Oil in Global Economy Series: Producers Need to Focus on India, Prize of Next Decade
India topped the list of world’s best performing economy this year, taking over China in growth rate. National Democratic Alliance (NDA) led by Prime Minister Narendra Modi, has taken up steps to remove the unnecessary red tapes in investments, reduced corporate tax rates and opened up sectors for foreign investments and also heavily investing in infrastructure. According to IMF, India is the shining star in global economic slowdown.
Steps, which are being taken today, likely to bear fruit over the coming years. For example, thanks to the reforms, main apple supplier, Foxconn has announced that it is going to make India, its major production hub. But that will take almost end of this decade.
With rise in India’s GDP, expect its energy consumption to go up rapidly over the next few years and more so over the next decade. More so because, India today one of the biggest beneficiary of lower oil price in the world and it will fuel consumption further. Just recently India launched a high speed train, “Gatiman” from its capital city to city of Taj Mahal and developments like these are very energy intensive. Right now, we are probably looking at next level of modernization drives in India.
India is already one of world’s biggest importer of crude oil. It imported about 4 million barrels per day in 2015 and this year it is expected to surpass world’s third biggest exporter Japan this year. It is also widely expected India’s oil demand will be at par with China in this year or next.
So missing out on India is likely to be big cost for producers, when demand is likely to slow down structurally in the developed world, due to their shift into alternate energy sources.
The material has been provided by InstaForex Company - www.instaforex.com