Crude comfort: Let no sleep be lost over India’s rising oil dependency
Subscribe to enjoy similar stories. India’s reliance on imported crude oil is getting worse. The latest government data shows that the country imported 88.2% of the oil it consumed in the first half of 2024-25, up from 87.6% a year earlier.
Such a high import dependency would disappoint policymakers who have been trying to increase our self-reliance in the energy sector. To that end, in 2014-15, the government had set a target of reducing our oil dependency to 67% by 2022. Since the import proportion was 77% in 2013-14, a reduction of 10 percentage points may have seemed like a reachable aim back then.
But the share of imported oil in Indian consumption has gone the other way over the past decade. This exposes our economy to global price shocks, in addition to the risk of supply disruptions. Oil price upshoots usually widen India’s trade and current account deficits, soak up that much more foreign exchange, weaken the rupee, and fuel domestic inflation.
Previous major episodes have been scary. It was an oil crisis caused by the 1990-91 Gulf War that left India short of US dollars and moved us away from our post-1947 ‘mixed economy’ model. As we needed hard currency for oil shipments, we learnt the hard way that globalization was a must.
When oil hit $147 per barrel in mid-2008, we took another economic blow, though a far milder one. Significant changes have taken place since then. The Russia-Ukraine War is in its third year, with stiff Western sanctions on the former, an oil producer.
The Gaza War that began last October has threatened to engulf large oil fields in West Asia, with Israel-versus-Iran hostilities on a short fuse. Yet, the oil market has stayed relatively calm for the most part. Despite recent Israeli air
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