Plenary Session -3 on ‘India: Manufacturing hub for Hydrocarbon Sector’

The third Plenary Session was held on ‘India: Manufacturing hub for Hydrocarbon Sector’ under ‘Make in India’ at PETROTECH-2016, New Delhi. The session was chaired by Mr. Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. Mr. Amit Khera from McKinsey & Co. moderated the session. The distinguished speakers for the plenary session included Mr. Amitabh Kant, CEO, NitiAayog;Mr. D. K. Saraf, CMD, ONGC; Mr.SubramaniamSarma, CEO and MD, L&T Hydrocarbon Engineering; and Mr. Sanjay Gupta, CMD, EIL.

Opening the session, Mr. Amit Khera said, ‘For Make in India, we should start with focusing on areas where the import percentage and India’s capability of indigenizing are fairly high’. He underlined the four points for the future, namely, ‘Local content/QCBS contracts’, ‘Fiscal incentives – Mandated R&D, tax exemptions’, Hubs for petroleum specific industries, and ‘Human capital – focus on collaboration between industry and educational institutes’.

Mr. Ramesh Abhishek, in his address, said thatIndia is the fastest growing economy – 7.6% GDP growth achieved last year. Stating that India is the 3rd largest energy consumer, he underlined the energy requirement of the nation which is likely to increase significantly. He said that only 6.7 billion USD has been invested in last 15 years in O&G sector and so there is a huge scope for improvement. Lot of work has gone in to make business climate more friendly – fundamental changes likely to come in over the next year, leading to large improvement on this front.PSUs have invested Rs. 8 lac crores recently, and are expected to invest 3 lac crore more in the next few years. ‘DIPP is committed to work with ministry, PSUs, private investors, and all other investors, through ‘Invest India’ to make ‘Make in India’ happen. ‘Invest India’ is already facilitating 45 million $ of investment within a year of conception,”he added.

Mr. Amitabh Kant took the session ahead with his remarkable thoughts on ‘Make in India’. “India needs a predictable and consistent policy for over 3-4 decades to rise in manufacturing and to meet the energy demands”. He pointed out the three points, namely, Discover O&G in India, Manufacture equipment in India and to develop technical and procedural expertise in country, for ‘Make in India’. ‘It is important for the oil and gas companies to create wealth, hence an incentive structure and infrastructure on par with the best in the world is required’, said Mr. Kant. ‘Our aspiration’, added Mr. Kant, ‘should be - ‘Explore, discover, tap and refine oil in India’.

Mr. D. K. Saraf highlighted the initiative of ONGC over the past few years. He said that to boost the growth petroleum specific export promotion zones and single window clearance are essential. “Energy consumption doubled in last 15 years, however, per capita consumption is still 1/3rd global average – upswing in demand expected. Over 48% of sedimentary basin unappraised - untapped reserves need to be found and developed, he added. “Hon’blePM has envisioned energy sufficient India, to reduce import dependence by 10% by 2022”, adding that KG offshore, Rajasthan, other discoveries recently, are a great start. Making a strong case for reformas, he said that two main reforms, among multiple others, have happened over the past 2 years

  • HELP – multiple freedoms, and revenue sharing instead of profit sharing
  • Attractive prices for difficult gas

  • He shared that value addition to revenue ratio of E&P is one of the highest in O&G, among other industries. He also spoke about multiple initiatives of ONGC over the past few years including approved projects worth over 12 bn USD over last 2 years for 1.2 bn barrels of oil/oil equivalent of gas; 5.07 bn dollar project under implementation, Rs 100 Cr startup fund to foster and incubate start-ups in India, etc. he recommended petroleum specific export promotion zones, single window clearance etc. to boost growth ‘To capitalise on our opportunity to make India a manufacturing hub, we need to make ‘Make in India’ a brand. We need a paradigm shift in our attitude towards some issues such as Quality consciousness, Sense of pride, Honouring commitments and Education and training’, remarked Mr.SubramaniamSarma. He said further, ‘In addition, there is a need to support the right policies – Government already doing significant, but a little more could be done. We are making very good progress as a country’.

    Carrying the theme of the session forward, Mr. Sanjay Gupta remarked that India is a young and aspirational country with a high growth rate, a passion to deliver and a visionary leader. India is set to take the world-stage. He announced that EIL plans to see a refinery of its own, along with O&G company, very soon. This will be completely indigenized, including technology. Mr. Gupta pointed out ‘We are making headwind into the bio-fuels area, and with the help from oil majors, we expect to bring ethanol cost down drastically. We have set up a project in Nigeria, and 1billion $ worth jobs have already been secured in India’. He added further, ‘110 billion $ investment is expected in the next 5-7 years in this segment. 50% in upstream, whereas the rest 50% is likely to bring about a big change in the LNG pipeline, cryogenics, and petchem. Mr. Gupta concluded saying, ‘Already a refining hub, now we can be a petrochemical hub, will need investment in the powder-based equipment space which accounts for a large portion of petchem’.