India’s robust merchandise export growth of 18.8 per cent so far in the current fiscal is driven by a surge in petroleum exports, which grew 46 per cent year-on-year, while non-oil exports expanded at a slower 14.4 per cent rate, marking a sharp reversal from the consecutive declines recorded in petroleum exports earlier, ratings agency Crisil said.
“India’s oil terms of trade have improved since the onset of the West Asia conflict. While crude oil import prices have risen sharply, export prices of refined petroleum products have increased even faster. Export volumes have also recovered in recent months after an initial disruption caused by the conflict,” the agency said in a report.
It said that an analysis of petroleum export destinations shows that shipments to newer markets have accelerated this fiscal, offsetting weakness in some traditional markets. This reflects supply disruptions faced by key exporters such as West Asia and Russia amid geopolitical tensions and reduced refining capacity.
“With favourable terms of trade persisting into September, petroleum export growth is likely to remain robust in the near term,” Crisil said. It added that as of June, Gulf exports of LPG and other refined products remained below 50 per cent of their pre-war levels, while Russia has extended its ban on diesel and gasoline exports until January 2027 to safeguard domestic supplies.
Against this backdrop, India’s petroleum product exports to Russia have surged, although from a negligible base. These evolving trade flows have significantly altered the destination mix of India’s petroleum product exports, according to Crisil.
Between April and June 2026, exports to the United Arab Emirates declined 40 per cent year-on-year, likely reflecting disruptions to regional shipping routes. Exports to the United States fell 41 per cent over the same period.
