Indias fossil fuel trade is experiencing an unprecedented boom, marked by surging oil exports to the European Union (EU) and rising coal imports amid increasing domestic production in 2024. A combination of global energy dynamics, including the fallout from the Russia-Ukraine war and shifting trade flows, has positioned India as a key player in the global energy market.

Oil Exports to EU Jump 58% Amid Discounted Russian Oil

Indias export of oil products, particularly from the refineries which depend on Russian Crude, to the European Union has skyrocketed by 58% in the first three quarters of 2024, according to the latest monthly tracker report from the Centre for Research on Energy and Clean Air (CREA). Indian refineries in Jamnagar, Vadinar, and Mangalore, have increasingly relied on Russian oil due to its discounted prices. These refineries have been able to export refined fuels to the EU despite sanctions and trade restrictions on Russian crude thanks to a loophole in the sanctions.

The situation stems from a gap in international sanctions. While countries like the US and EU have imposed price caps and embargoes on Russian crude oil, they have not extended these measures to refined oil products made from Russian crude. This loophole has enabled India to procure Russian oil at a discount, refine it into high-demand fuels like diesel, and export these products to the EU market, which is largely avoiding direct purchases of Russian crude.

This rise in Indian oil exports to the EU is significant, as the EU seeks to diversify away from Russian energy sources due to the ongoing conflict in Ukraine. As European nations shun direct Russian oil purchases, they have increasingly turned to India, which now meets a substantial portion of this demand. In July 2024, India even surpassed China to become the worlds largest importer of Russian crude, further bolstering its role as a global refining hub.

However, India was the second-largest buyer of Russian fossil fuels in October, contributing 19% (EUR 2.6 bn) to Russias monthly export earnings from its top five importers. China was the largest buyer of Russian fossil fuels in October, accounting for 45% (EUR 6.1 bn) of Russias monthly export earnings from the top five importers. Crude oil comprised 65% (EUR 3.9 bn) of Chinas imports from Russia.

Coal Imports

On the coal front, India has also seen a notable uptick in imports. During the April-September period of 2024, coal imports rose by 7.48%, reaching 140.6 million tonnes (MT), compared to 130.34 MT in the same period of 2023. India remains the second-largest consumer of coal in the world, driven by its fast-growing economy and energy demands.

The increase in coal imports is primarily due to the strong demand for both coking coal (used in steel production) and non-coking coal (used for power generation). However, Indias dependence on foreign coal is expected to remain modest, thanks to ongoing efforts to bolster domestic coal production. In September 2024, coal imports dipped slightly by 10.09%, from 21.6 MT in the previous year to 19.42 MT. Non-coking coal imports totaled 13.24 million tonnes (MT), down from 14.88 MT in the same month last year. Coking coal imports were 3.39 MT, compared to 4.59 MT in September 2023.

 Notably, India holds the fifth-largest coal reserves globally, and recent policy shifts have aimed to reduce the share of imported coal in the energy mix. From 2014 to 2024, the import share of coal in total consumption has declined by around 2.7%, showcasing a positive trend in Indias coal self-sufficiency.

Indias ambitious goal of boosting domestic coal production is making notable strides, as recent figures for October 2024 show impressive gains. The countrys coal production reached 84.45 million tonnes (MT) in October, surpassing the 78.57 MT produced in the same month last year. This marks a growth of 7.48%, a strong indicator that Indias efforts to ramp up coal output are gaining momentum.

Subsequently, coal dispatches witnessed a significant boost in October 2024, reaching 82.89 MT, showcasing a 4.60% increase over the 79.25 MT recorded in October 2023. Coal dispatch from captive and other entities also grew to 16.18 MT in October 2024, compared to 11.83 MT in October 2023, representing growth of 36.83%. Cumulative coal dispatch (up to October 2024) has risen to 571.39 MT in FY 2024-25 as compared to 541.51 MT during the corresponding period in FY 2023-24, reflecting growth of 5.52%.

While India is working towards increasing domestic production and reducing coal import dependence, its strong appetite for both coal and oil underscores the ongoing energy demands driven by its economic growth and industrialization.