Growth in the consumption of diesel—a weather vane of economic activity in the country—sharply slowed to 2 percent to an offtake of 91.4 million tonnes for 2024-25. This is the slowest growth in diesel sales since the Covid years, and the slowest in the last decade if we exclude the two-year pandemic period. In the previous two years, the growth was 4.3 percent in 2023-24 and a robust 12.1 percent in 2022-23, according to provisional data released by the oil ministry. The demand for diesel, which accounts for 40 percent of the entire petroleum, oil and lubricants category, is significant as it not only a fuel for passenger mobility, but also powers trucks and rail locomotives for goods transportation, apart from pumps and other farm machinery.
Slower diesel sales reflect slackening consumer consumption and a weakening in the demand for goods transportation. Some pundits also put it down to a shift from fossil fuels to battery-powered electric vehicles. However, the transition to EVs has been more pronounced in the passenger car segment dominated by petrol engines. Though the number of EV passenger buses is increasing in large cities, their impact cannot be overestimated, as diesel vehicles continue to power three-fourths of India’s transport sector.
Significantly, the oil ministry’s data for 2024-25 also says petrol consumption rose 7.5 percent to 40 million tones, while the aviation boom saw jet fuel sales jumping nearly 9 percent to about 9 million tonnes. Petrol mainly fires passenger car engines, and the robust rise in petrol consumption shows the era of internal combustion engines is not really over. In the year gone by, though there was an impressive 15 percent increase in EV sales—60 percent of which was accounted for by two-wheelers—the whole EV segment represented only 2 percent of all passenger vehicles sold in 2024.
While the target of shifting 30 percent of all vehicle sales to EVs by 2030 is laudable, fossil fuels like diesel and petrol will continue to be useful for some time. The data of slowing diesel sales is therefore more a reflection of an economic slowdown, and not so much a stampede towards EVs. Conversely, stoking demand of the fuel for farm equipment and goods transportation will serve us well in the short run.