In a significant economic relief, India's oil import bill contracted sharply by 12 percent during the first eight months of the current financial year, even as the volume of crude oil imports rose. This paradoxical trend is a direct result of a steep decline in international crude oil prices, offering a cushion to the world's third-largest oil consumer.
Key Numbers: Lower Bill, Higher Volume
Provisional data from the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reveals that India's oil import value for April-November 2025-26 (FY26) stood at $80.9 billion. This marks a substantial drop from the $91.9 billion recorded in the same period last year.
Interestingly, this decline in value occurred alongside a 2.4 percent increase in import volumes, which rose to 163.4 million tonnes from 159.5 million tonnes a year ago. The primary driver was the average price of the Indian crude basket, which fell to $67.6 per barrel from $80 per barrel in the year-ago period.
Rising Dependency and Domestic Challenges
The data underscores a persistent and growing challenge: India's increasing reliance on foreign oil. The country's oil import dependency for domestic consumption climbed to 88.6 percent in April-November FY26, up from 88.1 percent a year earlier.
This rise is attributed to a dual trend: declining domestic crude oil production, which fell to 18.8 million tonnes from 19.1 million tonnes, and rising consumption of petroleum products, which increased to 160.2 million tonnes from 158 million tonnes. Consequently, self-sufficiency from domestic crude fell to 11.4 percent.
Broader Impact on Economy and Trade
The fall in the oil import bill is a clear positive for the Indian economy. As oil imports top the country's merchandise imports, the lower bill eases pressure on the trade deficit, foreign exchange reserves, the rupee's exchange rate, and inflation.
The broader category of net oil and gas imports—covering crude, petroleum products, and natural gas—also declined by 12.4 percent year-on-year to $78.2 billion. A breakdown shows:
- Petroleum Product Imports: Value fell to $14.7 billion from $15.9 billion, despite stable volumes (~34 million tonnes). Exports of these products also dropped in value to $26.6 billion due to lower prices.
- Natural Gas (LNG) Imports: Value declined 11.5% to $9.2 billion, with volumes down almost 9% to 23,102 mscm, due to lower demand from power and fertilizer sectors and price volatility.
The global context for cheaper oil includes a supply glut, driven by increased production from major producers and an unwinding of output cuts by the OPEC+ alliance, coupled with slower-than-expected growth in global demand.
While the price dip provides temporary fiscal breathing room, it highlights the long-term strategic imperative. The government's earlier target to reduce import dependency to 67% by 2022 remains unmet, with the figure moving in the opposite direction, posing an ongoing vulnerability to global market shocks.
