Diesel demand growth set to slow in India as motorists switch to petrol

India’s strong diesel demand growth is decoupling from the car market as motorists increasingly turn to gasoline vehicles, leaving it more reliant on patchy demand from construction and heavy industry.

A slowdown in demand growth in India — one of Asia’s biggest diesel guzzlers — could add to a persistent glut of diesel in the region, fuelled in part by strong exports from China, and put pressure on regional refining profit margins.

Transportation has historically accounted for two-thirds of India’s diesel use, but a steady decline in diesel’s discount to gasoline has seen sales of diesel-powered cars fall to a record low share of total sales, according to industry body Society of Indian Automobile Manufacturers (SIAM).