India’s crude import bill declined by 17% to $50.4 billion in the first five months of FY26, compared with $60.7 billion in the year-ago period, according to data from the government’s petroleum planning and analysis cell.
The country imported 101.1 million tonnes of crude oil during April to August, marginally down from 101.9 million tonnes in the same period of previous fiscal. India’s reliance on crude oil imports increased to 80.2% during the period, up from 79.8% in April-August of 2024, amid rising demand. While the dependency increased, the country’s domestic production of oil declined by 2% during Apr-Aug at 11.9 million tonnes.
In August, the country imported 19.6 million tonnes of crude oil, against 20.2 million tonnes in the year-ago period. The import bill for last month stood at $9.9 billion, down 15% from $11.7 billion in the same period last year.
Lower prices and Russian discounts drive savings
The decline in the import bill can be attributed to lower crude oil prices during the period compared to last year coupled with discounted Russian barrels.
Russian barrels remain the cheapest option in India’s basket, $3-5/bbl cheaper than other sources on a landed cost basis, according to Kpler. The discounts have widened from the $1.5–$2/bbl discount seen in late July.
Russian crude continues to trade at a meaningful discount to Middle Eastern OSP-linked grades, helping refiners maintain margin resilience, as per analysts. This cost advantage has been central to India’s refining and fuel export competitiveness over the past two years.
Navigating geopolitical headwinds
Although steep discounts seen in early 2022 have narrowed over time, Russian crude still ranks among the most economically attractive grades in India’s import portfolio.
Kpler noted that even a modest $5-6/bbl spread and expectation of further increase in flat prices and premium on 1.7–2.0 million b/d equates to billions (many) in annual savings—a critical buffer that has helped the Indian government manage inflation, rein in the fiscal cost of fuel subsidies, and maintain refinery profitability amid global uncertainty.
The US had imposed an additional 25% “ad valorem” duty on Indian goods for buying Russian crude, effective August 27, taking the total tariff levy on Indian goods to 50%. However, Chief Economic Adviser V. Anantha Nageswaran on Thursday expressed the hope that Washington may scrap the 25% penal tariff on Indian goods and also cut the reciprocal tariff to 10-15% from 25% as the two nations agree to step up efforts to conclude an interim bilateral trade agreement (BTA) by November.
Indian refiners have continued their purchases of Russian oil despite mounting pressure from the US. State-owned Bharat Petroleum Corp has said that it expects Russian crude to form 35% of its total imports for the remaining year of FY26 as long as there are no new sanctions on Russian oil. Indian Oil too has said that it has continued to buy Russian oil in this quarter depending upon the economics. ONGC has also said that it will continue to buy Russian oil as long as it is commercially viable.