India Base Oil Market By Type (Group I, Group II, Group III, Group IV, and Group V), By Application (Automotive Oil, Industrial Oil, Metalworking Fluids, Hydraulic Oil, Greases, and Others), By Region, Competition, Forecast and Opportunities, 2020-2030F
Published Date: December - 2024 | Publisher: MIR | No of Pages: 320 | Industry: Chemicals | Format: Report available in PDF / Excel Format
View Details Buy Now 2890 Download Sample Ask for Discount Request CustomizationIndia Base Oil Market By Type (Group I, Group II, Group III, Group IV, and Group V), By Application (Automotive Oil, Industrial Oil, Metalworking Fluids, Hydraulic Oil, Greases, and Others), By Region, Competition, Forecast and Opportunities, 2020-2030F
| Forecast Period | 2026-2030 |
| Market Size, By Volume (2024) | 3.59 Billion Litres |
| CAGR (2025-2030) | 3.74% |
| Fastest Growing Segment | Metalworking Fluids |
| Largest Market | West India |
| Market Size, By Volume (2030) | 4.42 Billion Litres |
Market Overview
India Base Oil Market
The market for base oils is projected to grow due to rising industrialization, expansion in the automotive sector, and increasing demand for high-quality lubricants. The growth in vehicle production and the need for high-performance engine oils are significant factors driving base oil demand. Investments in infrastructure projects are also boosting the demand for lubricants and, by extension, base oils.
Fluctuations in crude oil prices, the primary raw material for base oils, can affect their cost structure. Complying with environmental regulations and standards for lubricant formulations can be both challenging and expensive. Major players in the Indian base oil market include Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL).
Key Market Drivers
Growth of Automotive Sector
According to Invest India, from April 2023 to March 2024, the automotive sector produced 28.43 million vehicles, including passenger cars, commercial vehicles, three-wheelers, two-wheelers, and quadricycles.
as reported by IBEF, the automobile sector attracted a cumulative equity FDI inflow of approximately USD 35.40 billion between April 2000 and September 2023. India is poised to become the largest electric vehicle (EV) market by 2030, with over USD 200 billion in investment opportunities projected over the next 8-10 years.
The increase in commercial vehicles, such as trucks and buses, driven by logistics and transportation needs, further escalates the demand for base oils used in heavy-duty engine oils and industrial lubricants.
As vehicles age, there is a consistent need for maintenance and replacement of engine oils and other lubricants, sustaining a steady demand for base oils. Government policies promoting cleaner fuels and more efficient vehicles often require higher-quality lubricants, which are formulated with advanced base oils. Additionally, regulations on emission standards and fuel efficiency further drive the demand for superior lubricants.
Rising Demand for High-Performance Lubricants
Modern engines and industrial machinery demand lubricants that provide exceptional protection and efficiency. High-performance lubricants, developed with advanced base oils, are crucial for optimizing engine performance, enhancing fuel efficiency, and ensuring reliable operation. Technological advancements have launched more demanding lubrication requirements, including higher temperatures, greater pressures, and stricter performance standards, which high-performance lubricants are designed to meet.
In July 2024, Autoz365 Lubricants, a division of Tesla Power India Pvt. Ltd., launched a new line of lubricants in Ahmedabad, Gujarat. These products feature innovative formulations aimed at improving fuel efficiency and delivering superior engine protection.
In April 2024, Savita Oil Technologies Ltd. released its Ester 5 brand, which offers 28% fewer engine deposits, and 33% lower friction compared to standard Group-III base oil lubricants.
The emphasis on improving fuel efficiency and reducing emissions across various sectors further drives the need for high-performance lubricants that minimize friction and wear, enhancing fuel economy and supporting environmental regulations. The growing use of high-performance lubricants in premium automotive models and specialized industrial applications underscores the demand for superior base oils. As competition among lubricant manufacturers intensifies, there is a strong push towards developing higher-performance products, accelerating the innovation and use of advanced base oils.
Key Market Challenges
Volatility in Crude Oil Prices
Fluctuations in crude oil prices result in unpredictable shifts in base oil production costs, complicating the task for manufacturers to set stable prices and manage profit margins. Significant increases in crude oil prices can reduce profit margins for base oil producers, especially if they cannot pass these higher costs onto their customers. On the other hand, sharp declines in crude oil prices can affect revenue for producers who have invested in inventory at higher prices.
Price volatility can disrupt the supply chain by impacting the availability and cost of raw materials, leading to delays and increased expenses throughout the supply chain. This volatility can also heighten competition among base oil producers, as they vie to maintain market share amidst changing costs, potentially resulting in price wars or more aggressive promotional strategies. End-users, such as automotive and industrial lubricant manufacturers, may react to these price fluctuations, leading to variations in the cost of final products and influencing consumer demand and buying patterns.
Technological Complexity in Refining Processes
Developing and maintaining advanced refining technologies requires significant capital investment, including the costs for acquiring and installing sophisticated equipment, as well as ongoing expenses for upgrades and maintenance. These modern refining processes involve complex technologies that necessitate specialized knowledge and skills, making the recruitment and training of qualified personnel both costly and challenging, which can affect overall operational efficiency.
Ongoing innovation in refining technologies demands considerable investment in research and development, with substantial expenses and time needed to create new and improved methods for producing high-quality base oils. Integrating these new technologies with existing systems presents technical challenges, requiring sophisticated engineering solutions to ensure compatibility and optimize performance across various production stages.
Advanced refining processes must consistently produce base oils that meet stringent quality standards. Ensuring high-quality output amidst this technological complexity requires rigorous quality control measures and continuous monitoring. Overall, the intricate nature of refining technologies necessitates substantial investment, expertise, and continual innovation, presenting a significant challenge for base oil producers.
