London and New Delhi, April 2017 – The sweeping reforms introduced by India's National Democratic Alliance government since coming to power have infused momentum into India's manufacturing sector. This will trigger massive requirements for oil, gas and other resources according to a new S&P Global Platts special report: "'Make in India' A new window of opportunity for commodities". A series of new projects have been announced and implemented, helping to drive up demand for industrial resources. This is expected to set the stage for sustainable long-term economic growth and create jobs for the millions of young people joining the workforce. There are already signs of success.

"To secure long-term energy and resource needs, India will need partners, it will need reliable supply chains and it will need foreign investment, if it is to grasp the opportunity that awaits", said Sambit Mohanty, Lead Author of the report and Senior Editor-Asia Pacific at S&P Global Platts. "There are indeed reasons to remain optimistic about the Indian manufacturing growth story. The signs are visible in demand for various commodities. But the final level of success, and thus the upturn in demand for commodities, will ultimately depend on the continuation of the strong government policy initiatives that have been launched and implemented so far by the government," Mohanty added.

According to the report, the country's demand for a variety of energy and non-energy commodities is forecast to outstrip strong GDP growth. India's crude oil demand is expected to rise by just over 7 per cent in 2017 and at a Compound Average Annual Growth (CAGR) rate of 5 per cent between 2015-2020 to 5.2 million b/d. Gas demand is forecast to rise at a CAGR of 4 per cent to 183 MMcm/d by 2021. Utilisation of LNG terminal capacity is expected to grow from around the current 16 million mt to 30 mt/year by 2022.

A rapid expansion in domestic production has seen Indian thermal coal imports peak. Petrochemicals is the third-largest polymer market in the world, demand is growing at 10 per cent a year, a growth rate expected to be sustained over the next decade. Short term steel demand is forecast to grow at 4.5-5.5 per cent, accelerating to 6.0-6.5 per cent CAGR through 2020-21, driven by the steel-intensive railway and urban infrastructure sectors. The country is experiencing a boom in renewable energy. However, industrial consumers are paying high tariffs to subsidise rural constituents, while the financial position and lack of cost recovery of state-level distribution companies represents a major weakness affecting industrial competitiveness. Nonetheless, power demand is forecast to surge 44 per cent from 2016 levels by 2020.

Platts report notes that, there is little prospect that domestic production of many primary and secondary commodities will keep pace with demand growth. Import gaps are a certainty. The demand potential has already led major international companies, such as Shell, BP, Rosneft, Trafigura and Saudi Aramco to either consider expansion or explore joint ventures opportunities to establish presence in the country.

Dharmakirti Joshi, Chief Economist, CRISIL explains, "Unlike the sharp recovery seen after the global financial crisis of 2008, the current one has not only been gradual, but more sustainable. That's because the growth we are seeing is not driven by monetary and fiscal steroids." To achieve 'Make in India', "growth must be based on both the domestic market, which will require a broader distribution of income, and a more competitive economy that allows Indian manufacturers to expand their presence in foreign markets."