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Oil Import Data: Due to the increasing demand for petroleum products and fuel in India, the need for crude oil is increasing wildly. Dependence on imports for crude oil in the country is increasing and domestic production of crude oil in the country is not very effective in this matter, so its import has gone up a lot this time. Dependence on imports for the country’s crude oil requirement has come down to 87.3 per cent in the financial year 2022-23. Last year i.e. in the financial year 2021-22, it was at 85.5 percent. This data has been released by the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum.
How has the dependence of crude oil imports been in the past years?
If we look at the previous figures of India’s dependence on crude oil imports, it was at 84.4 per cent in the year 2020-21. It was at 85 per cent in the year 2019-20 and was at 83.8 per cent in 2018-19.
How is import dependence calculated?
The calculation of crude oil import limit is based on the domestic consumption of petroleum products. It does not include exports of petroleum products as these quantities do not represent India’s demand. With a refining capacity of a little over 250 million tonnes per annum, India is the world’s third largest consumer of crude oil and one of its top importers, while also a net exporter of petroleum products.
There is a special need for transport fuel
In the year 2022-23, India’s domestic consumption of petroleum products has increased by 10 percent on a year-on-year basis to a record 222.3 million tonnes. This shows strong demand especially for transportation fuels (petrol and diesel). However, domestic crude oil production declined by 1.7 per cent to 29.2 million tonnes for the year. In 2022-23, the import of crude oil has increased by 9.4 percent to 232.4 million tonnes on an annual basis. In value terms, crude oil imports for FY 2021-22 are set to increase from $120.7 billion to $158.3 billion, according to PPAC data.
The increasing demand for petroleum products is the main reason
Although the Indian government wants to reduce India’s increasing dependence on imported crude oil, sluggish domestic oil production due to rising demand for petroleum products has been the biggest hurdle. Cutting down on expensive oil imports is also a fundamental objective of the government’s efforts for electric mobility, biofuels and other alternative fuels for transport as well as for industries. Over the past few years, the government has stepped up efforts to increase domestic crude production by making research and production contracts more attractive and opening up vast areas for oil and gas exploration.
Heavy dependence on imported crude oil makes the Indian economy vulnerable to global oil price volatility, apart from impacting the country’s foreign trade deficit, foreign exchange reserves, rupee exchange rate and inflation.
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