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Reliance on oil imports rises in April-February, likely to hit fresh full-year high in FY24
Growing demand for fuel and other petroleum productsamid stagnant domestic crude oil output resulted in India’s reliance on imported crude increasing to nearly 88 per cent in April-February, indicating that oil import dependency for the full financial year 2023-24 (FY24) could breach the all-time-high FY23 levels.
As per latest data released by the oil ministry’s Petroleum Planning & Analysis Cell (PPAC), the country’s oil import dependency was 87.7 per cent in the 11 months to February, up from 87.2 per cent in the corresponding period FY23. For full FY23, reliance on imported oil was 87.4 per cent. According to industry insiders, like in the last financial year, import dependency in crude oil for the entire FY24 could be a tad higher than the April-February level.
Given the energy demand, reliance on oil imports has been rising continuously over the past few years, except for FY21, when demand was suppressed due to the COVID-19 pandemic. Reliance on imported crude to meet domestic demand stood at 85.5 per cent in FY22, 84.4 per cent in FY21, 85 per cent in FY20, and 83.8 per cent in FY19.
The government wants to reduce India’s extreme reliance on imported crude oil but sluggish domestic oil output in the face of incessantly growing demand for petroleum products has been the biggest roadblock. In 2015, the government had set a target to reduce reliance on oil imports to 67 per cent by 2022 from 77 per cent in FY14, but the dependency has only grown since. Heavy reliance on imported crude oil makes the Indian economy vulnerable to global oil price volatility, apart from having a bearing on the country’s foreign trade deficit, foreign exchange reserves, rupee’s exchange rate, and inflation.
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