India imports over 85% of its energy requirements. Hence crude oil is crucial for us.
India’s crude oil import bill typically ranges between 2% to 4% of GDP, depending on global prices.
For example:
In FY2023-24, oil imports were around $132 billion, which was ~3.7% of GDP.
In years of low crude prices, like 2020 (COVID), this dropped to ~2.5% of GDP.
Post tariff announcement the crude oil price has fallen by 15%.
This essentially means at “this price”, India’s GDP will be positively impact by 0.3%-0.5%.
This also has other positive benefits
- Lower inflation
- Lower current account deficit
- Stable rupee
- Fiscal relief for the government
- Positive for auto, FMCG, airlines and OMCs.
The one negative impact is remittances slowdown from Gulf countries.
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