India’s crude oil import bill is set to exceed $100 billion in the current fiscal year, which ends 31 March, almost double its spending last year, as oil prices trade at seven-year highs.

The country has spent $82.4 billion in the first nine months (April-December) of the ongoing fiscal year that started 1 April 2021, data released by India’s Petroleum Planning & Analysis Cell (PPAC) claimed.

India, which imports more than 80% of its crude oil requirements is expected to almost double its import bill to more than $100 billion by the end of the fiscal year 2021-2022.

By March this year, the nation could end up spending between $105 billion to $110 billion on crude oil imports, as the Brent oil price continues to rise, the fresh import data has indicated.

Brent spot prices were at $86.7 a barrel on Tuesday morning, trading at almost seven-year highs.

India spent $62.2 billion on crude oil imports during the previous financial year 2020-2021, as global oil prices remain subdued in the wake of the Covid-19 pandemic.

However, its crude oil imports slightly edged higher during the current financial year to almost 156.4 million tonnes in the first nine months (April-December), according to PPAC.

Fiscal impact

A higher crude oil import bill is expected to dent the macroeconomic parameters for the Indian government led by Prime Minister Narendra Modi, who has earlier laid out an ambitious target to reduce the nation's crude oil imports by 10%.

But India’s domestic oil production continues to decline, and stood at 22.4 million tonnes in the first nine months of the fiscal year, marginally lower than the 23 million tonnes produced in the same period last year.

Higher LNG import bill

India’s import bill for liquefied natural gas also increased to $8.7 billion during the nine-month period, significantly higher than $5.4 billion worth of imports during the same period in the previous fiscal year, the PPAC data said.

Global LNG prices have spiralled during the past few months, leading to costlier gas imports by Indian companies.

While several Indian gas importers including Petronet LNG have long-term contracts linked to crude prices, companies are increasingly including a mix of short-term and spot contracts along with longer commitments.