Page 5 - Policy & Economic Report - July 2025

POLICY AND ECONOMIC
ROEILPO&RGTAS MARKET

o Natural Gas production contracted by 7.4%

o Refinery Products declined by 4.7%

o Crude Oil production fell by 4.2%

Declining domestic production increases dependence on imported crude oil and LNG, exposing the
economy to greater external risks. It also places additional emphasis on accelerating exploration under
the Open Acreage Licensing Programme (OALP), enhancing recovery from mature fields through
Enhanced Oil Recovery (EOR) technologies, and promoting unconventional resources such as coal bed
methane, shale gas, and deepwater hydrocarbons.

• Import surge & trade deficit pressure:

India's total imports increased by 26.85% to US$88.76 billion during June 2026, primarily driven by higher
imports of petroleum products, crude oil, natural gas, and industrial raw materials. The value of petroleum
and crude oil imports increased significantly from US$9.9 billion in June 2025 to US$14.7 billion in June
2026, reflecting the combined impact of elevated international crude oil prices and import requirements.
Higher energy import bills widen the merchandise trade deficit and increase the country's exposure to
global commodity price volatility and external supply shocks.

• Strong foreign exchange reserves provide a strategic cushion:

India's foreign exchange reserves standing at a comfortable US$ 676.24 billion as of July 18, 2026 (with
Foreign Currency Assets at US$ 574.76 billion) provide a vital buffer. This robust reserve position ensures
the necessary liquidity to finance critical energy imports and cushions the economy against sudden
external shocks stemming from elevated crude oil prices and geopolitical tensions. It provides confidence
to global investors and credit rating agencies during periods of external volatility. Strong reserves
effectively enhance India's resilience against external shocks, particularly during periods of geopolitical
conflict or commodity market volatility.

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