A Dynamic India needs more energy for growth and prosperity. High technology manufacturing supply chains depend on reliable energy. Consumer products depends electric machinery and on availability of inexpensive materials. Chemicals depend on cheap crude feedstocks. Data centers are huge consumers of electricity. Transportation energy (fuels) are key consumption area.
Investment in India’s energy future will require international investors. Changes will be needed for a Dynamic India to construct coordinated policy, law and regulation, and investor returns. Green energy transformation will require new infrastructure at all levels of energy generation, distribution, and consumption. India cannot perform the green transformation without external investment. Setting the priorities and parameters of attracting and executing with the investment will require patient investors during execution under consistent multi-year policy and performance.
Clouds in Indian demand raise many questions further out. Questions range from Government policy, the green energy transformation, to the viability of margins in the Indian marketplaces. As an example, transport fuels in India use approximately 18% of total energy consumption (per BEE). Transportation uses almost 50% of petroleum fuels consumed in country (per CEEW). Present trends will require more than doubling oil-based equivalent energy by 2030. Lack, or expensive, transportation fuels act as a drag and street-tax on all enterprises.
Indian driving demand is sensitive to government energy policies. Driving demand has collapsed in Nigeria with the elimination of all subsidies for transport fuels. Indian government regulations dominate production, distribution, and sales of diesel fuels. Current rules allowed refiners and fuel distributors to benefit from the globally-cheap price controls. The government is spending on continued subsidies for consumer fuels in an inflationary period. Petroleum-produced fuels are seeing gains from cheap crude from Russia. These are all short term energy infrastructure and sales conditions. Taken together this doesn’t provide a long term consistent energy policy for execution. Changes to reduce petroleum-based fuels for transportation will be critical to costs of Indian energy consumption.
India’s energy infrastructure for transportation is not yet mature. Demands from high populations of electric vehicles are likely coming in the mid-term. Lower cost vehicle designs from USA, Chinese, Japanese, and Korean manufacturers are coming across energy types. These will upset marketplace price positions as Indian consumers, famous for frugal shopping, look for value. Worse for manufacturers this will challenge vehicle margins. European and Japanese manufacturers looking for a global haven from Alien Invaders challenging their margins will see highly competitive Indian markets instead. Global trends in product platforms can be adapted for Indian markets with appropriate policy and regulatory incentives.
Getting to a future Dynamic India will require political, policy, regulatory, and cultural adjustments. An example is remote work. Clearly developed economies have shown substantial amounts of transportation energy can be reduced by remote work and “local shared workplaces”. Indian gasoline uptake dropped about 20% during Covid-19 lockdowns. In future, this will require uniquely Indian adjustments to accomplish. Societal, and individual, costs related to remote work will drive enterprises to make this work. The opportunity for a Dynamic India is to skip the learning curves of other societies and get directly into the rewards from good policy.
For more analysis and notes on a Dynamic India see http://www.ekalore.com/india-business
For accelerating your international business contact us at http://www.ekalore.com
Comentarios