'India's manufacturing push to impact energy needs'

India's intention to increase the share of manufacturing in GDP to 25 per cent within 10 years will have serious implications for its energy needs, global banking giant StanChart said on Wednesday.

"India reaffirmed its commitment to...boosting the share of manufacturing in its economy from around 16 per cent to 25 per cent over the next decade... But it will have widespread energy implications, the full consequence of which may not yet be fully factored into thinking," StanChart said in monthly 'Global Insight' report.

It added, however, that India's economy will register an average growth of 7 per cent over the next decade.

"Our view of a 7 per cent club, which includes countries that we believe will grow at an annual average growth rate of 7 per cent, over the next decade, effectively doubling in size over that time. This includes... India," StanChart said.

In his Budget 2011-12 speech, Finance Minister Pranab Mukherjee had said the government aims to increase the share of manufacturing in the country's Gross Domestic Product to 25 per cent from 16

per cent within a decade.

StanChart said that boosting manufacturing was necessary for generating jobs, but added that India's efforts, along with China's 12th Plan focus on green technology, will have important implications for global energy demand.

The International Energy Agency has projected 31 per cent growth in global demand for fossil fuels by 2030.

Of this, India is likely to account for 16 per cent of the increase and China for 38 per cent.

StanChart said the political turmoil in the Arab world, including the ongoing conflict in Libya, an OPEC member, and the nuclear disaster in Japan will impact energy security.

"Energy security has returned as a central issue, in the wake of the recent disaster in Japan and the ongoing contagion across the MENA (Middle East and North Africa) region. This will focus attention on the geopolitical outlook," it said.

Besides, it added that the oil price rise is likely to affect the emerging economies and may also put a question mark on their efforts to tighten policy.