- India,
- 30-Jul-2025 07:20 AM IST
India Oil Economy: India's gas and oil sector is going through a critical strategic phase, especially at a time when geopolitical tensions and economic policies globally are affecting energy markets. The Russia-Ukraine war, instability in the Middle East, and US tariff policies have complicated global oil supplies. Yet, over the past five years, India has molded its energy strategy in such a way that it can keep its economy stable in the face of these challenges. A significant increase in Russian oil imports and a reduction in dependence on Middle Eastern suppliers is a prime example of this.Increasing share of Russian oilAccording to a recent report by Rubix Industry Insights, India, the world's third-largest crude oil importer, has seen an unprecedented increase in Russian oil imports. Imports from Russia have grown from a mere 2% in FY20 to over 35% in 2025. During this period, Russian oil imports have grown at a compound annual growth rate (CAGR) of 96%. On the other hand, the share of Gulf countries has declined, giving a boost to geopolitical and commercial balance in India's energy strategy.Since the Russia-Ukraine war, India has boosted its economy by taking advantage of the discounted prices of Russian oil. This strategy has not only been cost-effective but has also helped India emerge as a major refined petroleum exporter in the global oil market. The export value of India's petroleum products (POL) reached US$44.4 billion in FY25, with the major markets being the Netherlands, the United Arab Emirates and Singapore.India's rise in refining and exports
According to the report, India has now become the seventh largest refined petroleum product exporter in the world. The country's 23 refineries have a total refining capacity of 257 million metric tonnes per annum (MMTPA), making India the fourth largest refining hub in the world. The government aims to increase it to 309.5 MMTPA by 2030, supported by large investments from state-run companies such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL).However, declining domestic production remains a concern. It is projected to fall from 32.2 million metric tonnes in fiscal year 2020 to 28.7 million metric tonnes in 2025. This has led to India’s dependence on crude oil imports reaching 88.2%. India is also in a strong position in terms of demand, which is projected to grow from 5.64 million barrels per day in 2024 to 6.66 million barrels per day by 2030.Move towards natural gas and clean energyNatural gas is another important pillar of India’s energy sector. Its demand reached 71 billion cubic metres in FY25, with 50% of the share met by imported liquefied natural gas (LNG). The US has overtaken the UAE to become India's second-largest LNG supplier. India plans to double the share of gas in its energy mix from 6% to 15% by 2030, supported through pipeline expansion and regasification projects.India has also made significant progress in the field of clean energy. The Pradhan Mantri Ujjwala Yojana (PMUY) has ensured LPG access to over 103 million households. In addition, ethanol blending reached 20% by early 2025, six years ahead of the set target. City gas distribution is also being promoted, with a target to reach 70% of the population.Challenges and way forwardGlobally, US sanctions on Russian oil and tensions in the Middle East pose risks for India. Price fluctuations and reduced domestic production are also challenges. The target of increasing refinery capacity has also not yet been achieved as expected. There is a risk of disruption in supply chains due to tensions in the Middle East.Still, India's strategy has established it as an important player in the global energy market. Increasing dependence on Russian oil, increasing refining capacity, and moves towards clean energy are leading India towards a flexible and forward-looking energy policy. With these efforts, India is not only strengthening its energy security but also further strengthening its position in the global energy trade.
According to the report, India has now become the seventh largest refined petroleum product exporter in the world. The country's 23 refineries have a total refining capacity of 257 million metric tonnes per annum (MMTPA), making India the fourth largest refining hub in the world. The government aims to increase it to 309.5 MMTPA by 2030, supported by large investments from state-run companies such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL).However, declining domestic production remains a concern. It is projected to fall from 32.2 million metric tonnes in fiscal year 2020 to 28.7 million metric tonnes in 2025. This has led to India’s dependence on crude oil imports reaching 88.2%. India is also in a strong position in terms of demand, which is projected to grow from 5.64 million barrels per day in 2024 to 6.66 million barrels per day by 2030.Move towards natural gas and clean energyNatural gas is another important pillar of India’s energy sector. Its demand reached 71 billion cubic metres in FY25, with 50% of the share met by imported liquefied natural gas (LNG). The US has overtaken the UAE to become India's second-largest LNG supplier. India plans to double the share of gas in its energy mix from 6% to 15% by 2030, supported through pipeline expansion and regasification projects.India has also made significant progress in the field of clean energy. The Pradhan Mantri Ujjwala Yojana (PMUY) has ensured LPG access to over 103 million households. In addition, ethanol blending reached 20% by early 2025, six years ahead of the set target. City gas distribution is also being promoted, with a target to reach 70% of the population.Challenges and way forwardGlobally, US sanctions on Russian oil and tensions in the Middle East pose risks for India. Price fluctuations and reduced domestic production are also challenges. The target of increasing refinery capacity has also not yet been achieved as expected. There is a risk of disruption in supply chains due to tensions in the Middle East.Still, India's strategy has established it as an important player in the global energy market. Increasing dependence on Russian oil, increasing refining capacity, and moves towards clean energy are leading India towards a flexible and forward-looking energy policy. With these efforts, India is not only strengthening its energy security but also further strengthening its position in the global energy trade.