India's Crude Oil Dependence Remains High Despite Energy Import Diversification

India's reliance on imported primary energy has decreased to 42% in the fiscal year 2025, according to a new report by the Confederation of Indian Industry (CII) and EY. This is down from 47% in fiscal year 2017.

The report highlights that India still meets 90% of its crude oil demand through overseas purchases. Analysts describe the reduction in primary energy import dependence as modest, pointing to a gradual diversification of the energy system even as the country continues to rely heavily on imported oil.

India is ranked as the world's third-largest crude oil importer, and its import reliance has risen in recent years due to surging demand and falling domestic output. The Middle East crisis has pushed Indian refiners to seek alternative supply sources, while the government has moved to expand strategic storage capacity to better withstand future supply disruptions.

The State-owned Oil and Natural Gas Corporation (ONGC) is set to build a new storage facility at Mangaluru with a capacity of about 13 million barrels. This decision follows the Iran war and disrupted crude flows through the Strait of Hormuz, which forced India to replace lost Middle Eastern supply. Record crude imports from Russia have helped offset the shortfall.