India’s oil demand may head toward 400 million tonnes a year by 2050 from about 250 million tonnes currently, but the country’s fuel consumption story is no longer just about rising volumes — it is about a dramatic reshaping of what Indians burn, drive and cook with.
Over the past two decades, petrol has nearly tripled its share of the oil basket to 18%, LPG has emerged as a major household fuel, and industrial petcoke has surged into the top ranks, while once-dominant kerosene has collapsed to just 0.2% of total demand, according to data from the Petroleum Planning and Analysis Cell (PPAC).
Diesel continues to dominate India’s oil economy, holding a share of over 35% consistently since the early 2000s. In 2013, its share peaked at more than 44%, driven by a retail price gap of nearly ₹30 per litre between diesel and petrol that triggered a wave of diesel car purchases. Today, even with the price gap narrowed to ₹7–₹10, diesel remains the single largest product, accounting for roughly 91 million tonnes of consumption annually.
But diesel’s grip is steadily being challenged.
Petrol Surge
Petrol, once a distant sixth in the rankings in 2001 with barely 7% share, has surged to second place, commanding around 18% of India’s oil basket. Consumption has multiplied almost eight times over the period, touching nearly 40 million tonnes in 2024–25. The petrol-to-diesel ratio, once 1:7, has narrowed sharply to about 1:2.3 — a shift that reflects changing vehicle preferences, improved petrol engine efficiency and the gradual retreat by carmakers from diesel variants.
If current trends hold, industry observers say petrol could further narrow the gap over the next decade as urban mobility expands and diesel’s earlier price advantage fades.
The transformation is even starker in household fuels.
Great Household Swap
LPG has emerged as one of the biggest structural winners. From about 7.7% share in 2001, LPG now accounts for roughly 13.7% of total petroleum consumption, rising from fifth to third place in the fuel hierarchy. Consumption has climbed to more than 31 million tonnes, driven by sustained policy push toward clean cooking fuel access across rural and semi-urban India.
The flip side of this rise is the collapse of superior kerosene oil (SKO). Once the mainstay of India’s refining output — with around 11% share in 2001 and ranking as high as second a few years earlier — kerosene has now shrunk to just about 0.2% of total demand. Consumption has fallen to negligible levels, effectively marking the end of an era where kerosene defined household energy use.
Industrial fuel use has also been reconfigured.
Fuel oil, which once held a 13% share and ranked second in the basket, has slipped to just about 2.6% today. The decline has been driven by tighter emission norms and the shift toward natural gas and cleaner industrial fuels.
In contrast, petroleum coke has staged a striking rise. From less than 0.5% share two decades ago, petcoke now commands about 9% of the basket, ranking fourth. Its ascent accelerated after 2010 when it became the preferred fuel in the cement industry. Although environmental curbs have moderated growth, petcoke remains a significant industrial fuel.
Naphtha, once third in rank with nearly 12% share, has slipped to fifth at under 5%. The diversion of refinery streams toward petrol production has squeezed naphtha volumes. However, as refiners pivot toward petrochemical integration, naphtha’s role as feedstock is expected to gain renewed importance.
Smaller fuels such as bitumen, lubricants and specialty solvents have maintained steady shares, reflecting niche industrial and infrastructure demand.
“The next 25 years will see more churning of the basket and increasing petrochemical intensity in refineries. The rise of CNG and EVs will alter transport fuel shares, but oil is here to stay in various forms,” said Pankaj Sharma, former additional director, PPAC.
For refiners, the message from the numbers is clear: the future is not just about producing more diesel. It is about balancing a rapidly evolving fuel mix — where transport fuels, petrochemicals, cleaner household energy and industrial inputs will increasingly compete for refinery configuration and capital.
India’s oil story, in short, is no longer just about growth. It is about transformation within growth.