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The significance of the rise in India’s petroleum product exports to the EU

GS Paper 3

Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources

 

Source: IE

 Context: India’s petroleum product exports to the EU have increased considerably over the past months as the region reduces imports of refined products from Russia, due to the war in Ukraine.

 

Background:

  • India is a major refiner with an annual refining capacity of about 250 million tonnes.
  • While it is also one of the top consumers of crude oil, India’s refining capacity is higher than its domestic demand.

 

What does the data show?

  • India’s petroleum product exports to the EU rose 20.4% year on year in April-January to 6 million tonnes, with the region climbing to the top 20 regions importing refined products from India.
  • According to the Directorate General of Commercial Intelligence and Statistics (DGCIS) data, Indian refiners (particularly private) are rushing to partly fill the supply gap for the region.

 

Why does the rise matter? From the global oil markets perspective, suppliers like India are helping maintain a demand-supply balance, while preventing extreme price shocks.

 

Benefits for India:

  • Indian refiners, particularly export-oriented private sector players (Reliance Industries and Nayara Energy), stand to gain (purchase Russian oil at a discount).
  • India now finds itself playing an increasingly prominent role in the global crude oil and refined products supply map.

 

What is the West’s view on rising Indian exports to the EU?

  • While the West was irked at India’s rising purchases of Russian oil, countries like the US are comfortable with the rising supply of Indian refined products to the EU.
  • They see it as critical for the success of the price caps on Russian oil and refined products (imposed by G7 countries) without causing a global supply shock.

 

Insta Links:

 

Mains Links:

Account for the failure of the manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports. (UPSC 2017)