India's dependence on imported oil may hit fresh full-year high in FY26, Pg15

Key Highlights:

• India's crude oil import dependence reached 88.6% in the first 10 months of FY26, up from 88.2% in the same period of FY25.
• Full FY25 saw an 88.3% import reliance.
• Domestic crude oil production declined to 23.5 million tonnes (mt), while consumption rose to 202.2 mt.
• India's refining capacity currently stands at 258 million tonnes per annum.
• Petroleum product consumption is projected to increase by 2.8% in FY27, reaching 250.8 mt.

Detailed Insights:

• India's rising oil import dependence is driven by growing energy-intensive industries, vehicle sales, aviation sector expansion, petrochemical consumption, and a growing population.
• High import reliance exposes India to global oil price volatility, impacting trade deficit, foreign exchange reserves, rupee exchange rate and inflation.
• The government aims to reduce import dependence through policies promoting oil and gas exploration, electric mobility and biofuels.
• IEA projects India to be the largest driver of global oil demand growth over the next 10 years, reaching 8 mb/d in 2035 from 5.5 mb/d in 2024.
• Despite efforts to promote alternative fuels, they haven't sufficiently offset petroleum demand growth.

Key Concepts Involved:

• Trade Deficit: The difference between a country's imports and exports.
• Foreign Exchange Reserves: Assets held by a central bank in foreign currencies.
• Inflation Rate: The rate at which the general level of prices for goods and services is rising.