NEW DELHI: Domestic demand for petroleum products is projected to hit a record 252.9 million tonnes in FY26, a 4.65% increase from the 241.8 million tonnes expected for FY25, as per the Petroleum Planning and Analysis Cell (PPAC).
The growth in demand is primarily driven by key transport fuels—petrol and diesel. Petrol consumption is expected to rise 6.64% to 42.6 million tonnes (MT), up from 39.98 MT in FY25. Diesel demand is forecasted to grow by 2.77%, reaching 94.12 MT as against 91.57 MT in the current fiscal. This will mark the third consecutive year of record-high petroleum product consumption in India.
As demand rises, domestic oil refining capacity is set for expansion. In 2025, India will witness significant growth in refining capacity, including the launch of its first greenfield integrated refinery complex in nearly a decade. By 2028, India’s refining capacity is projected to reach 309.5 million metric tonnes per annum (MMTPA), up from the current 256.8 MMTPA. India is a key exporter of petrol, diesel and other petroleum products and the government’s drive to establish the country as a petrochemical manufacturing hub is further spurring the expansion of refining capacity.
LPG consumption is also on the rise, with demand expected to grow by 4.69% in FY26, reaching 33 million tonnes, up from 31.52 million tonnes in FY25. This growth is fueled by the success of the Pradhan Mantri Ujjwala Yojana, which provides subsidized LPG connections to low-income households. As of December 23, 2024, over 103.34 million LPG connections have been distributed under this program, launched in 2016.