The India retail fuel market is expected to grow at a CAGR of more than 4% over the period of 2020 - 2025. Fostered by the rise in per capita income, and increasing commercial and industrial sector, the demand for fuel is likely to increase during the forecast period, which in turn will help the market for retail fuel to grow. However, the high cost of petrol and diesel is likely to restrain the growth of the Indian retail fuel market in the coming years.
- The privately-owned sector is expected to be the fastest-growing market during the forecast period, owing to factors like liberalization of India’s retail fuel market.
- India is a developing country with huge potential for demand increase of petroleum products in the future. This is expected to create an excellent opportunity for retail fuel players in the country.
- The rise in vehicle sales caused by the increase in the average income of Indians is the major driving factor behind the retail fuel market in India. The GDP per capita of India increased from USD 998.52 in 2008 to USD 2009.97 in 2018. This has led to a rise in the overall spending of average Indian consumers leading to a rise in the commercial sector, which in turn leads to a rise in sales of commercial vehicles and also a rise in sales of personal vehicles.
Key Market Trends
Private Owned Sector to Dominate the Market
- Private owned sector is expected to witness significant growth in the forecast period, owing to factors like rising fuel demand, and liberalization of the retail fuel sector in the country.
- In 2019, the Indian government opened up its retail transportation fuel sector to non-oil companies, a move that is expected to intensify competition in a segment dominated by state refiners, while private and global oil majors seek to expand their presence.
- Unlike developed countries, such as the United States and the United Kingdom, where fuel demand has stagnated, Indian fuel demand is accelerating – rising at a modest rate in the past few years. The consumption volume of petroleum products in India rose from 148.13 million metric tons in FY 2012 to 211.03 million metric tons in FY 2019. This, combined with the liberalization of the retail fuel sector, is expected to significantly help the private players in the retail fuel market in the country.
- While in 2013, non-PSU owned retail fuel outlets had only 5.1% of the share of the total number of outlets at 2487, the share grew to 10.2% in 2019 at 6680 outlets. Daily price revision & dynamic pricing, which provides greater pricing flexibility and offsets the decline of margins, are also expected to help the private players.
- Therefore, with the increase in the demand for fuel and the rise in the sales of passenger vehicles (PV) and two-wheelers, the private-owned sector is expected to rise significantly in the forecast period.
Rise in Car Penetration to Help the Market Grow
- India is the second-largest economy in the region and is expected to be the fastest-growing economy in the forecast period. India is one of the fastest-growing countries in the world because of the increasing population, urbanization, and industrialization.
- The country has seen unprecedented economic growth in recent years, combined with rising living standards and average income, a steady increase of vehicle sales has been seen in recent years.
- India saw the annual vehicle sales number rise from 2.26 million in 2009 to 3.8 million in 2019. The vehicle sale is expected to follow the same rising trend during the forecast period, which in turn will increase the demand for fuel and fuel retail outlets.
- The rise of the Indian middle class is an important factor in the increasing sales of vehicles. An estimated 500 million people are expected to move into the middle- and high-income brackets by 2030. This is expected to go together with the rise in vehicle sales over the period.
- All of the above factors are expected to cause a rise in sales of vehicles in India and, in turn, is likely to propel the demand of the retail fuel outlets in the region during the forecast period.
The India retail fuel market is moderately consolidated. Some of the key players in this market include Indian Oil Corporation Ltd, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corporation Limited, Nayara Energy Limited, and Reliance Industries Limited.
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