The plant to manufacture ethylene glycol will be set up in Paradip in Odisha at a cost of Rs 4,221 cr, the company said.
Ethylene Glycol is used to manufacture polyester fibre as well as chips used for making polyester bottles and fiber.
The plant will have the capacity to produce 3.57 lakh tons of ethyl glycol per year.
The unit will use the gas produced as a byproduct of the company’s catalytic cracking unit at Paradip.
Catalytic cracking refers to the breaking down of big petroleum molecules such as naphtha to smaller and more useful products like gasoline and diesel.
“The project would help in meeting the growing domestic demand of ethylene glycol in the country,” the company said.
State-owned IndianOil Corporation is India’s largest commercial enterprise.
It operates 10 of India’s 20 refineries and supplies gas to nearly 50 mln households through a network of 5,000 distributors.