Sops for petroleum product exports also on the cards

In order to boost export of petroleum products in the backdrop of surplus refining capacity in the country, the government may include these in the Market Linked Focus Product Scheme.

Launched in April last year, the scheme provides ad valorem support equivalent to 2.5 per cent of the freight-on-board value of the export turnover, which can be used for importing inputs. However, such exports are linked to a particular product tied to specific destinations. For example, recently, apparel exports to Japan and Australia were included in the scheme.

The proposal, aimed at offsetting the freight disadvantage Indian companies suffer vis-à-vis West Asian companies, is being studied by the petroleum ministry.

This follows a plea by the Petroleum Federation of India — which has companies like Reliance Industries Ltd (RIL), Essar Oil and government-owned oil refiners and marketers as members — to commerce and petroleum ministries.

The private sector, led by RIL and Essar Oil, accounts for over two-thirds of the country’s petroleum exports, which are the largest foreign exchange earners. In 2007-08, 39.3 million tonnes (mt)of petroleum products worth Rs 1,07,603 crore were exported from India. These products account for around 15 per cent of the country’s total exports.

At present, petroleum products from India are exported to Africa, Europe, the US, Latin America, South East Asia and West Asia.

India has surplus refining capacity, which is slated to increase further to 240 million tonnes per annum (MTPA) by the end of the 11th Plan period (2007-2012) from the current level of 177.97 MTPA. The move will help the companies export their surplus output.

The country’s refining capacity increased by 29 MTPA to 177.97 MTPA from December 2008 with the commissioning of Reliance’s refinery at Jamnagar. Of this, 105.5 mt is in the public sector, while the balance 72.47 mt is in the private sector.

The refining capacity is expected to cross 190 MTPA at the end of the 2009-10 fiscal with the commissioning of the Bina refinery, among others. Indian companies would be required to export aggressively keeping in view the expected surplus capacity in the coming years, said experts.