Five mega trends set to drive India's commodity consumption

Stakeholders in the commodity value chain must keep an eye on these mega trends and their impact

- G CHANDRASHEKHAR

The Indian economy has been in an expansionary phase for about two decades now and the trend is likely to accelerate in the next two decades as well, with growthoriented policies.

A significant aspect of this growth will be commodity-intensity. India is already a large producer, processor and consumer as also exporter or importer of a wide range of commodities. Given the rising incomes and demographic pressure, the commodity market volumes are set to expand further.

These cover energy products (conventional and non-conventional), several categories of metals (industrial, base and precious), polymers and of course, agricultural goods (grains, oilseeds, sugar, cotton and so on).

From a commodity perspective, in a manner of speaking, India is set to go the China way. Over the last 30 years the Asian major expanded rapidly with production, consumption and trade in key commodities like steel, copper and aluminium, and major agricultural crops such as cotton and soybean.

Five mega trends are set to define and accelerate India’s commoditydriven growth. These trends may propel the consumption of some key commodities higher while some commodities may lose prominence.

Energy Transition: India is committed to decarbonise by moving away from polluting fossil fuels towards renewables to become netzero by 2070. This means the country would gradually reduce its dependence on crude oil and coal. While India is already a large producer, importer and consumer of coal, it is a modest producer but large importer and consumer of crude oil.

As we move toward renewables, the composition of the basket of energy products will undergo changes. A gradual reduction in import and consumption of fossil fuels is inevitable. Simultaneously, renewables — solar energy, wind energy, nuclear energy, biofuels - will gain importance.