figure 1)

Figure 1: Statistics on global average for plastic demand

The Indian plastics processing industry has grown at a CAGR of 10% in volume terms from 8.3 MMTPA in FY10 to 13.4 MMTPA in FY 15 and is expected to grow at a CAGR of approximately 10.5% from FY15 to FY 20 to reach 22 MMTPA. Though the outlook for plastics processing in the Indian subcontinent is positive, still the industry faces many challenges.

Coupled with local availability of raw material, market potentials for down -stream industries and various government initiatives are expected to give a further boost in setting up of plastic processing units in the region. Various initiatives are under taken by various stake-holders viz., setting of production units, public utilities, logistics, residential areas and administrative services to boost the development of plastic industries scenario in the region.

Keeping in line with the Government of India's vision of Hydrocarbon-2030, the primary focus is on promoting and attracting plastic-based downstream industries which will not only bring in large amount of investments but also generate huge employment opportunities and socio - economic development in the region.

North East scenario:
North East of India is bound to take a big leap and will grow at a faster speed in the field of Plastic and Petrochemicals. Assam consumes a wide range of plastic/polymer products and is the most industrialized state in the North Eastern region. Besides, the state holds the unique strategic position as the entry point to the rest of the states in the region as well as ASEAN and BBIN countries and hence have tremendous scope for polymer market including scope for exports. The region has the following basics of the growth i.e;
  • Market
  • Raw Materials
  • Resources including infrastructure
  • Skilled Labour Force
  • Ready Projects
  • Comprehensive Government Support
The current consumption in NER is around 4300 MT per month (MTPM) with the following break-up: (Figure 2)
Figure 2: Statistics on region wise demand pattern

  • Virgin Polymer (as processed in NER): 2300 MTPM
  • Reprocessed Polymer (as reprocessed in NER): 900 MTPM
  • External Supply (Processed products as are supplied to NER): 1100 MTPM
The petrochemical complex with an investments more than USD 1.5 Billion will lead the growth in the future with ample supply of raw materials to more than 200 plastic processing industries to set up and fulfill the envisaged bright future in Plastics and Plastic products for the region. The lone mega Petrochemical Industry in the entire NE region has brought renaissance in the polymer sector in the region with readily availability of raw materials thereby paving the way to set up , numerous downstream polymer industries will be set up in the region, and polymer consumption will also rise.

As North East region enjoys the strategic locational advantage of being in close proximity to ASEAN countries, hence operation of lone petrochemical complex in providing polymers will help in getting the necessary fillip in feedstock sourcing and in the polymer processing sector along with increased growth in end-user industries propelling the growth of plastics in North -East India.

The region has the strategic advantages as both upstream and downstream is coming up in the region coupled with lower labour cost and investor-friendly approach by most of the state governments of the region. The Gas Cracker has proven to be the potential game - changers and in shifting the focus of plastic industry to eastern states of India and become the hub for future growth. (Figure 3)

Figure 3: Growth drivers of Nor th East region of India

Way forward
The plastic industry in the region, at present, is witnessing a dramatic transformation from a low-profile production base accounted for by the local entrepreneurs, to a scenario in which the major-players in the field in the country are focusing on investment opportunities in the region. The major petrochemical players in the region are committed to establish significant presence in the north- east region in petrochemical sector by way of production or sourcing and marketing of quality products, deploying efficient distribution and marketing channels to cater to the needs of target customers. Opportunity of exporting desired polymer(PE/PP) grades in the adjoining countries is also being explored for expanding market footprints of the Plastic Industry in next few years.

Coupled with local availability of raw material, campaigns like "Star tup- India" launched by the Government of India are expected to give a further impetus in setting up of plastic-processing units in the region. As also India gears up to take the Make in India initiative forward, lone petrochemical complex in Nor th East region India products will provide tremendous boost to the nation and give an impetus to the downstream industries. The transport cost component involved here will be relatively low (say 1800- 2000 per ton), as compared to transport cost from the western region (say around 5500 per ton). Petrochemical complex in North East region has registered its presence in the market and presently command around 2% in the domestic market. The complex enjoys 60% market share in North East region and working relentlessly for further improvement in the scenario.

In terms of new plastics era Demands and new way of thinking and emerging technologies, demand for performance plastics such as biodegradable polymers is expected to be on rise across the world including India. Focus areas are going to be modern farming through Plasticulture, packaging for processed food & non- durables, better plastics for Automobiles, infrastructure development, innovative products for Telecommunication and IT sectors. Plasticulture can significantly benefit agriculture by its wide applications in all the areas of farming. It can be used to tackle the specific problems faced by North-East regions.

People understand the importance of Plastics and the role of Petrochemicals in the future and many future looking projects came up which were earlier not possible because of unavailability of raw materials or uncertainty of the availability of the raw materials. India will remain the leader in the economic growth for next decade and so will be North East region of India.

Various government strategies with consistent and suppor tive policies like "Act East" has transformed North-East Petrochemical and Plastic Industry towards sustainable competitiveness thereby providing longterm investment with stable business. Keeping in line with the Centre's vision of Hydrocarbon-2030, the state government has called upon entrepreneurs to invest in plastic industry. The government has also passed the Ease of D oing Business Bill 2016, creating possibilities of a single window clearance system for fast tracking business projec ts in the state. The focus is on promoting and attrac ting plastic-based downstream industries which will not only bring in large amount of investments but also generate huge employment oppor tunities and socio - economic development in the region. Significant effor ts are also being made by all the stakeholders to realize the real potential of this sec tor and positioned it as an evolutionary economic player in the North East region.

As India gears up to take the Make in India initiative forward, BCPL made in India products will provide tremendous boost to the nation and give an impetus to the downstream industries. It is now all set to redefine the North East petrochemical landscape. Moreover gate way of vast investment opportunity is awaiting in NER as present per capita consumption of plastic is approx. 4 Kg per year as against the world-wide consumption of plastic approx. 27 Kg and India's of 11 Kg. NER also enjoys the strategic locational advantage of being in close proximity to ASEAN countries.