The Indian lubricants market is the third-largest in the world. Motorcycle oil (MCO), the third-largest product category after process oils and heavy-duty motor oils (HDMOs), account for 9% of total lubricants demand in India. 

The MCO lubricants product category was one of the least impacted by the COVID-19 pandemic and was also one of the fastest to recover. According to estimates, the MCO market is growing at a 3.7% rate per year, making it one of the most attractive product segments for lubricants marketers. A recent report from Kline & Company concludes that market developments in India are pointing to rapid electrification of the two-wheeler vehicle parc that will create new challenges for market participants, including OEMs and lubricant suppliers.

Support from the Indian government has been pivotal in pushing the sales of electric two-wheelers. Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) is a scheme to promote electric vehicle (EV) adoption in the country. The first phase of FAME, which operated from  FY 2015-2016 to FY 2018-2019 supported slow- and high-speed electric two-wheelers. However, the second phase, running from FY 2019-2020 to FY 2021-2022,  has  a budget outlay to incentivize the purchase of a million high-speed electric two-wheelers that use batteries with advanced chemistry. Due to increased technical specifications in the second phase of FAME, the incentivization has resulted in only approximately 10% of electric two-wheelers sold to date during this period. This has translated into the utilization of only approximately 5% of the budgeted outlay, even as two-thirds of the scheme period has elapsed.

In June 2019, the Indian government proposed banning the sale of two-wheelers under 150cc cylinder capacity after March 2025 and only allowing electric two-wheelers to be purchased following this date, as part  of its bid to promote a rapid transition towards electric mobility in India. 

Kline anticipates rapid penetration of electric two-wheelers propelled by several stakeholders ― government, OEMs, energy companies offering battery-swapping/charging facilities, and end users (for both business and personal use). EV penetration could grow to between 25% and just under 75% by 2040. In comparison, the current penetration of EVs in India is nil.

The change in the two-wheeler parc composition will naturally affect demand for motorcycle oils. Kline expects MCO demand to peak between 2030 and 2040. Given the size and growth in this market segment, MCOs garner special focus from most lubricants suppliers looking to grow or maintain their market share. Some of the leading suppliers of MCOs to OEMs and aftermarkets in India are bp,  Indian Oil Corp., Hindustan Petroleum Corp., Bharat Petroleum Corp. Savita Oil, and Gulf Oil.