Refinery Petrochemical Integration, Feedstock Certainty to Define India’s Next Chemical Growth Cycle: Ramya Bharathram, MD, Thirumalai Chemicals

Why It Matters

Stable domestic feedstock is essential for cost‑competitiveness and export growth; integrated hubs and transparent pricing will unlock high‑value specialty chemicals and support climate‑trade goals.

Key Takeaways

• Integration lowers feedstock costs, boosts downstream investment
• Import dependence exceeds $30 billion, hindering value‑chain upgrade
• Flexible crackers and anchor tenants ensure feedstock security
• Common‑carrier pipelines reduce logistics expenses for hazardous feedstocks
• Transparent, index‑linked pricing builds confidence for high‑capex projects

Pulse Analysis

India’s chemical sector is at a crossroads, grappling with a $30 billion trade deficit driven by heavy imports of ethylene‑derived intermediates such as EDC, VCM and PVC. The shortage of domestic ethylene limits the ability to produce higher‑value derivatives, forcing manufacturers to rely on volatile global markets. By co‑locating refineries with petrochemical complexes, the country can capture low‑cost feedstock streams, lower transportation expenses, and create a more resilient supply chain that shields producers from geopolitical shocks.

A re‑imagined anchor‑tenant model is central to this transition. Instead of operating as a standalone cracker, the anchor tenant would commit to supplying calibrated volumes of olefins and aromatics to downstream units, while flexible cracker configurations allow simultaneous production of multiple derivatives. Shared, common‑carrier infrastructure—tank farms, ship‑to‑shore pipelines, and multi‑user storage—further reduces logistics costs and encourages multi‑industry participation at port‑based hubs such as Paradip and Chennai. These mechanisms align risk‑sharing incentives between oil‑and‑gas firms and chemical manufacturers, making capital‑intensive specialty projects financially viable.

The strategic shift also dovetails with the EU’s Carbon Border Adjustment Mechanism, which will penalise high‑carbon exports from 2026 onward. Indian producers are therefore accelerating decarbonisation through energy‑efficient processes, cleaner fuel use, and transparent, index‑linked feedstock pricing that mirrors global benchmarks. Long‑term supply‑or‑pay contracts and cross‑equity participation provide the certainty needed for multi‑billion‑dollar downstream investments, positioning India to capture a larger share of the global specialty chemicals market while meeting emerging climate standards.

Refinery petrochemical integration, feedstock certainty to define India’s next chemical growth cycle: Ramya Bharathram, MD, Thirumalai Chemicals

Ramya Bharathram · MD & CFO, Thirumalai Chemicals · President, Indian Chemical Council · By Mittravinda Ranjan · ET EnergyWorld · Published Feb 16 2026 at 07:02 PM IST

India’s chemical sector must undertake structural shifts to move up the global value chain, Ramya Bharathram, managing director and chief financial officer of Thirumalai Chemicals and president of the Indian Chemical Council, told ET EnergyWorld in an exclusive interaction. She discussed various barriers to downstream investments and feedstock vulnerabilities and highlighted how integration, transparent pricing, and sustainable innovation can strengthen competitiveness and reduce import dependence in a volatile global landscape.

NITI Aayog, in one of its reports, highlighted India’s focus on bulk chemicals over high‑value derivatives. What key barriers are preventing domestic players from investing downstream in specialty chemicals?

India’s disproportionate use of propylene for polypropylene (PP) was historically rational, driven by acute domestic shortages and the need for rapid import substitution. That context has changed: PP capacity has expanded significantly, new projects continue to be added, and margins are increasingly under pressure, exacerbated by China’s large‑scale PP build‑up via propane dehydrogenation routes.

Despite this, investment has not meaningfully shifted toward higher‑value propylene derivatives such as propylene oxide, polyols, or acrylic acid. The constraints are largely structural:

• Downstream specialty projects are more capital‑intensive, have longer gestation periods, and require stable feedstock economics, assured offtake, and stronger integration with end‑use industries—conditions that remain underdeveloped in India.

• Technology access is a challenge for some derivatives with a high degree of import dependence, e.g., methylene diphenyl diisocyanate (MDI).

• Financing frameworks and infrastructure are still geared toward large commodity polymers, making lenders more comfortable backing PP than specialty chemicals.

Until policy, infrastructure, and risk‑sharing mechanisms evolve to support downstream integration, capital will continue to favour volume over value, limiting India’s move up the petrochemical value chain. I believe there is a latent demand in India which will unleash once domestic supplies at competitive prices are made available to downstream users.

