India’s oil import bill, which stood at $9.2 billion in February 2026 when the Indian crude basket averaged $69.01 per barrel, now faces the risk of a steep rise after crude prices surged to $156.29 per barrel on March 19, more than doubling input costs in less than a month. The February data reflected a relatively benign phase. India’s net oil and gas import bill was $106.1 billion during April–February FY26, lower than $120 billion in the corresponding period last year, aided by softer global crude prices.
“Crude oil imports decreased by 0.2% and increased by 2.4% during February 2026 and April-February FY 2025-26 as compared to the corresponding period of the previous year. As compared to net import bill for Oil & Gas for Feb 2026 of $9.2 bn, the net import bill for oil & gas for Feb 2025 was $9.8 bn,” the PPAC data showed. LNG imports stood at $1.1 billion in February, while petroleum product exports were $2.8 billion, partially offsetting the import burden.
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Erasing Cushion
That cushion is now rapidly eroding. The Indian crude basket rose sharply from $70.90 per barrel on February 26 to $127.20 on March 12, further climbing to $136.56 on March 13, $142.69 on March 16, and finally $156.29 on March 19—a 126.47% surge over the February average.
India’s structural exposure amplifies the impact. The country imported crude worth $137 billion in FY2025, and even under baseline assumptions of $70–75 per barrel, the net oil import bill was projected at $123 billion for FY2026 and $132 billion for FY2027.
With crude now trading far above these assumptions, the import bill outlook has worsened sharply. According to ICRA, every $10 per barrel increase in crude raises India’s net oil import bill by $14–16 billion, implying that if crude averages $110–115 per barrel, the bill could rise by $56–64 billion annually.
ICRA Chief Economist Aditi Nayar said such a price trajectory would push the current account deficit (CAD) to 1.9–2.2% of GDP, compared with 0.7–0.8% projected for FY2026, with each $10 rise widening the CAD by 30–40 basis points.
More adverse scenarios point to deeper stress. If crude rises to around $120 per barrel, India’s oil trade deficit could expand to $220 billion, pushing the CAD beyond 3% of GDP, according to DSP Mutual Fund estimates.
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The inflation impact is equally significant. Each $10 increase in crude could raise WPI inflation by 80–100 basis points and CPI inflation by 40–60 basis points, depending on the pass-through to retail fuel prices.
Sectoral Stress
At the sector level, the pressure is intensifying. Elara Capital estimates that every $10 rise in crude reduces petrol and diesel margins by Rs 6.3 per litre, while LPG losses increase by Rs 10.2 per kg, translating into an additional Rs 32,800 crore annual under-recovery.
India’s refining sector offers limited offset. While gross refining margins rise by about $5 per barrel for every $10 increase in crude, this is insufficient to counterbalance losses on fuel marketing and LPG subsidies.
India’s vulnerability is underlined by its import dependence. Crude import dependency stands at 89.5%, while overall oil and gas dependency is around 88.7%. Refinery throughput remains heavily reliant on imports, with 19.9 million metric tonne (MMT) of imported crude processed out of 21.9 MMT in February.
At the same time, demand remains robust. Petroleum consumption rose 4.7% year-on-year to 20.24 MMT in February, led by LPG (9.3%), petrol (6.1%) and diesel (4.3%), indicating sustained pressure on energy imports.
India retains some fiscal buffer through fuel taxes, with excise duties at Rs 19.9 per litre on petrol and Rs 15.8 per litre on diesel, allowing price shocks to be absorbed up to around $110 per barrel.
Beyond that threshold, analysts warn that retail fuel price hikes would become inevitable, shifting the burden from the exchequer to consumers.
With crude now at more than double the February average that supported a lower import bill, India faces a sharp inflection point — from a phase of moderated import costs to the risk of a multi-billion-dollar surge in its oil import bill, with cascading effects across inflation, fiscal balances and the external sector.
TOPICSCrude oilimportThis article was first uploaded on March twenty-two, twenty twenty-six, at zero minutes past nine in the night.