Diesel Demand Grows 2 Per Cent In FY25, Marking The Slowest Rise Since The Pandemic

Diesel, which plays a vital role in powering transport vehicles, farm equipment, and heavy-duty logistics, accounts for nearly 40 per cent of India’s overall oil consumption.

In urban areas, cities like Delhi and Mumbai are aggressively deploying electric buses, while electric auto-rickshaws have become the norm in many tier-2 and tier-3 towns.

Source : PTI

India witnessed its slowest growth in diesel consumption since the pandemic during the fiscal year ending March 31, 2025. According to provisional data from the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Oil, diesel usage rose just 2 per cent to 91.4 million tonnes in the 2024-25 fiscal year (FY25). This marked a continued deceleration compared to a 4.3 per cent increase in 2023-24 and a robust 12.1 per cent growth in 2022-23.

Diesel, which plays a vital role in powering transport vehicles, farm equipment, and heavy-duty logistics, accounts for nearly 40 per cent of India’s overall oil consumption, reported PTI.

However, the once-dependable growth trajectory of diesel appears to be flattening, driven not just by a slower economic pace but also by the increasing adoption of cleaner alternatives.

Commercial EV Adoption Begins to Dent Diesel Growth

Industry officials point out that while diesel still fuels around three-fourths of India’s transport sector, its dominance is being quietly eroded by the rapid rollout of electric vehicles (EVs), particularly in commercial fleets. In urban areas, cities like Delhi and Mumbai are aggressively deploying electric buses, while electric auto-rickshaws have become the norm in many tier-2 and tier-3 towns. This shift is directly curbing diesel usage in the public transport segment.

Logistics companies are also rethinking their energy mix. Major e-commerce players such as Amazon, Flipkart, and BigBasket are transitioning their delivery vehicles—especially light commercial vans—from diesel to electric, further pressuring diesel demand growth.

Mixed Trends In Broader Fuel Consumption

In contrast to diesel, petrol consumption grew at a steady rate of 7.5 per cent, reaching 40 million tonnes. Liquefied Petroleum Gas (LPG) demand also saw a 5.6 per cent rise to 31.32 million tonnes during the period under review. Jet fuel consumption, reflecting a resurgence in air travel, jumped nearly 9 per cent to around 9 million tonnes.

Industrial fuels presented a mixed picture. Naphtha demand declined by 4.8 per cent to 13.15 million tonnes, and bitumen usage fell 5.4 per cent to 8.33 million tonnes. Fuel oil consumption was slightly lower at 6.45 million tonnes, down nearly 1 per cent. On the other hand, petroleum coke usage increased by 8.6 per cent, and demand for lubricants and greases rose sharply by 12.3 per cent.

Oil Demand Forecasts Show Modest Recovery

Overall petroleum product consumption for 2024-25 stood at 239.171 million tonnes. This was a weaker performance compared to the 5 per cent growth recorded in 2023-24, 10.6 per cent in 2022-23, and 3.8 per cent in 2021-22. Excluding the pandemic-hit years of 2019-20 and 2020-21, this represents the slowest growth in a decade.

Looking ahead, PPAC  projected a 5.7 per cent increase in total oil consumption for the current fiscal year starting April 1, with diesel demand expected to rise by 3 per cent to 94.1 million tonnes and petrol consumption projected to grow by 6.5 per cent to 42.63 million tonnes.