Special Economic Zones Play Key Roles in India's Refining Sector

---

Researched by Industrial Info Resources (Sugar Land, Texas)--In 2000, the government of India introduced a new special economic zone (SEZ) scheme in the export and import policy, with a view to providing an internationally competitive and hassle-free environment for export production.

The foundation of India's SEZ concept can be traced back to the establishment of export oriented units (EOUs), which were industrial units specializing in manufacturing for the purpose of exporting products. These EOUs later switched into trading-related activities, manufacturing products and trading exports. Since they were open to this combined export activity, they came to be known as free trade zones (FTZ). This created the need for support infrastructure and logistic facilities for efficient and smooth functioning of these FTZs. The integrated entities came to be known as Special Economic Zones (SEZs).

An SEZ or FTZ is typically an enclave of units operating in a well-defined area within the geographical boundary of a country where certain economic activities are promoted by a set of policy measures that are generally not applicable to the rest of the country. FTZs offer high-quality infrastructure facilities and support services and allow duty-free imports of capital goods and raw materials. In addition to attractive fiscal benefits, relaxed labor laws and simpler procedures are also offered in such zones. The international experiences of SEZs lend credibility to the fact that countries like China, Ireland and the Philippines have achieved high economic growth supported by strong performance of their SEZs.

With the significant increase in demand for petroleum products and petrochemicals, India emerged as one of the largest suppliers of petro products in this dynamic economic scenario. Reliance Industries Limited (BSE:500325) (RIL) (Mumbai) fulfilled the refining hunger by the further expansion of its refinery complex in the Jamnagar SEZ. This refinery's output not only fills the Asia-Pacific demand gap, but also serves the global market, including North America, Gulf Cooperation Council countries, Africa and Australia.

Being a tax-free zone for the import of goods, RIL is increasing profit margins by selling its products in foreign markets, creating a win-win situation.

RIL's new refinery in the SEZ at Jamnagar is the world's sixth-largest refinery and has a Nelson Complexity Index of 14.0, making it the most complex refinery in the world. The refinery has a throughput capacity of 580,000 barrels of crude oil per day. In addition to size and complexity, the SEZ refinery has several advantages:

• The ability to process crude varieties that present a processing challenge to older refineries.
• The ability to produce Euro V grades of gasoline and diesel.
• Highly competitive operating costs, due to advantages of scale, technology and operational synergies.
• The capability to produce alkylates--a premium gasoline blending component. It will have the flexibility to maximize production of alkylates by converting butane to isobutene.

All key processing units, including the fluidized catalytic cracking unit (FCCU), vacuum gas oil (VGO) unit, hydrogen manufacturing unit (HMU), diesel hydro desulfurization (DHDS), propylene recovery unit (PRU), coker unit and the polypropylene complex are operating close to their respective design capacities. All of the support units and utilities are fully operational, and the refinery is operating at its design capacity.

The refinery has successfully processed more than 60 types of crude oils, including difficult crude oils, within a few months of its startup, thus reflecting the superior quality of its equipment and capabilities. Exports have commenced to 32 countries, including to the U.S. and Europe.

View Project Report - 89000052 89001323 89001322 89000333 89000593

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.