India may witness longer slowdown as oil imports, consumption decline

• In a sign that slowdown in the Indian economy may be long drawn, a government report has projected a modest 3.5% growth in oil imports in 2019. Considering that India imports more than 80% of its oil requirements, slow growth in imports signals tepid demand and consumption.
• While slower growth in oil imports is good news for exchequer in terms of keeping the high oil bill under check, it also signals that less crude will be processed by Indian refineries as there would be less consumption of products such as petrol, diesel and ATF, indicating pressure points in the economy.
• Apart from crude, petroleum product imports (largely comprising petrol and diesel) have also remained tepid. Product import has, in fact, fallen to 32.5mt in FY19 as against 35.5mt in FY18.
• With a surplus refining capacity, India is a net exporter of petroleum products. But with international markets also witnessing a slowdown, product exports have been hit.

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