To what extent are the chemical manufacturers dependent for feedstock on imports? How is the industry planning to de‑risk the supply chain from global price volatility and geopolitical risks?

India’s chemical industry remains heavily dependent on imported intermediates, particularly in the vinyl chain. In CY24, India imported:

• $193 million of ethylene dichloride (EDC)

• $360 million of vinyl chloride monomer (VCM)

• > $1 billion of polyvinyl chloride (PVC)

This dependence stems from limited domestic ethylene availability that prevents efficient chlorine absorption into EDC. Projects such as Reliance’s planned EDC‑VCM‑PVC expansion and Adani’s carbide‑based PVC route indicate progress, but they do not address the structural issue. Our overall trade deficit in chemicals exceeds $30 billion. Without additional petrochemical crackers or propane dehydrogenation (PDH) capacity, India will remain exposed to global price volatility and geopolitical risks.

What innovative mechanisms need to be in place to ensure a stable and competitive input supply?

The long‑term solution lies in refinery‑petrochemical integration. Port‑based integrated complexes with shared utilities and effluent infrastructure can lower costs, stabilise feedstock supply, and reduce import dependence—an approach successfully demonstrated in hubs like Antwerp, Ulsan, and Bayport.

In your view, how should the role of ‘Anchor Tenant’ in Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) be redefined to ensure the downstream units are not left with a feedstock vacuum?

India’s high import dependence reflects the limitations of its cracker base, which offers limited feedstock/product flexibility. New greenfield cracker configurations can make this feasible, with alternate olefin and aromatic derivatives output if designed in tandem with downstream projects to ensure assured offtake.

The PCPIR “anchor tenant” therefore needs to evolve from a standalone producer to a guaranteed feedstock provider that plans cracker capacity alongside downstream demand. The model can work only when mutual assurance is built into feedstock security for downstream units and volume certainty for the anchor tenant.

The experience at Paradip PCPIR underscores this gap. While the refinery and petrochemical complex came up, downstream configuration remained focused on traditional derivatives like PP. Future PCPIRs must mandate co‑investment in flexible crackers with downstream units developed in parallel, avoiding the feedstock vacuum that continues to drive imports.

What ‘common‑carrier’ pipeline or specialised storage expectations do you have from oil and gas companies to reduce the prohibitive cost of moving hazardous feedstocks?

Port‑based chemical complexes can reduce logistics costs only if oil and gas companies invest in shared, common‑carrier infrastructure. This includes:

• Dedicated tankage for hazardous liquid feedstocks and finished products

• Ship‑to‑shore pipelines that enable rapid unloading and turnaround of bulk carriers

Such infrastructure should be developed as neutral, multi‑user assets rather than captive facilities, with configurations tailored to the specific chemical value chains anchored at each port. Without common storage and pipeline access, downstream units face prohibitive handling costs, undermining the competitiveness of port‑led petrochemical clusters.

How is the chemical industry preparing for the transition to gain a greater share in the global chemical value chain as the EU’s CBAM mechanism shifts from reporting to financial obligations in 2026?

The EU’s CBAM is increasingly being viewed by Indian chemical producers as a non‑tariff barrier, akin to REACH. While it may temporarily raise the cost of exports, the industry recognises it as unavoidable and is preparing to adapt rather than disengage. The response is a gradual but deliberate push toward decarbonisation, improving energy efficiency, increasing the use of cleaner fuels, and aligning processes with global carbon‑accounting standards. Over time, lowering embedded carbon will be critical not just to mitigate CBAM costs but also to remain competitive and secure a larger share of the global chemical value chain.

What specific transparent pricing formulas do you expect oil and gas companies to adopt in order to ensure cost advantage for domestic players compared to global peers? What form of guaranteed feedstock supply agreements are necessary from refineries to provide you with the investment confidence needed for high‑capex downstream derivatives?

For domestic chemical producers to invest confidently in high‑capex downstream derivatives, feedstock pricing must be transparent and globally benchmarked. Oil and gas companies should adopt clear formula‑based pricing linked to international indices, with defined discounts or stabilisation mechanisms to avoid structural cost disadvantages versus global peers.

Equally important are long‑term supply frameworks. Proven models such as supply‑or‑pay and take‑or‑pay agreements can provide volume and price certainty across cycles. Deeper alignment through cross‑equity participation can further share risks and rewards between refineries and chemical producers. Where limited integration exists—such as support of Chennai Petroleum Corporation to downstream units in Manali—pricing flexibility during stressed market conditions has helped sustain viability. Scaling such practices is essential to unlock downstream investment.