India’s diesel consumption, crucial for the transport and logistics sector, is projected to surpass 93 million tonnes (mt) in the current financial year, which ends in March 2025. V Satish Kumar, the Acting Chairman of the Indian Oil Corporation (IoCL), indicated that diesel demand is expected to grow by 3 to 4 percent annually in FY25.
During a press briefing at the World Biogas Association’s India Congress 2024, Kumar mentioned that diesel consumption is likely to rise this month. This increase is attributed to the end of the monsoon rains and the harvesting of Kharif crops. Kumar is also the Director of Marketing at India’s largest fuel retailer. He assumed the role of Chairman at India’s leading oil marketing company last month.
In September 2024, diesel consumption fell to its lowest level in two years. This decline was due to reduced manufacturing activity and excessive rains, which affected mobility and reduced the need for mechanized irrigation.
Both August and September saw decreased diesel usage, primarily because of a drop in manufacturing and industrial activities. Heavy rains in northwest and central India contributed to this lower mobility.
Crisil Ratings reported that domestic consumption of petroleum products has seen a compound annual growth rate (CAGR) of 4 percent over the past decade. Transport fuels, which make up about 56 percent of total consumption, also grew by 4 percent.
Anuj Sethi, Senior Director at Crisil Ratings, stated, “We expect overall petroleum product consumption to moderate slightly and achieve a CAGR of around 3 percent over the next six years. This is mainly due to a slower growth rate of 2-3 percent in transport fuel consumption. Factors contributing to this include better fuel economy, a higher share of vehicle sales using alternative cleaner fuels, and the Government of India’s target of 20 percent ethanol blending.”
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