6 days ago
Cheap Russian Oil Fails To Benefit Common Indians: Oil Companies' Profits Soar 25-Fold, Govt Collects Over 40% Tax
New Delhi: India has been importing Russian crude oil at discounts ranging from 5 to 30 dollars per barrel for the past three years. According to a report by Moneylife, private companies such as Reliance and Nayara, along with state-owned firms like Indian Oil and Bharat Petroleum, pocketed around 65 percent of the benefits from these discounted imports. The Indian government received the remaining 35 percent. Ordinary consumers saw little or no relief at fuel stations.
Recent tariffs imposed by U.S. President Donald Trump, including a 50 percent levy on India, cite India's Russian oil imports. He accused Indian refineries of processing this crude and selling refined products to Europe and other regions. India has maintained that its oil purchases are aimed at ensuring domestic energy security, regardless of the conflict in Ukraine.
Petrol and diesel prices remain largely influenced by taxes. Excise duties levied by the central government in Delhi amount to Rs 21.90 per litre for petrol and Rs 17.80 per litre for diesel. State governments apply additional taxes, with Delhi charging Rs 15.40 per litre on petrol and Rs 12.83 per litre on diesel. Overall, taxes constitute over 40 percent of retail fuel prices.
In April 2025, a Rs 2 hike in excise duties generated an additional Rs 32,000 crore for the central government. These funds serve as a reliable revenue source for the government, leaving consumers without any benefit from discounted Russian oil.
Private refiners have also significantly profited. Reliance Industries and Nayara Energy refined substantial volumes of Russian crude, achieving refining margins of 12.5 dollars and 15.2 dollars per barrel respectively.
According to data from Kepler Analytics, both companies accounted for 45 percent of India's 23.1 million barrel Russian crude imports in the first half of 2025. The crude was converted into petrol, diesel and jet fuel and exported to Europe, the United States, the UAE and Singapore, generating massive profits.
India's imports from Russia began in February 2022 following Europe's sanctions. The share of Russian crude in India's imports grew from just 0.2 percent in 2021 to 35.1 percent in 2025, supplying around 1.67 million barrels per day, roughly 37 percent of the country's total requirements.
Long-term contracts, such as Reliance's 10-year deal signed in December 2024 to import 500,000 barrels per day, make sudden shifts difficult.
Alternative suppliers include Iraq, Saudi Arabia, the United States and other nations like Nigeria, Brazil, Guyana and the UAE. These sources are costlier than Russian oil.
India strongly objected to the U.S. tariffs, calling them 'unfair, unexpected and impractical'. The Ministry of External Affairs highlighted the double standards of Western nations, emphasising that the United States and the European Union continue extensive trade with Russia in energy and raw materials. It further said that its imports of Russian crude ensure domestic energy security and are conducted transparently.
Even as Russia-Ukraine conflict disrupts global energy markets, India continues to rely on Russian crude to stabilise domestic fuel prices and protect the energy needs of its 1.4 billion population.
(Data source: Petroleum Planning and Analysis Cell, NZZ, Moneylife, Reuters, New York Times)
