NEW DELHI — Prime Minister Narendra Modi told investors at an energy‑investment conference on Tuesday that India will continue to add to its oil‑refining capacity despite a “shut‑down” of new projects in Europe and North America, according to a report carried by Google News India from investingLive.
The remarks came as global refiners grapple with shifting demand patterns, tighter environmental regulations and the lingering effects of the COVID‑19 pandemic on fuel consumption. Modi said the move is driven by “rising domestic demand” and the need to bolster “energy security,” positioning India as a potential hub for refined petroleum products in the coming decade.
What happened
During a session focused on energy investments, Modi highlighted that while Western countries are “reducing their refining capacity,” Asian economies, led by India, are “moving forward with new projects.” He did not disclose specific capacity targets, timelines or the identities of the firms involved. The investingLive summary of his remarks, which was the sole source for this report, noted that the Prime Minister framed the expansion as a response to both domestic consumption growth and the broader geopolitical realignment of fuel supply chains.
Why it matters
If India follows through on expanding its refining base, the country could shift from being a net importer of refined petroleum to a regional exporter, altering trade balances and potentially reducing the strategic vulnerability that comes with reliance on overseas fuel imports. The International Energy Agency (IEA) projects that South Asia’s oil demand will rise by roughly 1.5 million barrels per day (bpd) per year through 2030, outpacing growth in many mature markets. An expanded Indian refining sector could capture a share of that demand, as well as serve neighboring markets such as Bangladesh, Nepal and Sri Lanka.
For Western refiners, the reported “shut‑down” reflects a broader trend of de‑investment in new capacity. Analysts have pointed to stricter emissions standards, the accelerating transition to electric vehicles and the lingering impact of the 2020‑21 pandemic‑induced demand slump as factors curbing new refinery projects in Europe and North America. If India steps into the vacuum, it could attract foreign capital seeking higher returns in a growth market, while also reshaping global fuel logistics.
Background and context
India’s refining capacity has grown steadily over the past decade. According to the Ministry of Petroleum and Natural Gas, the country’s total installed capacity stood at about 5.5 million bpd in 2023, making it the world’s third‑largest refiner after the United States and China. Existing complexes such as Jamnagar (Reliance Industries), Vadinar (Reliance), and the upcoming Paradip (Indian Oil Corp.) have already positioned the nation as a major player in the global fuel market.
Domestically, India’s per‑capita fuel consumption remains low compared to the global average, leaving room for growth as incomes rise and vehicle ownership expands. The government’s “Make in India” initiative has also encouraged domestic manufacturing of petrochemical products, many of which rely on refined feedstocks.
In contrast, Western refiners have faced a wave of closures and deferred projects. In 2022, the United Kingdom announced the shutdown of the Humber and Grangemouth refineries, citing unprofitable margins and a shift toward greener energy. The United States, while still expanding capacity in some Gulf Coast locations, has seen several Midwest projects stalled due to market uncertainty and environmental opposition.
Competing claims and uncertainty
The investingLive report did not provide concrete data on the scale of India’s planned expansion, nor did it cite any official government documents or industry filings. Without such details, the precise magnitude of the capacity increase remains unclear. Critics have warned that rapid expansion could exacerbate air‑quality concerns, especially in industrial corridors where refineries already operate near pollution thresholds.
Environmental groups have also questioned the long‑term viability of investing heavily in fossil‑fuel infrastructure amid global decarbonisation pledges. The United Nations Framework Convention on Climate Change (UNFCCC) has urged nations to limit new fossil‑fuel projects to align with the Paris Agreement’s 1.5 °C target. India, while a signatory, has pledged to increase the share of renewable energy to 50 % of its installed capacity by 2030, creating a policy tension between expanding oil refining and meeting climate goals.
Industry insiders point out that the profitability of new refineries will hinge on crude‑oil price volatility, the availability of low‑sulphur feedstock, and the ability to meet increasingly stringent product specifications. A 2023 report by the Energy and Resources Institute (TERI) warned that without robust downstream demand, new capacity could become under‑utilised, leading to stranded assets.
What to watch next
Stakeholders will be monitoring several developments for clues about the scale and timing of India’s refining push:
1. Policy announcements – The Ministry of Petroleum and Natural Gas is expected to release a detailed roadmap later this year, potentially outlining capacity targets, incentives and environmental safeguards.
2. Project pipelines – Companies such as Reliance Industries, Indian Oil Corp., Hindustan Petroleum and private players like Adani Group have hinted at new or expanded refineries. Formal project approvals, land‑acquisition updates and financing agreements will signal the seriousness of the expansion.
3. Regulatory reviews – The Ministry of Environment, Forest and Climate Change must clear any new refinery projects under the Environmental Impact Assessment (EIA) framework. Public hearings and court challenges could affect timelines.
4. Market signals – Crude‑oil price trends, global refining margins and the pace of electric‑vehicle adoption in India will influence the economic case for new capacity.
5. International response – Western oil majors with a presence in India, such as BP and Shell, may adjust their investment strategies based on the government’s stance, while trade partners could renegotiate fuel‑supply contracts.
Conclusion
Modi’s statement underscores a strategic pivot for India’s energy sector: a willingness to expand refining capacity while traditional refining hubs in the West pull back. The move could enhance India’s energy security, create jobs and position the country as a regional fuel supplier. Yet, the lack of concrete figures, the need to reconcile expansion with climate commitments, and the dependence on market conditions introduce significant uncertainty. As policy details emerge and project proposals solidify, analysts will be watching closely to see whether India can translate political intent into a sustainable, economically viable refining expansion.
Sources
– InvestingLive, “Modi says India to keep expanding refining as West shuts capacity,” Google News India, https://news.google.com/rss/articles/CBMiswFBVV95cUxNTjdxQkI2M1J2ZmxaeU8zQlBPRC1oUllvRlFHelJnTUlSRVdjMTIwMWE3aE1BYTdyd2drZk9RaEZBUkQxQmFILW1sR1lqLVQ2N0hCNVRnLVFqclQ5MVE0LTA0aUQ2dzJJWllZVjgxdTZWaWpPVlJfdFpGNkVjV0NyREtzdVQwZ0pXTkhYOF8zOE42UERiTDBoUXAwZkhKNkFWRjVNU3Rodl9NMkp4bHJpOWFMaw?oc=5
Story synopsis gathered from: Google News India — source
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