A. Harikumar
India’s crude oil imports are often blamed for the country’s staggering import bills despite increasing exports, and that’s partly true too. But the larger truth is increased crude imports have also helped India to increase exports. A significant part of the imported crude is converted to value added products by India’s petroleum industry and exported as value added products to be global market; including those countries that export crude oil to India.
In fact, India is the fifth largest exporter of refined petroleum products (some statistics put India as the fourth biggest exporter) and the country’s export destinations include the UAE, the US, China, Singapore, Malaysia etc.
Importantly, though the Russia-Ukraine war and the resulting surge in crude oil prices have definitely impacted India’s foreign trade and widened its trade deficit, that is also creating opportunities for India’s petroleum industry. The self imposed restraint of a few European and North American countries to restrict import of diesel and petrol from Russia apart from its crude oil has resulted in shortage of diesel and petrol in the market, esp in Europe. This is an opportunity to India to export more petroleum products.
Petroleum import and export statistics
India achieved an all-time high annual merchandise exports of USD 417.81 billion in FY 2021-22, but imports also zoomed to over $ 610.22 billion, an all time high. While crude oil contributed to around 25 per cent of India’s total imports during 2021 March to April 2022, refined petroleum products contributed to around 15 percent of India’s exports during the period. That was second only to engineering goods
During the period April 2021 to March 2022, exports of engineering goods from India were valued at $ 111632.94 millions ie roughly $ 116.34 billions, Petroleum products were the next highest export commodity valued at $ 65044.80 millions; ie roughly 65.04 billions.
India’s export of petroleum products has been increasing over a period. While export of engineering goods from Indi increased by 45.51 percent during April 2021- March 2022 compared to the corresponding period in 2021-22, petroleum products export increased by 152.07 percent during the corresponding period. While engineering goods constitute 26. 72 percent of India’s exports petroleum products constitute of 15.57 percent of India’s total exports during April 2021-March 2022. Even the much hyped pharmaceutical sector contributed only 5.86 percent of India’s total exports in 2021-22.
India exported petroleum products worth $ 35848 millon in 2019, and from 2020 March to April 2021 India’s petroleum products export was $ 21,406 million. While it’s true that India needs to move to reduce its dependency on fossil fuel drastically and switch over to alternative fuels in a big way, we need to realise that the impact of fuel price rise on Indian economy is complex. Crude oi isn’t solely responsible for India’s balance of trade woes.