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Growing demand for fuel and other petroleum products amid stagnant domestic crude oil output led to India’s reliance on imported oil inching up further during April-September (first six months) of the current financial year 2025-26 (FY26). Latest data released by the oil ministry’s Petroleum Planning & Analysis Cell (PPAC) shows that India’s oil import dependency was 88.4 per cent in April-September, up from 87.9 per cent in the corresponding period of the last financial year. For the full FY25, reliance on imported oil was at 88.2 per cent, a full-year record.
Industry watchers believe that the import dependency level for the entire FY26 could be a tad higher than the April-September level, as was the case in the previous financial year. India’s energy needs are consistently growing, leading to higher oil imports. This is fuelled by factors like growing energy-intensive industries, increased vehicle sales, a rapidly expanding aviation sector, growing consumption of petrochemicals, and a rising population. India’s reliance on imported oil has generally increased over the years, with the exception of FY21 when demand was suppressed due to the COVID-19 pandemic.
India’s oil import dependency was 87.8 per cent in FY24, 87.4 per cent in FY23, 85.5 per cent in FY22, 84.4 per cent in FY21, 85 per cent in FY20, and 83.8 per cent in FY19.
| PERIOD | OIL IMPORT DEPENDENCY (%) |
|---|---|
| April-September 2025-26 | 88.4 |
| April-September 2024-25 | 87.9 |
| 2024-25 | 88.2 |
| 2023-24 | 87.8 |
| 2022-23 | 87.4 |
| 2021-22 | 85.5 |
| 2020-21 | 84.4 |
| 2019-20 | 85.0 |
| 2018-19 | 83.8 |
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, among others. The Indian government aims to reduce the country’s reliance on imported crude oil but faces challenges due to sluggish domestic oil output amid rising demand. In 2015, the government had set a target to cut the dependence on imported oil from 77 per cent to 67 per cent by 2022. However, import dependency has only increased.
The government has implemented several policy reforms to encourage investments in India’s oil and gas exploration and production sector. The government is also promoting electric mobility, biofuels, and other alternative fuels to reduce oil imports. While there has been an increase in electric mobility adoption and the blending of biofuels with conventional fuels, it is not sufficient to offset petroleum demand growth.
India’s crude oil imports rose to 121.2 million tonnes in the six months to September from 120.7 million tonnes in the year-ago period. Meanwhile, domestic oil production declined slightly to 14.2 million tonnes from 14.4 million tonnes. Total domestic consumption of petroleum products in April-September rose 1 per cent year-on-year to 118.3 million tonnes, of which only 13.7 million tonnes of products estimated to have been produced from domestic crude oil, resulting in a self-sufficiency level of just 11.6 per cent, per the PPAC data.
The computation of the extent of import reliance is based on the domestic consumption of petroleum products and excludes petroleum product exports as those volumes do not represent India’s demand. India—the world’s third-largest consumer of crude oil and also one of its top importers—is a net exporter of petroleum products.
Despite higher oil imports and import dependency, the country’s gross oil import bill for April-September declined 14.7 per cent to $60.7 billion year-on-year. The relief was primarily on account of lower oil prices in the international market vis-à-vis last year. Crude oil imports top the list of India’s merchandise imports.
Unlike most large economies, India is seen as a major growth centre for oil demand given the future consumption potential and relatively low per-capita energy demand currently. In fact, India is among the few markets where refinery capacity is expected to expand substantially over the coming years. India currently has a refining capacity of nearly 258.1 million tonnes per annum.
