India’s net oil and gas import bill surged by nearly 15 percent during the first seven months of the current financial year (FY25), primarily driven by an increase in import volumes of crude oil, liquefied natural gas (LNG), and petroleum products. The rise in demand, coupled with stagnant domestic production, played a significant role in this spike, according to the latest data from the Petroleum Ministry. For the period between April and October, India’s crude oil imports saw a notable rise of 3.5 percent compared to the same period last year, reaching a total of 140.2 million tonnes. Consequently, the country’s oil import bill also grew, rising 7.6 percent to $81.7 billion.
The higher import volumes have significantly impacted the country’s overall import bill, marking a substantial increase in the outflow of foreign currency. Rising domestic demand has been a key factor contributing to this trend. As India’s economy continues to recover from the effects of the pandemic, consumption of petroleum products has escalated, further driving the demand for crude oil and natural gas. The country’s growth trajectory, which includes increased industrial activities, transportation needs, and urbanization, has led to heightened pressure on oil and gas supplies.
However, despite the growth in demand, India has faced challenges on the production front. Domestic oil production has largely remained stagnant, and the country still depends heavily on imports to meet its energy needs. This reliance on foreign oil has intensified the impact of rising global oil prices, which, in turn, have added to the growing cost burden. The lack of significant growth in domestic production highlights India’s vulnerability to global energy market fluctuations, as it remains one of the largest importers of oil in the world.
Apart from higher import volumes, the value of India’s petroleum product exports also played a role in the expansion of the import bill. The country’s exports of refined petroleum products, which have traditionally been a source of revenue, have faced challenges due to lower global prices and reduced demand from key export markets. The combination of higher imports and lower exports has widened the gap, further contributing to the increase in the overall import bill.
India’s net oil and gas import bill for the April-October period stood at $79.3 billion, a sharp rise from $69.2 billion recorded in the same period last year. This 15 percent increase is a direct reflection of both the growing demand for energy and the challenges India faces in increasing its domestic production. While the country continues to rely on imports to meet its growing energy needs, the rise in oil and gas prices has added a layer of financial strain on the economy.
The situation presents a complex challenge for the Indian government and the energy sector. The country’s growing dependency on oil imports not only places pressure on foreign reserves but also makes India susceptible to global oil price volatility. Given the economic importance of the energy sector, this growing import bill highlights the need for India to take decisive steps to improve energy security and reduce its dependence on foreign oil.
One potential solution lies in enhancing domestic production and exploring alternative energy sources. India has made strides in investing in renewable energy, with a focus on solar, wind, and biofuels, which could play a crucial role in reducing the dependency on oil and gas imports. Moreover, improving energy efficiency across various sectors of the economy could help mitigate the impact of rising oil prices.
In the short term, the government’s focus will likely be on managing the import bill, especially as global oil prices remain unpredictable. The challenge is compounded by the current global geopolitical climate, which has led to further uncertainty in the energy markets. To cope with this rising import bill, the government may need to consider strategies such as strengthening ties with oil-producing nations, exploring alternative energy sources, and implementing energy conservation policies.
The rising import bill is not just a concern for the energy sector but also has broader economic implications. The higher expenditure on oil and gas imports puts pressure on India’s trade balance, which can lead to a widening current account deficit. As a major oil importer, India’s economy is particularly sensitive to fluctuations in global energy prices. When global oil prices rise, the import bill escalates, and this can strain foreign exchange reserves and make it more difficult to manage inflation. Additionally, the impact of increased energy costs is felt across multiple sectors, from manufacturing to transportation, often leading to higher prices for goods and services. These inflationary pressures can undermine the purchasing power of the average consumer, adding another layer of complexity to the economic landscape.
India’s dependence on imports also highlights the need for strategic planning in terms of energy diversification. While the country has made progress in increasing its share of renewable energy sources, including wind and solar power, these efforts are still in the early stages compared to the immense scale of the nation’s energy consumption. Expanding domestic production of oil, gas, and alternative energy sources will be critical in mitigating the risks posed by external supply disruptions or price hikes. In this regard, the Indian government has been exploring ways to encourage domestic exploration and production, particularly in offshore fields and through joint ventures with foreign companies. However, progress has been slow, and these efforts face significant technical, logistical, and regulatory challenges.
In the longer term, the adoption of cleaner and more sustainable energy options could reduce India’s oil and gas dependency. The government has set ambitious targets for electric vehicle (EV) adoption, which, if achieved, could significantly reduce the country’s oil consumption. Moreover, the increasing focus on hydrogen fuel, green ammonia, and other low-carbon technologies presents new opportunities for India to transition towards a more diversified energy portfolio. However, achieving these long-term goals will require significant investments in infrastructure, technology, and policy support.
In the meantime, India may look to diversify its sources of oil imports, seeking more favorable terms from oil-producing countries. Bilateral agreements with nations like Saudi Arabia, Iraq, and the United Arab Emirates have already helped secure stable supply chains. Strengthening relationships with these and other oil-rich countries could ensure a more predictable flow of energy, which would be beneficial in managing both supply and price fluctuations. Moreover, India is increasingly turning to countries such as the United States and Russia for oil imports, tapping into new markets to reduce dependence on any single source.
Another avenue for mitigating the impact of rising oil imports is the continued development of natural gas as a key energy source. India’s focus on LNG imports is expected to rise as the government seeks to transition to cleaner fuels for power generation, transportation, and industrial processes. The expansion of the gas pipeline network and the construction of more regasification terminals for LNG could reduce the need for coal, further lowering carbon emissions and boosting energy security.
The government is also likely to continue its push for energy efficiency programs aimed at reducing overall energy consumption. Initiatives such as energy audits, the promotion of energy-efficient appliances, and smart grid technologies could help lower the national energy demand, which would, in turn, reduce the overall import burden.