Freedonia said the projected growth would be the result of multiple factors, including:

• rising demand for rubber and electricity, resulting in higher process oil sales;
• a growing motor vehicle parc and increasing marine and railroad shipping activity, which will increase engine oil demand;
• higher motor vehicle production and transportation equipment manufacturing, which will help sales of metalworking fluids, gear oils and greases;
• gains in mining output driving demand for hydraulic fluids.

Other factors, like increased food and beverage manufacturing and rising plastic resin demand, will help boost demand for the country’s industrial lube.

Freedonia also forecasted nonconventional lubricant demand in India to grow through 2024 “at an above average pace,” the company said, with synthetic and re-refined lube rising at a solid pace. Freedonia expects biobased lubricants to retain a minimal share of demand in the next few years.

Despite the optimistic forecast, the COVID-19 pandemic hampered demand, according to Freedonia researchers.

“The forecast is slower now, particularly when averaged out over a 5 year time horizon,” Ned Zimmerman, chemicals team leader at Freedonia, told Lube Report. “The reduced economic activity caused by the pandemic will lead to slower increases in manufacturing activity than would otherwise have been expected, and not as many vehicles will purchased as previously expected.”

The pandemic led to the Indian government shutting down factories, offices and public transport for a few days last year to curb spread of the coronavirus. Castrol India and Gulf Oil Lubricants India Ltd. each temporarily closed their lube plants in early 2020 before reopening again in April.

“Demand took a definite hit with the lockdown last year,” said Zimmerman. Reduced travel led to less fluid changes as consumers either waited until the recommended miles traveled change interval or looked to save money during economic uncertainty, he explained. “While reopening of the economy has helped, the current surge in cases makes it difficult to predict how things will turn out as the government appears much less willing to pursue the strict lockdowns enforced at the beginning of the pandemic.”

Zimmerman said that once the pandemic has been fully brought under control, however, Freedonia expects short-term above-average growth both in India and globally. “The combination of increased domestic economic activity and rising export opportunities should provide a welcome lift.”

Last year, India implemented its Bharat Stage VI automobile emissions standards, bringing the country roughly to the same level of emissions regulations as the European Union. The measures significantly raised the quality of lubricants that will be required in new cars, trucks and motorcycles. India jumped straight from Bharat Stage IV to Stage VI as it attempts to improve the country’s air quality. In 2019, 21 of the world’s 30 most polluted cities were in India, according to IQAir.com.

The new standards didn’t affect overall lube demand in the country, said Zimmerman, as the share of Bharat Stage VI vehicles in the market is still low. However, “there are some potential impacts on the demand for lubricants in gasoline vs diesel vehicles,” he said. “Gasoline vehicles will gain an edge at the entry level, but consumers may decide they prefer the larger vehicles where diesels are still quite popular. It remains to be seen how this will play out in the Indian market place.”