The consultancy sees recovery in several select sectors that will have favorable impacts on the Indian lube market. “The farm sector has been growing exponentially,” Gokhale cited as one key example.

India’s purchasing managers index reached 52.2 in August, Gokhale said, representing the country’s first expansion in the index since the lockdown. PMI measures the prevailing direction of economic trends in manufacturing.

Another indicator is the e-way bill, or electronic way bill. The electronically generated document or bill is used for movement of goods from one place to another above when their value is above a certain amount, as dictated by the country’s goods and services tax system. “That e-way bill has hit 95% of the year-ago period,” he said, reaching Rs 13.6 trillion Indian rupees (U.S. $184 billion). “Clearly the economy is quickly coming back.”

Another positive sign is railway freight traffic, he said, which reached 95.2 million tons in July, down less than 5 percent from 99.7 tons in July 2019.

India’s passenger car sales have also shown sequential improvement this year, rising to 183,000 unitsin July, after falling to 143,000 in March.

Several macro factors will shape the V-shaped recovery, according to Gokhale. “The [gross domestic product] contracted by 23.9% in the April-to-June quarter, due to the stringent lockdown,” he said.

He credited the country’s “good monsoon,” which accounts for the majority of India’s rainfall, with helping agriculture. “Obviously, the essentials were still going to get consumed by a huge population,” Gokhale added. “In India it was really important that the ingredients supply chain was adapting to the sudden change, and they did a marvelous job.”

India’s government is focusing on infrastructure, he said, boosting production and consumption of steel and cement. The country’s manufacturing is also gaining a boost from progress on land labor reforms, he added.

The youth of India, where 65% of its population is under 35 years of age, should also aid the country’s rebound, according to Gokhale.

He noted the country’s prime minister encouraged Atmanirbhar Bharat, which translates to “self-reliant India.” He explained that does not aim to suggest any increase in import duties; instead, it is meant to encourage manufacturing of products in India and to help the country develop an export base.

Vehicle demand in India rose in large part due to the impact that social distancing norms are having on public transportation. “Is that sustainable?” he asked. “I don’t think so. The moment a vaccine allows immunity, I think citizens will go back to public transportation, and that’s very important.”

Recovery of vehicle demand is evident in production projections. Maruti Suzuki is asking vendors to prepare for a record output of as much as 193,000 units in October, he said, when its previous peak monthly production was 182,000 in May 2018. Hero MotorCorp plans production of up to 800,000 units in October, he said, which would surpass its previous peak of 765,000 in September 2018.

On the agricultural side, he pointed out that Mahindra & Mahindra reported that its tractor sales during the last two months were their highest ever on a monthly basis.

He noted India’s lubricant market is the third-largest in the world. Recovery in sales of two-wheelers, four-wheelers and tractors is ongoing, he said, which should impact lubricant sales moving forward. “Commercial vehicles in my view is going to take some time to come back on stream,” Gokhale said. “The only exception is the small commercial vehicles [segment], which is definitely doing an extremely good job, with a solid start in July.”

Gokhale advised that keys for the lubricant industry in the new normal world include rural India, last-mile distribution and e-commerce.

“We definitely see a resurgence of rural India contributing to the economy, and this is going to be sustainable,” he said. “Tractor sales have never been so high in the history of India, and fertilizer sales also have been rising.” Last-mile distribution is the principle of delivering reliable, quality electricity to all people, even those in the most remote parts of the country.

He recounted that during the lockdown, people in India and globally moved more and more towards e-commerce for ordering their goods, a trend likely to continue. Lubricant companies should start thinking more about increasing their sales through an e-commerce system, he recommended.

Rosefield DAA estimated India’s lubricants demand – including process oils – at 2.8 million metric tons in 2019. “Out of that, almost 55% is for automobile use, about 25% is industrial and 20% is process oil,” he said.

The consultancy forecasts all three segments will edge up out to 2025, with internal combustion engines still expected to drive automotive lubricants consumption. “That’s where I feel there is going to be a tipping point for the EV industry in India,” he said. “I think there will be more and more EV vehicles, making inroads. Which mean automobile oils are going to remain at their same level.” The company projects automotive lubricants to remain at about 1.7 million tons in 2025 and 2030, and then slip a bit to 1.6 million tons in 2035.

“The biggest winner is going to be industrial,” he said, expected to increase from 700,000 tons in 2019 to 900,000 tons in 2025. The company projects increases to 1.3 million tons in 2030 and 1.5 million tons in 2035.

The company projects process oils to rise from 600,000 tons in 2019. Boosted by India’s drive on increased electrification, process oil demand is projected to increase to 800,000 tons in 2025, 1 million tons in 2030 and 1.1 million tons in 2035.