After the instruments are placed in the P&ID, who decides if the instrument should fall into an IS loop or a normal Non-IS loop? On what basis the decision is made?
It only needs to be IS if it is in a classified area, and you can protect against fire/explosion via IS. This is not possible with all instruments. It might also be that a person would chose not to use IS protection and go with some other protection means even if IS was a viable option in a particular case.
Somewhere there is a document that will tell you if the area the instrument is installed in is classified or not. That is the start.
To decide the IS or NIS loop there are certain procedures which are followed during designing or detail engineering. HAZOP is one such procedure to find if some area or section of the plant should be termed as hazardous. even if some section like piping, tanks etc. contains hazardous or inflammable material these sections will be termed as hazardous. hence instruments used in these sections will be IS...that means.
Basically it just depends on the zoning or most people refer it to HAC (hazardous area classification). This will determine whether the instruments should be IS or not.
(In the US) Usually the client or customer expresses their desire on whether they want to use IS wiring methods (can be cheaper, but much harder to do completely correct), explosion-proof wiring methods (more expensive, medium difficulty to do correctly), or a combination of both.
There must be a hazardous area classification drawing which details the location and extent of any haz areas so your electrical installation can be done correctly. Sometimes there are "examples" or "details" showing any specific methods or materials required by the customer or you.
Unless the client specifies that all circuits in a hazardous area are to be IS, usually nothing requires them to be, except for a particular device or instrument that has a control drawing and is supposed to be installed IS.
Intrinsically Safe wiring methods are but one example of installing electrical circuits in a hazardous area. The most common method, however, is to use explosion-proof wiring materials and methods.
One advantage of installing IS: Costs can be much lower since the explosion-proof materials are quite expensive. But so are IS barriers.
The biggest problem of IS installations is that there are very detailed requirements that must be followed for a compliant installation.
