India’s dependence on imported crude oil has been steadily increasing due to growing demand for fuel and other petroleum products coupled with stagnant domestic crude oil production. In the April-February period of the financial year, the country’s reliance on imported oil stood at nearly 88%, hinting that the oil import dependency for the full financial year 2023-24 could surpass the previous year’s record levels.
Despite government efforts to reduce the reliance on imported crude oil through initiatives like promoting electric mobility and biofuels, the lack of significant increase in domestic oil output remains a challenge. The government’s target of reducing oil imports to 67% by 2022 from FY14 levels has not been met, showcasing the vulnerability of the Indian economy to global oil price fluctuations and its impact on various economic indicators.
While India is a net exporter of petroleum products, the rise in domestic consumption of petroleum products in the April-February period highlights the continued robust demand for fuels like petrol and diesel. Efforts to boost domestic crude oil production through exploration and production contracts have seen limited success, with imports still meeting the majority of the demand for petroleum products.
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