India's Growing reliance on Imported Oil
Context:
India’s dependence on imported crude oil has intensified, reaching over 88.5% in the first 10 months of the financial year FY26.
This trend indicates that import reliance for the full year is headed for another record high due to stagnant domestic production and surging demand.
Key Statistics:
According to the Petroleum Planning & Analysis Cell (PPAC), import dependency stood at 88.6% for the April-January period of FY26, up from 88.2% in the corresponding period of FY25.
Consequently, India’s self-sufficiency in crude oil has dropped to just 11.4%.
Despite the crude deficit, India remains a net exporter of petroleum products, boasting a refining capacity of 258 million tonnes per annum with utilisation levels exceeding 100%.
Drivers of Demand:
India is a major growth centre for oil demand due to:
Rapid expansion in the aviation sector and vehicle sales.
Growth in energy-intensive industries and consumption of petrochemicals/plastics.
Rising use of Liquefied Petroleum Gas (LPG) for cooking.’
Impact:
Given the country’s stagnant domestic oil production, rising demand for petroleum fuels and products is expected to lead to higher oil imports in the foreseeable future.
India’s heavy reliance on imported crude oil makes its economy vulnerable to global oil price fluctuations.
This also impacts the country’s trade deficit, foreign exchange reserves, the rupee’s exchange rate, and inflation rate.
Future Projections by IEA Outlook:
The International Energy Agency (IEA) stated in its World Energy Outlook 2025 that India will surpass China to become the biggest driver of global oil demand over the next 10 years.
India's oil use is projected to rise from 5.5 million barrels per day (mb/d) in 2024 to 8 mb/d in 2035, capturing almost half of the additional global barrels produced.
FY27 Projection:
The PPAC projects consumption of petroleum products to reach 250.8 million tonnes in FY27, a growth of 2.8%.