KEY DEVELOPMENTS AND CURRENT STATE OF THE INDIAN OIL AND GAS SECTOR

The oil and gas sector in India is a critical component of the country’s economy, accounting for 15 percent of the country’s gross domestic product (GDP).Economic growth is directly linked with energy demand, and a conservative estimate of 7 per cent growth is expected to double India’s per capita energy consumption from 560 kilograms of oil equivalent (kgoe) in FY10 to 1,124 kilograms of oil equivalent (kgoe) by FY32. As oil and gas is one of the main sources to meet the required demand for energy in India, its demand is forecast to rise further. In 2011, natural gas accounted for 10 per cent of the country’s total energy requirements, whereas estimates suggest that this figure will reach 20 per cent by 2025, with oil and gas together accounting for approximately 45 percent of the total demand.

Market reports estimate that this growth is expected to take the size of the Indian gas market to that of the gas market in Japan, the largest consumer of liquefied natural gas (LNG) in Asia, by the end of 2015. Despite having significant reserves in India, the increase in demand is expected to be primarily met through imports.

To cope up with the increasing demand, the government has allowed 100 per cent FDI in the oil and gas sector, enabling some large partnerships such as the US$ 7.2 billion deal between British Petroleum (BP) and Reliance Industries. In order to further aid the development of the sector, the government introduces legislations such as the New Exploration Licensing Policy (NELP) to enable companies to bid for exploration rights, and encourage private sector participation. The participation of the private sector is expected to bring in monetary resources and technological capabilities, especially in the field of deep sea exploration while simultaneously reducing the dominance of PSUs in the country’s competitive landscape.

Posted By:

Reema Kapoor

ICIS

Indian paint industry forecast to double by 2018

The Indian paint industry was given a market value of US$5 billion at the beginning of 2013, and has been forecast to double by the time we reach 2018.

Though the paint industry witnessed some slowdown in the last few years due to global economic uncertainties and growing urbanization, good growth has been forecast for the next five years.

In recent years several factors have contributed to the fortunes of the Indian paint industry including the adoption of the latest technologies, innovative product launches, aggressive marketing strategies, comprehensive product portfolios, and value added services offered by companies.

In recent years, there has been a major transition in the type of products and services brought in by manufacturers and an evolving preference towards mid and premium segment products. Innovation has been seen all around the market landscape of decorative and industrial paint categories.

As the paints market has grown and evolved there has been increased demand for premium products. This has come about as buyers have become more aesthetically aware, and have the means to opt for better value products, even at higher prices.

As with other fields, some challenges also exists in this promising sector that can affect the growth trajectory of the paint industry, if not handled accordingly. For instance, the industry is highly raw material-intensive and any fluctuation in the availability of raw material leads to substantial price fluctuation in paint production costs.

In terms of volume, the industry stood at 3.11 million tonnes, of which the decorative segment accounted for an approximate nearly 77% share in 2012.

The 70:30 trend within the decorative and industrial segments is expected to continue in the future, mainly because of the growth in urbanisation and the increase in disposable income.

The country looks set to continue to enjoy a healthy growth rate compared to other economies, backed by the increasing level of disposable income, and demand from infrastructure, industrial and automotive sectors.

Posted By:

Reema Kapoor

ICIS