Key Market Trends
Focus on Environmental Sustainability
in April 2024, Savsol Lubricants launched Savsol Ester 5, a biodegradable lubricant designed for high-end automotive and railway applications. This product, made from edible oil fatty acids and featuring proprietary molecules developed in-house,
Stricter environmental regulations are being enforced by governments and regulatory bodies, including new limits on emissions and waste management. As a result, base oil manufacturers are being compelled to develop products that meet these higher environmental standards and enhance sustainability. There is a growing emphasis on creating lubricants that produce fewer emissions and have a lower environmental footprint. This includes advancements in base oil formulations aimed at reducing overall emissions.
At the India ComVAC Show 2023, Klüber Lubrication highlighted its innovative solutions designed to protect and optimize compressor performance. Their synthetic lubricants, featuring carefully selected base oils and additives, are engineered to prevent oxidation residues and extend system life, demonstrating the company's commitment to sustainability and performance.
Consumer awareness about environmental issues is increasing, leading to higher demand for sustainable and eco-friendly products. This shift is prompting base oil producers to prioritize sustainability in their offerings. Additionally, there is a trend towards adopting circular economy principles in the base oil industry, such as recycling and reusing base oils, reducing waste, and improving lifecycle management.
Companies are investing in green technologies and cleaner production methods to minimize the environmental impact of base oil production. This includes reducing energy consumption and emissions. Sustainability is becoming a key focus in corporate social responsibility (CSR) strategies, with companies aiming to lower their environmental impact and support broader sustainability goals.
Segmental Insights
Type Insights
Based on Type, the Group I emerged as the dominating segment in the Indian market for Base Oil in 2024.
Application Insights
According to Invest India, the truck market in India is projected to expand more than fourfold by 2050, with the number of trucks expected to increase from 4 million in 2022 to approximately 17 million.
Regional Insights
Based on Region, West India emerged as the dominant region in the Indian market for India Base Oil in 2024. The region encompasses key industrial and economic centers such as Mumbai, Pune, and Ahmedabad, which play crucial roles in manufacturing and business. The economic vitality of West India drives substantial industrial activity, leading to increased demand for base oils across automotive and industrial sectors. Cities like Pune and Mumbai serve as major automotive hubs with a high density of vehicle production and assembly facilities. West India also benefits from strategic ports like Mumbai and Kandla, which support the import and export of base oils and related products.
The region supports a wide range of industries, including petrochemicals, textiles, and pharmaceuticals, all of which rely on base oils for their machinery and production processes. This diverse industrial base creates a high demand for industrial lubricants and base oils. West India’s advanced infrastructure and ongoing industrial and commercial investments create a favorable environment for base oil production and consumption. For example, in April 2024, Gujarat Gas (GGL) and Indian Oil Corporation (IOCL) signed a memorandum of understanding to improve energy solutions for consumers, with IOCL supplying liquid fuels and automotive lubricants through GGL outlets and establishing a CNG facility at IOCL locations. The region’s appeal to both domestic and international investors further boost industrial activity and base oil demand.
Recent Development
- InJuly 2024, Indian Oil began producing fuel for high-performance motor racingand shipped its first consignment. The Paradip refinery in Odisha has launchedSTORM-X, a high-octane petrol designed for racing vehicles. This fuel combineshigh-octane gasoline with advanced sustainable components, including 2G Ethanolsourced from the Panipat Refinery.
- InJanuary 2024, Hindustan Petroleum Corp. Ltd. (HPCL) awarded a contract toChevron Lummus Global LLC (CLG) for licensing technologies for a new grassrootsunit at HPCL’s 9.5-million tonne/year refinery in Mumbai, Maharashtra, India.Under this agreement, CLG will provide licenses for its proprietarytechnologies to develop a new 550,000-tonne/year integrated hydrocracker andcatalytic dewaxing unit, aimed at increasing the production of Group II+ andGroup III premium base oils at the refinery.
- InOctober 2023, Gulf Oil Lubricants India, a Hinduja Group company, expanded itsproduct offerings with the launch of the S-Ol Seven range through a strategicpartnership. Under this collaboration, Gulf Oil manages the production,distribution, and promotion of these premium products, including those for theKIA India dealer network. The new lineup includes various variants of passengercar gasoline engine oils and one passenger car diesel engine oil. The rangefeatures fully synthetic, semi-synthetic, and premium lubricants, all utilizinghigh viscosity index base oils within the Group II/III class.
- InMay 2023, Lumax Auto Technologies Limited (LATL), a manufacturer of automotivesystems and components, introduced its new line of lubricants and coolants forall vehicle segments in the domestic aftermarket. The all-weather coolants willbe available under the ‘Smart Cool,’ ‘Ultra Cool,’ and antifreeze ‘SupremeCool’ brands. The engine oil line features two variantsthe ‘Ultra’ range,which utilizes mineral base oil to enhance power, performance, andresponsiveness with a high-quality Group 2 base oil blend, and the ‘Supreme’range, which combines synthetic oil with a superior Group 3 base oil andadvanced additives sourced from the US.
Key Market Players
- GS Caltex India Pvt Limited
- Indian Oil Corporation Ltd.
- SK Lubricants Co., Ltd.
- Eastern Petroleum Pvt. Ltd
- BP p.l.c
- Shell India Pvt Ltd.
- Hemraj Petrochem Pvt. Ltd.
- Bharat Petroleum Corporation Limited
- GARS Lubricants
- Hindustan Petroleum Corporation Limited
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