The Government of India started encouraging energy companies to invest in refineries at the end of the 1990s, thus helping the country to become a net exporter of petroleum products in 2001, despite being a significant importer of crude oil. According to the Petroleum Planning and Analysis Cell, production of petroleum products by refineries and fractionators stood at 231.3 million metric tons (MMT) during FY 2015-16, as compared to 220.7 MMT in the previous fiscal year.
With substantial increase in refining capacity in India, exports of petroleum products have picked up since FY 2005-06, although the slowdown in global economy has affected the exports in recent years. Amidst an increasingly challenging environment of declining prices and rising competition, exports of petroleum products witnessed a sharp decline of (-) 46.4 per cent during FY 2015-16, to reach a level of US$ 30.4 billion from US$ 56.8 billion during the previous year. The share of petroleum product exports in total exports has witnessed a consistent increase from 15.7 per cent in FY 2009-10 to 20.1 per cent in FY 2013-14. However, this export share exhibited a decline in the fiscal year FY 2014-15 to touch 18.3 per cent and further to 11.6 per cent during FY 2015-16.
During 2015-16, UAE was the largest export destination for India’s exports of petroleum products, accounting for 12.7 per cent of the total exports, followed by Singapore (9.9 per cent), the USA (6.8 per cent), Kenya (5.1 per cent), and Saudi Arabia (4.7 per cent).
Foreign Direct Investments
Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum products' pipelines, natural gas pipelines, LNG regasification infrastructure, market study, formulation and petroleum refining in private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the government or private participation in exploration of oil and the discovered fields of natural oil companies - 100% FDI, automatic route. Petroleum refining by PSU, without disinvestment of dilution of domestic equity in existing PSUs - 49% automatic route. During April 2000-March 2016, petroleum and natural gas sector received FDI inflows of US$ 6.7 billion.
As part of International Energy Outlook 2016, EIA projects India and China will account for about half of global energy demand growth through 2040, with India's energy demand growing at 3.2% per year. As per BP Energy Outlook 2016, India's energy consumption is projected to grow at 4.2% per annum upto 2035, faster than all major economies in the world.