Why India is more vulnerable than other nations to global crude movements

Weakness in rupee and India's heavy dependence on oil import are seen as key reasons for the unabated price hikes at home

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Petrol and diesel prices in India are the fourth highest among the top crude oil consuming nations of the world. The top three nations among the top 10 crude oil consuming nations are Germany, South Korea and Japan. Saudi Arabia has the cheapest price among the top 10 oil consuming nations.

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All countries get crude oil at the same price. The retail price in each country depends on the taxes levied by its governments. In India, the Centre levies a fixed excise duty of Rs 19.48 a litre on petrol and Rs 15.33 a litre on diesel. Over and above this, the state governments impose value added tax.

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The crude oil imported by India accounts for 87% of the oil produced in its refineries. Over the years, India has not made significant progress in becoming oil independent by finding and establishing its own oil reserves. And, therefore; the country is heavily dependent on imports from Opec countries.

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The New Exploration and Licensing Policy (NELP) adopted by the government in 1997 had generated great enthusiasm at that time among corporates and state energy companies to explore oil reserves. The actual investment was more than the promised investment in the year 1999. But, after a decade, the actual investment dipped to zero.

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Over the last six years, India’s domestic crude oil production has consistently declined. Crude oil production was 38.09 million metric tonnes in 2011-12, and has declined since, reaching 36 million metric tonnes in 2016-17.