"India's Energy Dependence Deepens: Oil & Gas Imports Surge in 2024-25"

 According to provisional data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry, India's oil import dependency was 88.2 percent in the financial year ended March, up from 87.8 percent in the previous fiscal year (FY24). India's dependence on imported crude oil and natural gas has further increased in the fiscal year 2024-25 (FY25) as the gap between increasing consumption and declining domestic hydrocarbon production continues to widen. According to the latest data from the Petroleum Ministry, the country's oil import dependency for the entire fiscal year has reached another record high, while dependence on imported natural gas is at a four-year high.

According to provisional data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry, India's oil import dependency was 88.2 percent in the financial year ended March, up from 87.8 percent in the previous fiscal year (FY24). Import dependency for natural gas stood at 50.8 percent in FY25, up from 47.1 percent in FY24.

India's energy demand is growing rapidly, leading to an increase in crude oil and natural gas imports. This is due to factors such as growing energy-intensive industries, increasing vehicle sales, rapidly expanding aviation sector, increasing use of petrochemicals and a growing population.

Dependence on imported oil has been increasing steadily over the past few years, except in FY2021, when demand declined due to the COVID-19 pandemic. The country's oil import dependence stood at 87.8 percent in FY2024, 87.4 percent in FY2013, 85.5 percent in FY22, 84.4 percent in FY21, 85 percent in FY2020 and 83.8 percent in FY19. India is the world's third-largest consumer of crude oil and high import dependence makes the Indian economy vulnerable to fluctuations in global oil prices. This also impacts the country's trade deficit, foreign exchange reserves, rupee exchange rate and inflation rate.

The government wants to reduce India’s dependence on imported crude oil, but slowing domestic oil production has been the biggest obstacle in the face of ever-increasing demand for petroleum products.

In the case of natural gas, the government wants to increase its use and share in the country’s primary energy mix from more than 6 percent to 15 percent by 2030. The rationale behind the push for natural gas, although it will result in higher fuel imports, is quite simple.

Natural gas is much less polluting than conventional hydrocarbons like crude oil and coal and is generally cheaper than oil. It is also seen as an important transition fuel. But to be sure, the government is also pushing India’s oil and gas companies to increase domestic production of natural gas to keep import dependency levels in check.

According to PPAC data, India's crude oil imports rose to 242.4 million tonnes in FY25, while domestic production declined slightly to 28.7 million tonnes from 234.3 million in FY24. According to PPAC data, the country's total oil import bill for the fiscal year increased by about 3 percent year-on-year to $137 billion.

Natural gas imports in FY25 increased by 15.4 percent year-on-year to 36.7 billion cubic metres (bcm) and cost $15.2 billion compared to the same period last year. Domestic natural gas production in FY25 was 35.6 billion cubic metres, marginally lower than 35.7 billion cubic metres in FY24.

According to PPAC data, the total domestic consumption of petroleum products in FY25 was 239.2 million tonnes, of which only 28.2 million tonnes came from domestically produced crude oil, resulting in a self-sufficiency level of 11.8 per cent, according to PPAC data. In the case of natural gas, the total domestic consumption in FY25 was 72.3 billion cubic metres, while imports were 36.7 billion cubic metres.

In early 2015, the government had set a target of reducing dependence on oil imports to 67 per cent by 2022 from 77 per cent in 2013-14, but since then the dependence has only increased. Reducing expensive oil imports is a key target area for the government, which has taken several policy steps to encourage investment in India’s oil and gas exploration and production sector.

Reducing oil imports is one of the fundamental goals of the government's emphasis on electric mobility, biofuels and other alternative fuels for transport and industry. Although there has been an increase in the adoption of electric mobility and the blending of biofuels with conventional fuels, this is not enough to meet the increase in petroleum demand.