With an estimated 900 million people eligible to vote, more than the combined population of the US and the EU, this has the been the world’s largest electoral exercise but what does the future hold for the world’s largest democracy in terms of trade.
A recent report by the Organisation of Economic Cooperation and Development (OECD) has indicated that due to the ongoing US-China trade war plus a slowdown in the Chinese economy, the Indian economy is set to continue to overtake that of China in terms of growth. China’s GDP growth for 2019 is expected to be 6.2% and 6.0% for 2020 whereas for India, growth is predicted to continue to increase from 7.2% this year to 7.4% in 2020.
In terms of coal, India is the second largest importer globally, just behind China. However, India is predicted to overtake China this year having increased imports by 14% for Q1 2019 to over 56 million tonnes in order to meet power demand. India’s surging demand has spurred growth in the sector and India is sourcing the bulk of its coal from South East Asia but is increasing amounts are coming from East Coast Australia and further afield. This could be good news for larger vessels but in reality, Indian port restrictions dictate that the majority of coal is imported in Panamax and Supramax vessels, which indicates good demand prospects for this sector in the future.
In 2015 Prime Minister Modi outlined targets decrease the country’s dependence on imported oil by 10% by 2022 when India celebrates it’s 75th year of independence and instead focus on increasing domestic production and promoting the use of biofuels, energy conservation and sustaible alternatives. However with oil consumption continuing to grow and domestic production limited to meet the growing demand, government data suggest that India is still highly dependent on oil that crude imports have continued to increase. In fact oil market predictions show that by 2024 India will surpass China in terms of demand for oil and will acount for avout 30% of total global oil demand growth.
As the world’s third largest oil-consumer, India meets more than 80% of its oil needs through imports. However, US sanctions on Iran and Venezuela have forced India to seek alternative sources of crude to make up for lost volumes. In 20108, Iran was the third largest supplier of crude to India, accounting for 11% of and Venezuelan imports ranked fourth at around 8%. Instead, the Indian government announced that it will step up imports from other sources in the middle east such as UAE and Saudi Arabia and also from Mexico which would reinforce the demand for long-haul crude shipments domestic refineries have stepped up production in order to meet national demand. In April 2019, India’s crude oil refinery output increased 4.3% to 20.63mt compared to the same period in April 2018.
As Trade wars continue to escalate and fears that a global slowdown could be on the cards, affecting China’s economy. India’s growing demand for raw materials could provide welcome support for vessel demand both in the dry bulk and crude sectors.