Karnataka is one of the top ranking industrialized states in the country. The state has emerged as a major centre for the petrochemical industry. Based on the production volume, India occupies 12th position in the global chemical industry. The petrochemical sector forms a big part of this industry. Karnataka is a key contributor to the overall petrochemical production in the country.
The state has more than 500 factories driving its chemical industry. Mangalore has evolved as the hub of Karnataka’s chemical and petrochemical industries. Mangalore Refinery and Petrochemicals Limited (MRPL) is the leading name in the state’s petrochemical industry. It is also the only public sector refinery in the state.
Key factors influencing the growth of the petrochemical industry in Karnataka
Karnataka is witnessing a constant demand in the production and consumption of petrochemical items. The petrochemical industry fulfils various basic human requirements and improves the quality of life. The state’s petrochemical industry is growing at a fast rate. There are many factors that are helping the petrochemical industry to flourish in Karnataka. Some of these factors are:
- Karnataka has Special Economic Zones (SEZ) marked for the petrochemical industry
- There are several research and development centres in the state that cater to the petrochemical industry and its products
- The state has transport hubs that help the cause of this industry
- The presence of Petrochemical Industrial Parks in Karnataka play an important role in the growth of this industry
- The eco-friendly technologies used in the petrochemical industry boosts its growth
- The products of this industry include items of daily use as well as special use
- The state offers the infrastructure and logistic facilities needed for the smooth functioning of this industry
- There are dedicated courses and colleges that impart knowledge and skill development needed for this industry
- The ITI’s in Karnataka produce trained human resources that can be value addition to the petrochemical industry
Policies and initiatives by the state government
The petrochemical industry plays a significant role in the economy of Karnataka. It is a diversified industry with numerous commercial products. There is a huge potential for the industry to grow further and improve the state’s economy. That is why the state government has undertaken various policies and initiatives to support the industry’s growth in the state. These policies and initiatives include the following:
- Active single point approval method for petrochemicals projects. The clearance is to be handled by the Unit Approval Committee supervised by the Development Commissioner of SEZ.
- Proposal to declare all industrial units in the SEZs as Public Utility Service. This is to be done as per the Industrial Dispute Act of 1947.
- Providing of 50% reduction in registration charges and stamp duty.
- Exemption of taxes and electricity charges.
- Exemption from paying Labour Welfare Cess of 1% based on construction price.
- Exemption from paying any sort of duties, taxes, cess, or levies that may be declared by the State government.
- Grant of 100% FDI for the chemical and petrochemical industry in the state, excluding a few delicate industry sectors.
- Planned infrastructure to fuel the growth of the industry
- Grant of incentives for all industrial units functioning out of SEZ.
Investment opportunities in the petrochemical industry in Karnataka
Karnataka is a desirable location for investment in the petrochemical industry. The state offers various incentives for establishing and developing petrochemical units within its territory. Some of the investment opportunities offered by the state are:
- Grant of subsidy to anchor units
- Providing of subsidy for investment promotion to MSMEs
- Exemption from paying stamp charges
- Concession in registration fees
- Reimbursement of conversion charges
- Special grants and incentives for upcoming units in districts with low HDI
- Exception from paying of entry charges and incentives for units with export orientation
- Exemption from paying APMC cess
- Subsidy for establishing of ETPs
- Grant of interest free loan on VAT for mega and large units or ventures
- Exemption from paying electricity charges
The road ahead for the petrochemical industry in Karnataka
The petrochemical industry in Karnataka is on a rising graph. The industry has the potential to expand further and help in the economic growth of the state. Recognizing the potential of the industry, the state government has laid down various policies and initiatives to promote a healthy investment environment. The investment opportunities in the state are attracting various multinational companies. It can be expected that within the next decade the petrochemical industry will witness a sustained growth rate.