India is the world's third-largest oil consumer and imports nearly 88% of its total crude oil requirement. During FY 2023-24, the country consumed over 234 Million Metric Tonnes (MMT) of petroleum products, while domestic production accounted for just about 29.36 MMT. This massive gap between demand and supply makes crude oil import India's single largest trade expenditure. If you are exploring opportunities in the petroleum sector, understanding the regulatory framework, licensing requirements, and customs procedures is the essential first step.
This guide explains who can import crude oil in India, what licences and registrations you need, how customs duty works, and the complete petroleum import procedure from sourcing to clearance. Whether you represent a refinery, a trading house, or a new entrant evaluating the energy sector, the information here will help you navigate the process with confidence.
Who Can Import Crude Oil in India
Unlike most commodities that fall under Open General Licence, crude oil is classified as a "canalised" item under India's Foreign Trade Policy. This means only government-designated agencies and entities authorised by the Ministry of Petroleum and Natural Gas can commercially import crude oil. The primary importers include public sector undertakings such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), and Mangalore Refinery and Petrochemicals Limited (MRPL).
Private sector refineries that have received specific approval from the government can also import crude oil directly. Reliance Industries and Nayara Energy (formerly Essar Oil) are prominent examples. These entities operate large-scale refineries and import crude oil for processing into petroleum products. The government periodically reviews and updates the list of authorised entities based on refining capacity, infrastructure readiness, and policy objectives.
Smaller businesses or traders cannot independently import crude oil without canalisation approval. However, if you are setting up a refinery or petroleum processing facility, you can apply for the necessary permissions through the Ministry of Petroleum and Natural Gas, along with obtaining an IEC registration from the Directorate General of Foreign Trade (DGFT).
Registrations and Licences Required for Crude Oil Import
Even for authorised entities, importing crude oil demands a comprehensive set of registrations and approvals. The Import Export Code (IEC) issued by DGFT is the foundational requirement. This 10-digit identification number must be obtained before any cross-border transaction can take place. Without it, customs will not process your Bill of Entry, and banks will not facilitate foreign exchange payments to overseas suppliers.
Beyond IEC, you will need an active GST registration because Integrated GST (IGST) applies on all imports into India. An AD Code registration with your authorised dealer bank is also mandatory, as it links your bank account to the ICEGATE system for processing payments in foreign currency. Registration on the ICEGATE portal itself is required for electronic filing of Bills of Entry, shipping bills, and other customs documentation.
Additionally, importers of petroleum products must comply with the Petroleum Act, 1934, and the Petroleum Rules, 2002. These regulations require a storage licence from the Chief Controller of Explosives (PESO, now known as the Petroleum and Explosives Safety Organisation). The storage facility must meet specific safety standards for handling flammable materials. Environmental clearances from the Ministry of Environment, Forest and Climate Change may also be required depending on the scale of your operations.
If your business entity is not yet incorporated, a private limited company registration or public company registration provides the legal structure necessary for large-scale import operations involving high-value commodities like petroleum.
Customs Duty on Crude Oil Imports in India
The duty structure on crude oil has evolved over the years in response to global price fluctuations and domestic policy priorities. Crude petroleum oil falls under HSN Code 2709 in the Customs Tariff Schedule. The government applies a combination of Basic Customs Duty (BCD), Social Welfare Surcharge (SWS), and cess on crude oil imports.
Currently, the effective customs duty structure for crude oil and major petroleum products is as follows:
Note: Crude oil and petroleum products are currently exempt from Special Additional Duty (SAD). IGST is also not levied on crude petroleum imports at present, as petroleum products remain outside the GST framework. However, the Oil Industry Development Cess (OIDC) applies to domestically produced crude oil and not on imports. These rates are subject to periodic revisions through budget announcements and government notifications.
Step-by-Step Petroleum Import Procedure
The process of importing crude oil into India is tightly regulated and involves coordination across multiple government departments. Here is the sequential procedure that authorised entities follow:
Step 1: Secure all mandatory registrations. Obtain your IEC from DGFT, register on ICEGATE, complete AD Code registration with your bank, and acquire the petroleum storage licence from PESO.
Step 2: Enter into term contracts or spot purchases. Most crude oil imports happen through long-term supply agreements with oil-producing nations or through spot market purchases. Indian PSUs typically issue tenders through their procurement portals. For instance, Indian Oil Corporation maintains a registered supplier list for crude oil and petroleum products.
Step 3: Arrange shipping and marine insurance. Crude oil is transported via Very Large Crude Carriers (VLCCs) or Suezmax tankers. Marine transit insurance is critical given the high value of each consignment, often running into hundreds of crores. The Incoterms commonly used are CIF (Cost, Insurance, Freight) and FOB (Free on Board).
Step 4: Obtain pre-shipment inspection and quality certification. The crude oil must meet the quality specifications agreed upon in the purchase contract. An independent surveyor typically inspects the cargo at the loading port and issues certificates for quality, quantity, and origin.
Step 5: File the Bill of Entry on ICEGATE. Once the vessel arrives at an Indian port, file the Bill of Entry electronically through the ICEGATE portal. Attach all supporting documents, including the commercial invoice, bill of lading, insurance policy, quality certificate, and certificate of origin.
Step 6: Customs assessment and duty payment. The customs officer assesses the consignment based on the declared value, applicable tariff rates, and any exemption notifications. Pay the BCD, SWS, and any applicable cess through the electronic payment facility linked to your ICEGATE account.
Step 7: Discharge and storage. After customs clearance, the crude oil is discharged from the tanker into storage tanks at the port terminal or pipeline-connected refinery. The storage facility must hold a valid petroleum storage licence issued under the Petroleum Rules.
Key Ports for Crude Oil Import in India
India's crude oil imports are handled through a network of specialised port terminals equipped with deep-water berthing, single-point mooring (SPM) facilities, and pipeline connectivity to refineries. The major ports handling crude oil consignments include Vadinar (Gujarat), Mundra (Gujarat), Jamnagar (Gujarat), Paradip (Odisha), Visakhapatnam (Andhra Pradesh), Mangalore (Karnataka), Kochi (Kerala), and Mumbai Port/JNPT (Maharashtra). Gujarat alone accounts for a significant share of total crude imports due to the concentration of refining capacity in the state, including Reliance's Jamnagar refinery, the world's largest single-location refinery complex.
Selecting the right port depends on factors such as proximity to your refinery, draught requirements for large vessels, storage infrastructure availability, and pipeline connectivity. Working with an experienced customs broker at your chosen port can significantly reduce clearance timelines and compliance risks.
Compliance and Regulatory Oversight
Crude oil imports attract attention from multiple regulatory bodies. The CBIC oversees customs compliance, while the Petroleum and Explosives Safety Organisation monitors storage and handling safety standards. The Directorate General of Hydrocarbons (DGH) under the Ministry of Petroleum tracks production and import data. The RBI regulates foreign exchange outflows related to crude purchases.
Any misrepresentation of quantity, quality, or value in customs declarations can lead to severe penalties under the Customs Act, 1962, including confiscation of goods and prosecution. Importers must also comply with environmental norms for oil handling and spill prevention, as mandated by the Central Pollution Control Board (CPCB) and state-level agencies. Maintaining meticulous records of every transaction, filing timely GST returns, and engaging qualified professionals for regulatory compliance are essential practices for anyone operating in this sector.
