With increasing demand for fuel and other petroleum products amid stagnant domestic crude oil production, India’s dependence on imported crude oil grew to over 88.5% in the first 10 months of the current financial year FY26, indicating that the import reliance level for the full financial year could be headed for yet another record high.According to the latest data released by the Petroleum Planning & Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas (MoPNG), the country’s oil import dependency was 88.6% in April-January, up from 88.2% in the corresponding period of FY25. For the full FY25, reliance on imported oil was 88.3%. According to industry insiders, the import dependency for the full FY26 could be a tad higher than the April-January level, similar to what happened in the last financial year.India is seen as a major growth centre for oil demand given the future potential in energy-intensive industries, growing vehicle sales, a rapidly expanding aviation sector, expected growth in consumption of petrochemicals, and a still-growing population with relatively low per-capita energy consumption. In fact, India is among the few markets where refinery capacity is expected to expand substantially over the coming years. India currently has a refining capacity of 258 million tonnes per annum, with average capacity utilisation levels of well over 100%.India’s reliance on imported oil has generally increased over the years, with the exception of FY21 when demand was suppressed due to the pandemic. India’s oil import dependency was 88.3% in FY25, 87.8% in FY24, 87.4% in FY23, 85.5% in FY22, 84.4% in FY21, 85% in FY20, and 83.8% in FY19.Given the country’s stagnant domestic oil production, rising demand for petroleum fuels and products is expected to lead to higher oil imports in the foreseeable future. India’s heavy reliance on imported crude oil makes its economy vulnerable to global oil price fluctuations. This also impacts the country’s trade deficit, foreign exchange reserves, the rupee’s exchange rate, and inflation rate, among others.The government aims to reduce the country’s reliance on imported crude oil but faces challenges due to sluggish domestic oil output amidst rising demand. In 2015, the government targeted to reduce reliance on oil imports to 67% by 2022. However, the dependence has only grown.The government has implemented several policy reforms to encourage investments in India’s oil and gas exploration and production sector. The government is also promoting electric mobility, biofuels, and other alternative fuels to reduce oil imports. While there has been an increase in electric mobility adoption and the blending of biofuels with conventional fuels, it has so far not been sufficient to offset petroleum demand growth.Story continues below this adIndia’s crude oil imports rose to 206.3 million tonnes in the 10 months to January from 201 million tonnes in the year-ago period, as per provisional data from the PPAC. Domestic oil production for the period declined slightly to 23.5 million tonnes from 24 million tonnes, while domestic consumption of petroleum products rose 1.6%to 202.2 million tonnes. Of this, 23 million tonnes of products are estimated to have been produced from crude oil produced in India, thereby resulting in a self-sufficiency level of 11.4%, the PPAC data shows.The calculation of the extent of import reliance is based on the domestic consumption of petroleum products and excludes petroleum product exports as those volumes do not represent India’s demand. India—the world’s third-largest consumer of crude oil and also one of its top importers—is a net exporter of petroleum products.India’s crude oil consumption and imports are projected to rise further due to growing domestic demand. Consumption of petroleum products is projected to increase by 2.8% in FY27, reaching 250.8 million tonnes, per PPAC projections. If these projections hold, the country’s petroleum fuel and product consumption in FY27 will hit yet another record. And the trend of growing petroleum consumption is expected to continue for the foreseeable future.In November, Paris-based International Energy Agency (IEA) said that India will be the biggest driver of global oil demand over the next 10 years, surpassing China.Story continues below this ad“India leads global oil demand growth over the next ten years, with almost half of the additional barrels produced globally to 2035 heading in its direction. Its oil use increases from 5.5 mb/d (million barrels per day) in 2024 to 8 mb/d in 2035 as a result of rapid growth in car ownership, increasing demand for plastics, chemicals and aviation, and a rise in the use of liquefied petroleum gas (LPG) for cooking,” the IEA said in its World Energy Outlook 2025.