The oil ministry said that India's push for rupee transactions for crude oil import has not found any takers as suppliers have expressed concern about the repatriation of funds and high transactional costs. Currently, the default payment currency for all contracts for import of crude oil is the US dollar as per the international trade practice. However, in a bid to internationalise the Indian currency, the Reserve Bank of India on July 11, 2022 allowed transactions for importers and exporters in the Indian rupee.
While a few non-oil trades have happened in the rupee with a select few countries, the Indian currency continues to be shunned by oil exporters.
"During FY 2022-23, no crude oil imports by oil PSUs were settled in Indian rupee. Crude oil suppliers (including UAE's ADNOC) continue to express their concern on the repatriation of funds in the preferred currency and also highlighted high transactional costs associated with the conversion of funds along with exchange fluctuation risks," the oil ministry told the parliamentary department related standing committee.
"Payments for crude oil can be made in Indian rupee, subject to the suppliers' complying with regulatory guidelines in this regard," the ministry said. "Currently, Reliance Industries Ltd and oil PSUs do not have an agreement with any crude oil supplier to make purchases in Indian currency for the supply of crude oil."
India is the world's third-largest energy consumer. With its domestic production meeting less than 15% of its needs, the country imports the remaining crude oil, which is converted to fuels such as petrol and diesel at refineries.
In FY 2023, India spent $157.5 billion on import of 232.7 million tonnes of crude oil. Iraq, Saudi Arabia, Russia, and UAE were its biggest suppliers. Of this, 141.2 million tonnes came from the Middle East, accounting for 58% of all supplies.
In the current fiscal, India imported 152.6 million tonnes of crude oil between April and November for $113.4 billion.
"India's consumption would be about 5.5-5.6 million barrels per day. Out of that, we import about 4.6 million barrels per day, which is about 10% of the overall oil trade in the world," the ministry told the committee.
