The Petrochemical Pivot: India's Refineries Are Learning to Stop Burning and Start Building

By Dev Chandrasekhar

What?

A quiet revolution is underway in India's industrial heartland as refineries transition from combustion centers that burn hydrocarbons into conversion hubs that build essential materials from them. This strategic shift is measured by the Petrochemical Intensity Index (PII), which tracks the percentage of crude converted into chemical feedstocks rather than fuel.

With a collective investment exceeding Rs 3.5 lakh crore, India’s energy giants are betting that the barrel's future lies in high-value polymers and specialty chemicals rather than just petrol and diesel. "Increasingly, we are seeing a movement more towards what I call conversion rather than combustion," Atanu Mukherjee, CEO of Dastur Energy, told The Core.

With peak gasoline demand looming by the early 2030s, Indian refiners are investing over Rs 3.5 lakh crore to ensure their assets do not become obsolete. "In Panipat, we are already beyond 30% of my crude that is going into Panipat is getting converted into petrochemicals. And in Paradip also, with my new petrochemical projects coming up, there again it will be going beyond 35%," said Arvinder Singh Sahney, IOCL's Chairman and Managing Director.

Why?

This massive capital deployment is a matter of survival in a bifurcating global market. A 2025 Wood Mackenzie study warns that roughly 21% of global refining capacity—representing 18.4 million barrels per day—faces closure risk by 2035, primarily because they lack petrochemical integration.

Standalone refineries in Europe and North America are particularly vulnerable to EV demand erosion and rising carbon costs. In contrast, integrated facilities enjoy a structural margin uplift of $1.00 to $3.00 per barrel, creating a financial moat that protects them when fuel cracks weaken.

Why It Matters?

India's domestic demand arithmetic further justifies this high-stakes buildout, as the nation's per-capita petrochemical consumption remains just one-third of the global average. While fuel demand is growing at a modest 2%, polymer demand is surging at rates between 5% and 12% annually, feeding sectors from electronics to textiles.

As IOCL invests Rs 97,000 crore in petrochemical hubs and BPCL rolls out its Rs 1.7 lakh crore Project Aspire, both aim to reduce reliance on volatile fuel margins. Raising petrochemical intensity to 35% is key to building more stable earnings. BPCL’s CMD Sanjay Khanna told The Core the strategy marks a pivot “beyond fuels to power new industries.”

Now, as the smart money is on the molecule and India's refinery bosses have made their bets. Will the cycle catch up?

Rs 8,000 crore

That’s how much India’s top 50 listed companies by market capitalisation spent on corporate social responsibility initiatives, reaching over 200 million Indians, according to the ‘Perpetual Capital Hurun India Impact 50-2026’ list. The ranking evaluates firms on their alignment with the 17 United Nations Sustainable Development Goals and indexes their performance to a score out of 100, based on publicly available disclosures such as annual reports and Business Responsibility and Sustainability Reports.

Top five companies’ scores (indexed to 100), along with contributing areas:

• Hindustan Unilever Limited (HUL) —> 53.9 —> Climate Action, Quality Education, Clean Water & Sanitation

• HCL Technologies —> 53.8 —> Affordable & Clean Energy, Climate Action, Gender Equality

• Grasim Industries —> 52.6 —> Clean Water & Sanitation, Affordable & Clean Energy, Responsible Consumption & Production

• Tata Motors —> 51.8 —> Climate Action, Clean Water & Sanitation, Affordable & Clean Energy

• Dabur India —> 50.3 —> Responsible Consumption & Production, Climate Action, Clean Water & Sanitation

The Scoop: The report says sustainability was largely aspirational three years ago. Companies framed ESG as compliance or philanthropy.

Future: Today, the list argues that large corporates treat sustainability as core strategy. Firms now set measurable, time-bound targets, tie them to capital expenditure, and publicly track progress across climate, water, gender and energy goals, signalling a shift from voluntary signalling to structured accountability.

The Pioneer presents India Finance & Innovation Forum 2026 convenes policymakers, regulators, financial institutions and industry leaders to examine India’s evolving financial architecture. Over three days, senior decision-makers will explore fiscal and monetary priorities, capital markets, digital finance and innovation-led growth through focused dialogue, networking and collaborative sessions on what’s changing, what works and what comes next.

No Country For Tech?

A controversy erupted at the India AI Impact Summit 2026 as organisers asked Galgotias University to vacate its pavilion on Wednesday, following allegations of tech plagiarism.

The row began on Tuesday when Communications professor Neha Singh enthusiastically introduced a quadruped robo dog named "Orion" to DD News cameras. She declared that the Centre of Excellence at the University had developed Orion, highlighting its features as a shining example of campus innovation. A major IT company showcased the robo dog too, though they didn’t explicitly claim to make it.

Flashpoint: Social media users quickly debunked that Orion was actually a commercially available robo dog manufactured by Chinese company Unitree Robotics, which is available in India for Rs 2-3 lakh. The backlash exploded rapidly.

Turning Point: On Wednesday, Singh said the controversy arose because she did not express herself clearly, adding that she takes accountability for not communicating effectively.

The university later issued a clarification saying their representative was “ill-informed”. It also said that Singh, caught in the "enthusiasm of being on camera," provided factually incorrect information even though she was not authorised to speak to the press.

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Wall Street Just Named the Most Crowded Trades of 2026

AI stocks. Metals. Crypto.

Surprise, surprise; gold crashed 16%. Silver plunged 34%. Bitcoin dropped to 1 year lows.

All supposedly "uncorrelated" assets moving in lockstep largely because of overleveraged margin.

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Are Slowing IPOs Restoring Sanity In The Markets?

On Episode 802 of The Core Report, financial journalist Govindraj Ethiraj talks to Akhil Chandna, Partner – Global People Solutions Leader at Grant Thornton Bharat.

• Are slowing IPOs restoring sanity in the markets?

• Google to build new fibre-optic cables into India

• Maruti finally launches a new electric car

• Guess what adults and kids in India are buying up like there is no tomorrow

• New labour code comes into effect this November