India Continues Overhauling its Energy Economy: WisdomTree India Earnings Fund (EPI)

Page 1 of 2

India is suffering from rising oil import bills, which has put a huge strain on the Indian economy. It’s well known that India imports nearly 80% of its need for petroleum products and this import demand is likely to increase in the coming years.  Because of this Prime Minister Singh is championing the need to develop electric and hybrid vehicles to ease the oil needs of the transport sector. I find this assertion rich, no matter how true, coming from a man that presides over a national electrical grid so fragile it spectacularly failed all last summer.  So, while there is a need to adopt a transportation sector that is more diversified, how that is possible without a major overhaul of the fuel and electricity markets across the entire country is a serious question.

India ETFs Jump Following Moody's CommentsTransportation accounts for approximately 30% of energy consumption worldwide with 75% of that going to power road-going vehicles. Oil powers 95% of all road-going vehicles currently and 75% of future demand increases in petroleum will come from transportation according to the International Energy Agency. It is India and China who are expected to contribute to the major part of this surge in the global demand for Oil.

The National Mission for Electric Mobility (NMEM) was recently launched by Indian Prime Minister. The purpose of this mission is national energy security, mitigation of the effect of vehicles on the environment and growth of domestic manufacturing capacities. The government is billing the NMEM as an important step in improving the future of the Indian economy.  For investors this means that the NMEM will have a large impact on where government funds will flow over the next few years.

I would look for Toyota Motor Corporation (NYSE:TM) to make a big push for market share over time for lower-cost hybrids into this market as it did not, like Honda and Suzuki, invest heavily in the unsustainable diesel boom.  India is a market that Toyota is targeting for expansion and the NMEM is a perfect opportunity for it to achieve its goal of generating 10% of its total revenue from India by the end of the decade versus the ~1% the country generates now.

India’s oil imports rose 40% to a record $140 billion in 2011-12, which was not at all helped by a 20% devaluation of the Rupee but so much of that is due to an unsustainable subsidization of fuel use created by a budget-destroying subsidy of diesel fuel.  The government has tried to mask its inflation numbers and keep afloat its GDP growth rates by absorbing the expanding demand for oil by running deficits.  This scheme finally blew up on them in 2012 and now in 2013 finally has to bow to the economic reality that when you subsidize something you get more of it.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!