India fuel demand: why diesel scale and aviation growth need different strategies

Scale is a different variable from growth velocity

PPAC’s FY2024-25 baseline puts diesel at roughly 91.4 MMT and ATF at about 9.0 MMT. A hypothetical 1% change in the former is approximately 0.91 MMT; a 10% change in the latter is approximately 0.90 MMT. Similar incremental tonnes can therefore arise from very different headline growth rates. This is a scale comparison using historical rounded data, not a forecast that either change will occur. [S1]

For a commercial team, the distinction affects where effort is deployed. A nationwide diesel supply business can be sensitive to small shifts across established channels. An aviation-fuel business may need to focus on a smaller set of customers, airport-specific constraints and service reliability. The percentage-growth ranking does not identify which opportunity produces the better contribution, needs more working capital or is accessible to a particular supplier.

Read the historical product stack with its definitions

These fuels do not represent one uniform exposure. LPG includes uses beyond a simple passenger-mobility story; diesel serves several activity channels; petrol and aviation respond to different customer and travel patterns. A robust forecast attaches a causal driver to each segment and records where the relationship can fail. More road activity, for example, need not imply identical fuel growth if fleet efficiency, vehicle mix or operating patterns change. The useful question is the net effect on supplied volume and commercial value.

The geography overlay changes the addressable market

The ministry’s FY2024-25 compendium identifies Gujarat, Maharashtra and Uttar Pradesh as the largest state contributors to petroleum-product consumption in that statistical period. That fact establishes concentration at an aggregate state level, not a ready-made fuel-specific customer list. A state’s industrial, refining and transport composition can make its product mix materially different from the national average. Use the state-product matrix before treating an aggregate state ranking as a target-market ranking. [S2]

A practical addressable-market model then applies three filters. First, define the actual delivery area and product specification. Second, identify customers and channels that can be served through existing assets or justified incremental infrastructure. Third, apply a realistic commercial share and contribution rather than assuming that every regional tonne is contestable. This avoids converting a large national number into an unsupported revenue opportunity.

Build a driver tree that can be challenged

Do not give each driver a precise elasticity merely because a forecast model has a vacant input cell. Begin with a documented range and test how strongly the commercial decision depends on it. A depot expansion that only works under one aggressive activity assumption deserves closer scrutiny than a replenishment change that is robust across several demand paths. Back-test against comparable periods, and preserve the effect of revisions separately from genuine changes in behaviour.

Turn a market view into allocation choices

IndianOil’s FY2025-26 chairman’s discussion describes focus areas including aviation, bitumen, lubricants and other businesses. That is company strategy, not independent proof that every segment will deliver attractive returns for every competitor. It is useful as a signal to investigate asset and customer positioning alongside demand evidence. Analysts should distinguish a company’s stated priorities from independently observed market outcomes. [S8]

The practical output should be a short allocation matrix: product, location, accessible volume, expected contribution, cash requirement and downside risk. That gives management a basis to compare a large established market against a smaller expanding one. Research adds value when it explains which business decision changes under a different mix, rather than simply celebrating the fastest-growing product in a national table.

Translate the national product view into a route-to-market hypothesis before assigning a sales target. A refinery planner needs product balances and specification constraints; a terminal operator needs regional throughput and delivery patterns; a marketer needs customer and distribution economics. The same annual demand table is an entry point for those different questions, not a ready-made forecast for every asset. Keep a volume bridge separate from a value bridge so changes in prices, product mix and physical sales do not masquerade as each other. In a planning review, ask which observation would cause the team to revise its assumption, who monitors it, and when that revision would still leave time to act.