As we approach the end of the financial year 2023–24 (FY24), India faces a sobering reality: its dependence on imported crude oil is on the rise, potentially reaching unprecedented levels. According to recent data released by the oil ministry’s Petroleum Planning & Analysis Cell (PPAC), India’s reliance on imported crude surged to nearly 88% in the period from April to February, indicating a trend that could see FY24 surpass the record high levels of the previous year.
Despite efforts to bolster domestic production, India’s self-sufficiency in crude oil dwindled to just 12.3% during the April-February period, a decline from 12.8% in the corresponding period of the previous financial year. This decline in self-sufficiency is primarily attributed to stagnant domestic crude oil output coupled with escalating demand for fuel and petroleum products.
Over the years, India’s reliance on oil imports has been steadily increasing, barring a brief respite in FY21 due to the COVID-19 pandemic-induced slowdown. The country’s dependence on imported crude stood at 85.5% in FY22, with previous years witnessing a similar upward trajectory. Despite governmental aspirations to curtail this reliance — with targets set as early as 2015 to reduce oil imports to 67% by 2022 — the actual dependency has only surged, making the Indian economy susceptible to global oil price fluctuations and impacting various economic indicators such as foreign trade deficit, foreign exchange reserves, and inflation rates.
In response to this escalating dependence, the government has been advocating for alternative energy sources such as electric mobility and biofuels to mitigate the reliance on costly oil imports. Efforts to augment domestic crude oil output through incentivizing exploration and production contracts and opening up new areas for hydrocarbon exploration have also been intensified. However, these measures have yet to yield significant offsets to the burgeoning demand for petroleum products.
India’s refining capacity, exceeding 250 million tonnes per annum, positions it as a net exporter of petroleum products despite being one of the world’s largest importers of crude oil. However, the widening gap between domestic production and consumption underscores the urgency for sustainable solutions to balance energy needs and economic stability.
As we navigate the complexities of India’s energy landscape, the trajectory of oil imports in FY24 will be closely monitored, bearing implications not only for the energy sector but also for broader economic indicators and policy directions. Efforts to diversify energy sources and enhance domestic production remain imperative in ensuring energy security and economic resilience in the years to come.
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