Euromonitor International’s India Natural Resources Country Briefing focuses on a nation that is one of the fastest-growing economies in the world. Economic growth, clubbed with rising per capita energy consumption, has increased the demand for energy in the country. In view of the above, the country’s draft National Energy Policy (NEP) aims at providing access to energy at affordable prices, improving energy security and independence, and promoting greater sustainability and economic growth. As part of this, the Indian government has set an ambitious target of achieving 175 GW of power using renewable sources by 2022. Of the total renewable energy target, 100 GW of energy is to be produced from solar power alone, which makes it imperative for the government to facilitate its increased production and adoption in the country.
SWOT Analysis
Chart 1 SWOT Analysis: India
Source: Euromonitor International
Agriculture
Water stress a threat to production
India is a net food exporter. The agricultural sector employed 46.9% of the workforce and accounted for 16.6% of gross value added (GVA) in 2016. Less than one-third of all crop land is irrigated and most farming is at subsistence level. According to FAO, up to 40% of India's fruit and vegetables perish before reaching the consumer while tonnes of grain rot.
Risks:
- Around 60% of irrigated farming depends on groundwater but these sources are expected to be in a critical state by the 2020s due to severe pollution.
Opportunities:
- A growing middle class is increasing demand for dairy products. The dairy market was worth INR990 million in 2016, an increase of 106% from 2011.
Chart 2 Case Study on Agriculture: India
Source: Euromonitor International
Chart 3 Agricultural Landscape in India
Source: Euromonitor International from UN Food and Agriculture Organisation (FAOSTAT)/International Federation of Organic Agriculture Movements (IFOAM)/Research Institute of Organic Agriculture FiBL
Energy
Heavy reliance on fossil fuel imports
Rapid urbanisation, a growing middle class, high economic activity, and rising income levels have increased the demand for fuels used in the transportation, industrial, residential and commercial sectors.
India relies heavily on energy imports despite the country holding nearly 7% of global coal reserves, 5.8 billion barrels of proven oil reserves and an estimated 1.5 trillion cubic metres of natural gas in 2016. It could soon overtake Japan as the world's third-biggest oil consumer (behind the USA and China). It is unable to meet more than 25% of oil demand.
India is the third largest consumer of coal. Despite ambitious plans to increase solar power generation capacity the government expects coal to be a crucial component of the energy matrix going forward as the economy grows.
Risks:
- India has a significant electricity deficit owing to under-investment in transmission and distribution infrastructure. This has led to frequent blackouts, and occasional large blackouts.
Opportunities:
- To reduce reliance on expensive fossil fuel imports the government has announced its intention to achieve 57% of its total electricity capacity through non-fossil fuel sources by 2027. India aims to add 266GW of renewable energy by 2020. In April 2017 solar power generation costs reached a record low.
Chart 4 Energy Landscape in India
Source: Euromonitor International from International Energy Association (IEA)/BP Amoco, BP Statistical Review of World Energy
Mining of Metals and Minerals
Ambtious infrastructure plans expected to increase demand
India has substantial minerals and metals resources at its disposal. It is a major producer of chromite, coal, lignite and zinc. Excessive bureaucracy has undermined the production of steel and diamonds.
The government’s commitment to provide extensive infrastructure for manufacturing zones as part of the Make in India initiative will increase demand for minerals and metals resources. New Delhi intends to raise the share of manufacturing to 25% of GDP through this programme. In 2016 manufacturing accounted for 15.8% of GDP.
Risks:
- In recent years frequent industrial action from Indian coal miners, aimed at securing higher wages has led the local mining industry to stagnation and uncertainty.
Opportunities:
- The lifting of a ban on iron ore production (to clamp down on illegal mining) in the states of Goa, Odisha and Karnataka has seen production and exports increase in the short-term. This is expected to continue as more iron ore blocks are put up for auction. India’s ports reported a 169% increase in iron ore shipments between April 2016 and January 2017.
Chart 5 Mining Landscape in India
Source: Euromonitor International from US Geological Survey (USGS)/British Geological Survey (BGS)/national statistics
Water
The challenge of addressing extensive water pollution
There has been a steady increase in access to improved drinking water rising by 3.6% between 2011 and 2016, to reach 94.6% of the population. However, water pollution is increasingly becoming a problem with around 80% of surface water contaminated. Drivers of water pollution include dumping of domestic waste such as sewage and industrial waste water including chemicals. The Central Pollution Control Board has issued regulations on wastewater discharge by utility plants and industry. In February 2017 the Supreme Court ordered that all industries must install water treatment facilities.
While a growing number of people have access to improved sanitation, rising by 10.6% between 2011 and 2016, this still remains low reaching just 40.4% of the population.
Risks:
- Despite water quality standards issued by the Bureau of Indian Standards, water testing and treatment is not enforced due to a lack of resources and government funding.
Opportunities:
- In urban areas water shortages and concerns about unclean water and the spread of waterborne diseases is leading to growing demand for bottled water.
Chart 6 Water Landscape in India
Source: Euromonitor International from World Bank/UN AQUASTAT
Pollution
Deadly air pollution getting worse
In 2016 India was the third largest emitter of CO2 emissions from the consumption and flaring of fossil fuels and the second highest emitter of methane, behind China. India ratified the Paris Climate Agreement in October 2016. Based on its current ambitious plans to develop renewable energy it is expected to meet its emissions reductions targets.
In urban areas the drivers of air pollution include rapid urbanization, the rising number of vehicles and congestion, coal-fired power stations and industry. Nationally, the government is considering introducing fuel efficiency norms for passenger cars from 2017, increasing manufacturing of electric and hybrid vehicles, as well as upgrading mass public transport systems including a new bus rapid transit system.
Risks:
- Air pollution is worsening leading to around 1.4 million deaths in 2013 and India is projected to have the highest rate of mortality from air pollution by 2060.
Opportunities:
- Demand for residential air purifiers is rising rapidly, especially in major cities such as Delhi, Bangalore and Mumbai where there are higher levels of disposable income. However, they can be costly to maintain because the filter needs to be replaced every few months.
Chart 7 Case Study on Pollution: India
Source: Euromonitor International
Chart 8 Pollution in India
Source: Euromonitor International from Energy Information Administration of the US Government/International Energy Agency/UN/World Bank/EEA/OECD
Regional Comparison
Chart 9 Regional Comparison
Source: Euromonitor International from UN Food and Agriculture Organisation (FAOSTAT)/International Energy Association (IEA)/ UN AQUASTAT