Overview of Russia’s Increased Share in Indian Oil Imports

In March 2024, Russia accounted for nearly 25% of India’s crude oil imports, a sharp rise from approximately 3% in January 2023, according to the Petroleum Planning & Analysis Cell (PPAC). India imported about 1.25 million barrels per day (mbpd) of Russian crude out of a total 5 mbpd crude oil import volume. This shift reflects India’s strategic diversification amid ongoing geopolitical tensions and Western sanctions on Russia.

The surge has significant implications for India’s energy security, foreign policy, and refining sector, as India balances discounted Russian crude imports against geopolitical risks and infrastructure adaptation challenges.

Legal and Institutional Framework Governing Oil Imports

India’s oil import and regulation framework is governed primarily by the Petroleum and Natural Gas Regulatory Board Act, 2006, which oversees the sector’s regulation, and the Essential Commodities Act, 1955, which allows government control over petroleum product distribution. Legislative competence arises from Article 246 (Union List) granting Parliament exclusive power to legislate on oil and gas.

The Ministry of Petroleum and Natural Gas (MoPNG) formulates policies on oil imports, while the Petroleum Planning & Analysis Cell (PPAC) monitors import data and pricing. The Foreign Trade (Development and Regulation) Act, 1992 also influences import-export regulations.

Economic Dimensions of Increased Russian Oil Imports

India’s crude oil imports averaged 5 mbpd in March 2024, with Russia’s share rising to 25%, up from 3% in early 2023 (PPAC). This shift enabled India to save an estimated $2 billion in FY 2023-24 due to steep discounts on Russian crude, as reported in the Economic Survey 2023-24. Concurrently, Saudi Arabia’s share declined from 25% to 18%, reducing India’s traditional dependence on Middle Eastern suppliers.

The quality of Russian crude, generally heavier and sourer, necessitates costly modifications in Indian refineries, including those operated by Reliance Industries Limited (RIL) and Indian Oil Corporation (IOC). This affects refining margins and operational efficiency.

• India’s annual oil import bill stands at approximately $150 billion (Economic Survey 2023-24).
• Discounted Russian crude reduces import costs but increases refining complexity.
• Shift away from Middle Eastern suppliers alters India’s geopolitical energy alignments.

Comparative Analysis: India vs China’s Oil Import Diversification

China maintains a more balanced crude import portfolio, with Russian oil constituting about 15% of its imports in 2023. China secures long-term contracts with Russia and Middle Eastern countries, mitigating supply risks through diversification.

India’s rapid increase to 25% Russian crude imports in March 2024 is unique, reflecting its geopolitical positioning and willingness to leverage discounted Russian oil despite sanctions imposed by Western nations.

Risks and Challenges in Over-Reliance on Russian Crude

India’s increased dependence on discounted Russian crude exposes it to geopolitical risks, including potential supply disruptions if sanctions intensify or Russia’s export capacity declines. The heavier crude grades require refinery upgrades, increasing capital expenditure and operational costs.

Policy frameworks have yet to fully address the long-term sustainability of this import pattern, especially in comparison to competitors who invest in refining flexibility and diversified sourcing.

• Geopolitical risk: Sanctions could disrupt supply chains.
• Refinery constraints: Heavy sour crude requires specialized processing.
• Economic risk: Potential volatility in discounted pricing.

Significance for India’s Energy Security and Foreign Policy

The surge in Russian crude imports enhances India’s energy security by diversifying suppliers beyond the Middle East, reducing vulnerability to regional instabilities. It also strengthens India-Russia ties amid Western sanctions, reflecting India’s strategic autonomy in foreign policy.

However, this realignment complicates India’s relations with Western countries and OPEC members, requiring calibrated diplomacy to balance economic benefits with geopolitical considerations.

Way Forward

• Invest in refinery upgrades to handle diverse crude qualities efficiently.
• Expand import diversification to include other non-OPEC sources to mitigate geopolitical risks.
• Develop strategic petroleum reserves to buffer supply shocks.
• Enhance diplomatic engagement to balance relations with Russia, Middle Eastern suppliers, and Western partners.
• Implement policy frameworks under MoPNG and PPAC for dynamic monitoring and adjustment of import strategies.

Jharkhand & JPSC Relevance

• JPSC Paper: Paper 2 (Economy and Infrastructure) — Energy security and import dependency
• Jharkhand Angle: Jharkhand’s coal and mineral resources position it as a complementary energy hub, but rising oil import diversification affects state-level energy planning and industrial fuel costs.
• Mains Pointer: Frame answers linking India’s oil import strategy to Jharkhand’s energy resource management and industrial growth challenges.