Petrol consumption is expected to grow by 6.64% in FY26 to 42.6 million tonnes from 39.98 million tonnes projected for FY25.New Delhi: India’s petroleum product demand is projected to reach an all-time high of 252.9 million tonnes in the next financial year (FY26), marking a 4.65% increase from 241.8 million tonnes estimated for FY25, according to the Petroleum Planning and Analysis Cell (PPAC). This would be the third consecutive year of record consumption, driven primarily by the demand for petrol and diesel.
Petrol consumption is expected to grow by 6.64% in FY26 to 42.6 million tonnes from 39.98 million tonnes projected for FY25. Diesel, the country’s most consumed fuel, is projected at 94.12 million tonnes, a 2.77% increase from 91.57 million tonnes estimated for the current fiscal year.
India outpaces global trends
India’s demand growth contrasts sharply with global trends, where oil consumption is expected to taper amid concerns of an economic slowdown and a shift toward electric mobility. India, however, has emerged as a key driver of global oil demand, with growth rates surpassing even China, the world’s second-largest oil importer. S&P Global Commodity Insights reported that India led global oil demand growth in 2024, a trend expected to continue in 2025.
Refining capacity expansion
In line with rising demand, India’s oil refining capacity is set to grow significantly. The launch of the country’s first greenfield integrated refinery complex in nearly a decade is expected in 2025. By 2028, India’s refining capacity is projected to increase from the current 256.8 million metric tonnes per annum (MMTPA) to 309.5 MMTPA. The government’s push to make India a petrochemical manufacturing hub is driving this expansion.
LPG consumption growth
Consumption of domestic cooking gas, or liquefied petroleum gas (LPG), is also expected to rise by 4.69% to 33 million tonnes in FY26, up from 31.52 million tonnes in FY25. The expansion of the Pradhan Mantri Ujjwala Yojana, which provides subsidized LPG cylinders to people below the poverty line, has played a key role. As of December 23, 2024, over 103.34 million LPG connections had been provided under the scheme, launched in 2016.
Russian crude dominates imports
India’s high petroleum consumption is heavily supported by crude imports, with 85% of its annual requirement sourced from abroad. Russia has been a key supplier, accounting for 38.5% of India’s total oil imports during April-October FY25, valued at $31.86 billion. Russia’s discounted crude oil, offered after sanctions by Western countries in 2022, has strengthened its position as a major supplier to India and China.
Sustained growth ahead
Despite the gradual adoption of electric vehicles, India’s oil demand is expected to grow steadily in the coming years, supported by infrastructure expansion and economic activity. The government’s focus on enhancing refining capacity and fostering petrochemical production aligns with the country’s long-term energy security goals.
