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India's 2017 oil demand growth posts lowest gain since 2013

Reuters  |  SINGAPORE/NEW DELHI 

By Gloystein and Nidhi Verma

SINGAPORE/(Reuters) - Indian consumption in 2017 grew at its slowest in four years, according to statistics, hit by the government's move and a increase that knocked the gain in fuel use back to a modest 2.3 percent.

The low growth also coincided with another year of weak, albeit improving, new vehicle sales.

Last year's was held back "by headwinds from and a new goods and services tax," U. S. said in a note to clients.

imports almost all of its oil, shipping in around 4.2 million barrels per day (bpd) of crude in 2017, according to trade flow data in Eikon.

"Gasoline rose 7.4 percent, or 41,000 barrels per day, down from 12 percent growth in 2016 as was affected by at the start of the year," the said.

in late 2016 pulled all 500- and 1,000-rupee notes out of circulation, crimping and wholesale markets.

"The demonetization exercise hit consumption, particularly in the first half of 2017.

We are likely to see better growth this year," said Sukrit Vijayakar, at Indian Trifecta.

also saw some structural changes that affected the use of refined products.

A push for household to use more (LPG) has challenging as the world's top LPG importer.

This has come at the cost of a straight 15-month decline in jet fuel and kerosene in India, said.

Also, "naphtha ... was down 8 percent for 2017

as a whole, possibly driven by more LPG use in petrochemicals," it said.

For 2018, expects India's growth to improve to 4.3 percent.

"India's fuel will rebound in 2018 because of policy initiatives by the and the country's economic expansion," said Senthil Kumaran, senior analyst at

"Higher purchasing power of consumers along with rapid growth in will drive two-wheeler and passenger car sales," he said.

SLOW BUT IMPROVING CAR SALES

India's slow growth has surprised many, given the country has often been touted as the next in terms of rising consumption.

Yet the figures correlate with slow, albeit improving, growth in a related field:

India's new in 2017 broke through 3 million for the first time, reaching 3.23 million cars, according to the said on Thursday.

That means broke a previous record of 2.8 million in annual new sales from 2012.

The figure, though, remains far below China's new of almost 3 million a month.

The low auto sales are partly explained by India's (GDP) being merely a fifth of China's. Fuels at Indian petrol stations are also much more expensive.

If an Indian citizen with an average salary buys 10 gallons of gasoline per month, that would represent nearly 30 percent of the person's income, while the average Chinese would fork out just 5 percent, data from statistics company showed.

However, India's lacklustre auto sales may pick-up as its economy continues to grow strongly, at over 6 percent per year.

Trifecta's Vijayakar said car and motorbike sales in "have shown good growth in the last few months ... (and) should be better this year."

(Reporting by Gloystein; Editing by Tom Hogue)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 16:54 IST
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