India’s crude oil production has fallen for the 11th year in a row. Output is reported to have dropped approximately 2.5% to around 28 million metric tonnes in 2025–26. That’s a 22% total decline since 2014–15. Natural gas production has also declined, with output falling for the second consecutive year.
The country’s import dependence has grown as a result. India now relies on imports for 89% of its crude oil needs. India also relies heavily on natural gas imports to meet domestic demand. That’s a big vulnerability, especially when global supplies get disrupted. Geopolitical tensions in the Middle East have added uncertainty to global oil supply chains, potentially affecting India’s sourcing options.
Experts say the main reason for the decline is simple. Older oil and gas fields are running dry, and no major new discoveries have been made in the past decade. ONGC’s legacy fields have been producing less over time. The KG-D6 block did see a recovery in 2021–22, but its output has since stabilized and isn’t making up for losses elsewhere. Gas production declined significantly between 2011–12 and 2020–21, with KG-D6 output playing a major role in this decline.
India’s government has tried to attract new investment. Reforms have included easier approvals and better access to exploration data. The government has also introduced fiscal frameworks offering explorers a larger share of returns to encourage new drilling activity. But the results haven’t been strong. Licensing rounds have historically been dominated by domestic public sector companies, with limited international participation. Policy unpredictability and modest resource prospects have kept many investors away. As part of its reform efforts, the government built a national geological data repository to improve access to subsurface information for prospective explorers.
Some experts believe faster development of already-identified resources could help slow the decline. But companies have been slow to act on those finds. Meanwhile, global non-OPEC+ supply is expected to rise by about 1.5 million barrels daily in 2025, increasing competition for market share and potentially limiting the returns that might otherwise attract new investors to India’s upstream sector.
The economic effects are real. Higher import dependence leaves India exposed to global price swings. Every $10 increase in oil prices worsens the country’s current account deficit. The rupee has weakened significantly against the US dollar, reflecting broader economic pressures. Rising oil prices also threaten to push up inflation and slow economic growth. Without new discoveries, experts say it’ll be hard to reverse this trend.
References
- https://timesofindia.indiatimes.com/business/india-business/high-import-dependence-indias-crude-oil-production-falls-for-11th-consecutive-year-gas-also-sees-a-dip/articleshow/130460583.cms
- https://economictimes.indiatimes.com/industry/energy/oil-gas/india-crude-oil-production-falls-for-11th-year-gas-declines-again/articleshow/130450005.cms
- https://www.newsbytesapp.com/news/india/indias-crude-output-falls-11th-year-as-imports-reach-89/tldr
- https://economictimes.com/industry/energy/oil-gas/india-crude-oil-production-falls-for-11th-year-gas-declines-again/articleshow/130450005.cms
- https://www.youtube.com/watch?v=43tMLr-7E8U
