India's Fuel Exports Skyrocket Despite Volume Drop

India's earnings from petroleum product exports saw a remarkable surge of nearly 50% in rupee terms, reaching ₹2.59 lakh crore during April-September. This substantial increase occurred despite a 16% drop in shipment volume. The growth was primarily fueled by a sharp rise in international petroleum prices and a notable depreciation of the Indian rupee against the US dollar.

Elevated global benchmark prices for diesel and petrol, which climbed 83% and 54% respectively over the six-month period, significantly boosted returns. These gains were further amplified by the rupee's slide, averaging 95.17 to the dollar compared to 86.44 a year prior. Supply disruptions, including those impacting the Strait of Hormuz and Russian refineries, contributed to sustained high crude oil prices.

Diesel exports were a major driver, with earnings increasing by 58% in rupee terms to approximately ₹1.2 lakh crore, despite a 19% volume decrease. Petrol export earnings also rose by 21% in rupee terms. The decline in export volumes reflects a tightening domestic surplus, as demand expanded while production stagnated, leaving less fuel available for overseas sales.

Reliance Industries remains the dominant player, accounting for about 70% of India's fuel exports. The sustained pressure on the rupee is linked to elevated crude oil prices and foreign capital outflows, with refiners increasing dollar demand for importing crude oil, which constitutes nearly 90% of domestic consumption.