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Published:October 15, 2019 7:52 PM
India stands at the second position as the largest lubricant consumer in the Asia-Pacific region and third-largest lubricant consumer in the world, after the United States and China. The emerging automotive and industrial sector in the country has led to augmented demand for base oils and lubricants. India is one of the fastest developing and dynamic lube markets, and emerging into a substantial market proposing great opportunities to the industry’s refiners, traders, and blenders in the region. Lubricants are used extensively in various industries including Power Generation, Construction and Mining, Automotive, Chemical, Food and Beverage, Oil and Gas, Metallurgy & Metalworking and other industries. Lubricants are mainly used by OEMs for automobile manufacturing. The automobile industry needs lubricants for pre and post-production of the automobile. Lubricant products comprise Engine Oil, Metal Working Fluid, Bearing Oil, Grease, Compressor Oil, Industrial Engine Oil, Hydraulic Oil, Bearing Oil and other products. The series of reforms such as BS-IV, GST, and Make in India, etc. in the country is expected to attract the global players. Since India is implementing directly BS-VI emission norms from BS-IV, this would swift major hardware modifications from the OEMs to provide to the new emission category, coupled with significant development in fuel quality. Lubricants and base oils will be playing a crucial role during the shift. India’s Lubricants Production and Consumption (2014-18) The total consumption was around 3884 metric tons of lubricants annually for the FY 2017-18, and the production was 1036 metric tons over the FY 2017-18. India holds only 40% lube domestic production. Increasing demand for lubricants from the automotive industry is expected to boost the growth of the lubricants market in India. The consumption represents market demand and is cumulative of actual sales by oil companies in the domestic market, consumption through direct imports by private parties and sales by SEZ units in the Domestic Tariff Area. India’s Lubricants Import and Export (2014-2018) India imports more than 60% from APAC, Middle East, US, and other countries. The total import was 2539 Metric tons during the FY 2017-19, while export was 13 Metric tons over the FY 2017-19. Importing countries include Srilanka, Nepal, Indonesia, Bangladesh, Austria, etc. Import has shown tremendous progress with a growth rate from -5.8% to 19.14% during the period FY 2017-18. Increasing demand for lubricants from various industries and growing manufacturing sectors are the major factors contributing to the growth of the Indian lubricants market. Impact of BS-VI on Lubricant Market India plans to implement directly from BS-IV to BS-VI in order to reduce pollution levels will largely impact the automakers. BS-IV was implemented by 2017 and BS (Bharat stage) emissions norms are set by the Indian government regulatory to check the pollutant levels emitted by vehicles. BS norms are based on European norms (e.g. Euro 4, Euro 6) which are followed by automakers across the globe. The main difference between the BS-IV and BS-VI is the presence of sulfur content in the fuel, where BS-IV contains 50ppm sulfur and BS-VI contains 10ppm. •BS-VI will help to reduce the toxic waste levels caused by automobiles but it is time-consuming for automakers to develop a new automobile engine and replacing the existing one used in the vehicles. •It will make vehicles more costly to customers as manufacturing costs will be higher including R & D activities, setting up a new scale of production and technological cost. •Huge stock of vehicles is unsold that are having BS-III and BS-IV engines including commercial vehicles, two vehicles, and three vehicles. •A more stringent BS-VI standard is anticipated to increase the demand of standard lube oil of group II and group III depending on the imports, it is estimated to decrease the demand of group I oil that is manufactured locally for lube application. Hence group I oil will be fulfilling the demand for other applications. •Global leading lubricant players are likely to have an advantage over NOCs to provide to the lube oil to the market owing to their technological advantage. •The unorganized sector which captures about 30% of the share is anticipated to shrink swiftly owing to restraint in the accessibility of technology to manufacture lubes meeting BS-VI norms. Market Dynamics Major Player in Indian lubricant Market Among PSUs Indian Oil and in Private Players Castrol are leaders in the Market Indian Oil Corporation, one of the leading PSU is acquiring the largest market share in the lubricant market followed by BPCL and HPCL. Servo is one of the most renowned lubricant brands in the country. Indian oil is serving globally and exports its products under the servo brand over 25 countries, whereas its Propel brand petrochemicals are exported to 70 countries. Indian Oil owns multiple subsidiaries and JVs that help to increase its customer reach and brand value. Castrol India Limited is one of the prominent leaders in the lubricant industry and giving tough competition to the well-established PSUs. Castrol has strong branding across urban and rural areas. It follows direct marketing strategy to attract customers and invest heavy amount of capital on advertising and marketing. Conclusion The Indian lubricant market is one the most lucrative market and going through some major changes in the coming years. Implementation of GST is enabling companies to reduce the logistics and operating costs due to faster goods movement owing to reduced paperwork. Under Make in India scheme, government has reduced the corporation tax and also offering separate incentives for companies using advanced manufacturing technology. NOCs are the main refiners to the manufactures of lubricant and crude oil is not added to GST and following the previous tax regime. This is anticipated to lead to the complex of dual taxation. The implementation of BS-VI by 2020 will impact the manufacturing and automotive industry. Indian refiners are required to upgrade their refining systems to manufacture products as per the new norms.
India stands at the second position as the largest lubricant consumer in the Asia-Pacific region and third-largest lubricant consumer in the world, after the United States and China. The emerging automotive and industrial sector in the country has led to augmented demand for base oils and lubricants. India is one of the fastest developing and dynamic lube markets, and emerging into a substantial market proposing great opportunities to the industry’s refiners, traders, and blenders in the region. Lubricants are used extensively in various industries including Power Generation, Construction and Mining, Automotive, Chemical, Food and Beverage, Oil and Gas, Metallurgy & Metalworking and other industries. Lubricants are mainly used by OEMs for automobile manufacturing. The automobile industry needs lubricants for pre and post-production of the automobile. Lubricant products comprise Engine Oil, Metal Working Fluid, Bearing Oil, Grease, Compressor Oil, Industrial Engine Oil, Hydraulic Oil, Bearing Oil and other products. The series of reforms such as BS-IV, GST, and Make in India, etc. in the country is expected to attract the global players. Since India is implementing directly BS-VI emission norms from BS-IV, this would swift major hardware modifications from the OEMs to provide to the new emission category, coupled with significant development in fuel quality. Lubricants and base oils will be playing a crucial role during the shift.
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