Lubricant Oils in India Indian Motorisation Drives Demand for Lubricants, Oils and Greases

Rising incomes in one of the world’s fastest-growing economies are driving purchases of cars and motorcycles in cities and rural areas. At the same time, improvements in engine technology and environmental regulations are transforming the needs of consumers.

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Motorists are looking for lubricants that not only protect, clean and extend engine life but also optimize consumption and performance. A partnership between GP Petroleums Ltd and Repsol SA may offer a model for how India can satisfy this anticipated surge in consumer demand without accelerating the nation’s dependence on imported petroleum products or adding to its carbon footprint.

Indian domestic automotive standards traditionally follow European norms, and lubricant manufacturers are now catching up with technology and specifications to match the new European requirements for engines. Meanwhile, infrastructure improvements in India are narrowing the gap between prices for petrol and diesel and contributing to growth in demand for both types of engines and cars.

Upcoming trends of the automotive market

Engine technology has evolved rapidly in recent years, and pressure has mounted on engine manufacturers to do more to control harmful emissions amid growing global concern for the environment. This transformation in technology is creating a market for hybrid and electric cars in developed countries, and many Indians will probably develop a similar taste for greener vehicles.

Unprecedented economic and demo-graphic changes are also shaping the automotive market. Indians are among the world’s biggest buyers of motorcycles, and increasing prosperity will accelerate this trend, just as it is already doing for sales of smartphones. This is especially true for many millions of young people who value convenience and aspire to a more affluent lifestyle than that of their parents. In the countryside, higher incomes are spurring demand for motorcycles and farm vehicles. In cities, India’s expanding middle class is hungry to own cars.

Each new vehicle that hits the road this year is more technologically advanced than those that preceded it last year, and motorists need sophisticated lubricants that can protect their engines and enhance their driving experience.

Indian imports of crude oil: facts and figures

However, this rising demand risks aggravating India’s reliance on imported additives and oil products. India imported 38 per cent of its fossil fuels in 2012, up from 15 per cent in 1990, according to the US Energy Information Administration. In 2013, the country was the world’s fourth-biggest consumer and net importer of crude oil and petroleum products, after the United States, China and Japan.

India consumed an average of 3.7 million barrels a day of petroleum products that year, almost four times its total liquids production.

Consumers in India receive large subsidies for retail prices of LPG and kerosene, and this puts more upward pressure on overall demand. Consumption of fuel products grew by 2.9 per cent in May from the same month a year ago, while petrol sales increased by 8.9 per cent over the same period. On the supply side, insufficient investment in producing more crude oil and liquids has resulted in output growing more slowly than demand.

All of this creates a policy conundrum for the government as it seeks to meet rising demand, secure affordable energy supplies, and attract investment in hydrocarbon production and infrastructure.

Despite India’s status as a net importer of crude oil, investment in new refining capacity has made it a net exporter of petroleum products. Its total oil-refining capacity amounts to almost 250 million ton per year compared with an annual consumption of less than 175 million ton. Most of the nation’s refineries have been modernized or are being upgraded.

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