Government prepares R&D boost for petrochem sector

To improve the image of India in petrochemical exports, the government has come out with a national policy for boosting research and development (R&D) activities in this field.

Termed as “centres of excellence in the petrochemicals sector”, the policy entails creation of R&D set-ups for modernisation of the petrochemical industry at an estimated cost of Rs 440-660 crore. At present, the R&D expenditure of the industry stands at around Rs 220 crore, one per cent of the total industry turnover.

The Union finance ministry’s Economic Survey for financial year 2009-10 had put the total industry turnover in petrochemicals at Rs 22,000 crore.

With the scheme, the government aims at a low-cost high-return intervention in the petrochemical sector through public-private participation to promote the development of new applications of polymers and plastics by setting up such centres of excellence (CoEs).

Under the scheme, existing educational and research institutions working in the field of polymers and petrochemicals will be encouraged to set up CoEs for updating products for new applications, innovate new design and technology, recycle process technology, and develop biopolymers and biodegradable polymers, among others.

The thrust will be on new process technologies for high performance polymers through green technology. The CoEs will emerge as internationally recognised centre for path-breaking R&D efforts, which would be subsequently transferred to the industry for commercial development.

Any autonomous institution with a proven track record of academic excellence and R&D activities in the petrochemicals sector can apply for such scheme before July 15.

The funding of the scheme will be only in the form of a one-time capital expenditure for the government to set up such CoEs. Thus, the total government support for a single project will be either 50 per cent of the total investment or costs of the project, with an upper limit of Rs 6 crore over a period of three years.

Each CoE should finish the project within a period of three years. The rest of the amount will be met from resources of the applicant institute and its industrial partners.

The policy note is of the view that India has a large and growing domestic market but low per capita polymer and synthetic fibre (plastics) consumption. It states that while the upstream petrochemical products are technology-intensive for which technologies are imported from global investors, the downstream part of the industry needs major technological upgrade.

This scheme proposes to come out with technological innovation in both products and processes for both upstream and downstream petrochemical industry.

According to industry estimates, India has one of the lowest per capita consumption of petrochemical products in the world. For example, the per capita consumption of polyester in India is 1.4 kg, comparing to 6.6 kg for China and 3.3 kg worldwide. Similarly, the per capita consumption of polymer is 4 kg in India, against 20 kg for the whole world.

The upstream petrochemical sector refers to the exploration and production sector which involves searching for potential underground or underwater oil and gas fields, drilling of exploratory wells, and subsequently operating the wells that recover and bring the crude oil/or raw natural gas to the surface.

The downstream petrochemical sector refers to the refining of crude oil and the selling and distributing natural gas and products derived from crude oil. This sector includes oil refineries, petrochemical plants, petroleum product distribution, retail outlets and natural gas distribution companies.

The downstream industry touches consumers through thousands of products such as petrol, diesel, jet fuel, heating oil, asphalt, lubricants, synthetic rubber, fertilisers, plastics, anti-freeze, pesticides, pharmaceuticals, natural gas and propane.