India is the world’s third-largest importer of crude oil, with its oil import bill accounting for nearly 40 percent of the country’s total annual expenditure. In 2025, however, India witnessed a notable development: despite importing 2.4 percent more petroleum products than in the same period of the previous year, its overall oil import bill declined by 12 percent. This occurred even as the US dollar continued to strengthen against the rupee. The primary reason for this decline was a sustained drop in crude oil prices in the international market.
Lower global crude prices helped keep domestic petrol and diesel prices stable, which in turn had a positive impact on key economic indicators. Importantly, the reduction in the oil import bill did not exert pressure on India’s foreign exchange reserves, allowing the country to maintain a comfortable external position. As a result, 2025 proved to be a relatively positive year for India’s oil sector.
India’s foreign exchange outflow is largely driven by imports of crude oil and gold. The country is among the world’s top three gold importers, and rising dollar prices have continued to strain foreign exchange spending on gold imports. However, the easing of the oil import burden provided significant relief. According to data released by the Ministry of Petroleum and Natural Gas, India imported oil and petroleum products, including natural gas, worth $80.9 billion between April and November 2025. In comparison, imports during the same eight-month period of the previous financial year stood at $91.9 billion.
During this period, India imported a total of 163.4 million tonnes of oil, compared to 159.5 million tonnes in the corresponding months of the previous year. Thus, while the volume of oil imports increased by 2.4 percent, the total cost fell by 12 percent. This underscores the impact of lower international crude prices.
India remains heavily dependent on imports to meet its energy needs, with nearly 88 percent of petroleum consumption sourced from overseas due to limited domestic production capacity. Only about 12 percent of the country’s oil requirements are met through domestic output. Consequently, fluctuations in global crude prices have a direct and significant impact on India’s economy. The recent decline in international crude oil prices, therefore, has provided timely support to India’s rapidly expanding economy.
Between April and November 2025, India purchased crude oil at an average price of $67.6 per barrel, compared to approximately $80 per barrel during the same period the previous year. This decline in oil prices was due to the abundant supply of oil in the market during this period. Oil-producing countries did not reduce their production; on the contrary, they increased it. The Organization of the Petroleum Exporting Countries (OPEC) reversed its previous production cut formula and emphasized increasing production. Although OPEC countries did this due to increased demand for crude oil in the international market, it resulted in a decline in oil prices. During these eight months, India produced a total of 18.8 million tons of oil, while in the same eight-month period of the previous year, it had produced 19.1 million tons.
However, oil consumption in India increased during this period, rising from 158 million tons to 160.2 million tons. During the eight months of 2025, domestic oil production yielded a total of 18.3 million tons of petroleum products. India’s self-reliance in this sector reached 11.4 percent, which was better than the previous year. The Modi government in India has been trying since 2015 to reduce India’s dependence on oil imports, but conversely, it has been continuously increasing. In 2015, India imported only 77 percent of its total oil consumption, and the Modi government had set a target to reduce this to 67 percent by 2022, but this was not possible, and import dependence instead rose to over 80 percent.
The main reason for this is the continuously increasing demand for petroleum products in India. As far as natural gas is concerned, its import bill saw a decrease of 11.5 percent during the eight months of 2025. India imported gas worth a total of $9.2 billion. During this period, gas imports decreased by 9 percent. Industrial demand for gas in India also declined. Meanwhile, gas prices in the international market fluctuated significantly. Overall, the past year resulted in a lower petroleum import bill for India, but the worrying aspect is that India is not able to increase its domestic oil production despite a year-on-year increase in demand.
