Structure and determinants of Indias imports of crude oil and petroleum products

Abstract

The study analyzed the India s crude oil, petroleum products and nine sub- categories of petroleum products imports by estimating Growth, Structure, Concentration, Competitiveness, Trade Potential and determinants (Gravity Model and Oil Vulnerability Index) for the time period 1996-1997 to 2019- 2020. India s crude oil and petroleum products imports both grew at rate more than 15 per cent for the study period. The overall average share of imports of crude oil (22.7%) was more than average share of imports of petroleum products (3.47%) in India s imports. LPG has the highest share in petroleum product imports of India and further LPG, naphtha, fuel oil and other sub-categories were found with less than 50 per cent growth rate, listed among top four concentrated sub-categories due to the wider application in different sectors of Indian Economy. Moreover, India exhibited the bilateral trade potential with Saudi Arab and Singapore in case of LPG and HS code 271019 but India showed dependence on imports of Naphtha from its import concentrated countries over the study period. The results of extended gravity model for crude oil imports found that most of explanatory variables were statistically significant whereas in case of sub- categories of petroleum products imports models (i.e., LPG, Naphtha, HSD and Lubes), the variables: total GDP, consumption, import/GDP ratio and export/GDP ratio of India were found to be significant. Lastly, OVI analysis revealed an increase in index of India s import of crude oil which was more vulnerable to market risks than supply risks during study period. newline