Rising oil imports to widen India’s trade deficit in FY27, push it into dangerous zone: CRISIL
&imwidth=600&imheight=450&format=webp&quality=medium "Rising oil imports to widen India’s trade deficit in FY27, push it into dangerous zone: CRISIL")
Representative image. Photograph: (AFP)
Crisil report indicated that India's oil imports have risen steadily from nearly 190 million tonnes in FY14 to over 300 million tonnes in FY26, while exports have largely remained within a limited range during the same period.
India's oil trade deficit is set to increase sharply in FY27 as rising crude oil prices, weakening petroleum exports and heavy dependence of the country on imported oil continuously put renewed stress on external balances, according to a report by Crisil. The report, titled "Oil's not well", highlighted India’s continued heavy dependence on imported crude, noting that more than 85 per cent of the country’s annual oil demand is met through overseas supplies. "India's crude oil trade deficit has been under the pump historically because of having to meet over 85 per cent of its annual requirement from imports," the report noted.
According to the data, India's oil imports have risen steadily from nearly 190 million tonnes in FY14 to over 300 million tonnes in FY26, while exports have largely remained within a limited range during the same period. The report also indicated that although the oil trade deficit had narrowed during phases of lower crude prices in the past, it has once again begun to widen.
Rise in the import amount
The report further noted that the rise in import amount has not been matched by growth in refined petroleum product exports, which have remained constant over the years, other than the short-term spike after the Covid-19 pandemic. It highlighted that pressure on the oil trade deficit has increased since FY24, driven by a continuous rise in imports even as refined petroleum product exports declined for two consecutive financial years.
"Consequently, the oil trade deficit in dollar terms rose, despite crude oil prices trending down in that period," Crisil said, and added that this marked "a break from the past when the deficit used to narrow as crude oil prices fell".
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It also cautioned that the situation may deteriorate further in the current fiscal year. CRISIL projects Brent crude prices to average between USD 90 and USD 95 per barrel in FY27, sharply above the previous fiscal’s average of USD 70.3 per barrel. As a result, the report forecasts India’s current account deficit (CAD) to widen to 2.2 per cent this fiscal. "With the prospect of oil trade deficit increasing and likely pressure on remittances from West Asia, we forecast India's current account deficit (CAD) to rise to 2.2 per cent this fiscal from an estimated 0.8 per cent last fiscal," the report further said.
