That will bolster India's position as a swing supplier of refined products in an already tight global market buffeted by the US-Iran and Ukraine-Russia wars that have disrupted trade flows and boosted freight rates worldwide.
"We will be in a happy situation of not only refining for ourselves but for the world," said Oil Minister Hardeep Singh Puri.
India is becoming a global refining hub as it prepares to boost refining capacity to 300 million tons per year by 2030, and increasing further to 400 million tpy later.
Amid unprecedented disruption to global refining from conflict and plant closures, with operating refineries running at historic utilisation rates to ease fuel shortages, India has emerged as the second-largest exporter of seaborne diesel this year, behind only the US, ship-tracking data from Kpler shows.
In 2027, Indian state refiners will together increase their diesel production capacity by 16.5 million tons as they boost capacity of existing refineries, officials said.
"We will be exporting diesel due to refinery expansion," said A S Sahney, chairman of Indian Oil Corp, the country's largest refiner, which aims to add about 18 million tons of annual capacity, to produce about 8 million tpy of additional diesel.
Hindustan Petroleum Corp's new 9-million-tpy refinery in the western state of Rajasthan will turn out 3 million tpy of diesel next year, once the refinery stabilises, said Chairman Vikas Kaushal.
Bharat Petroleum Corp plans to produce 1.5 million tpy extra diesel from next year, its chairman, Sanjay Khanna, said.
Oil India's subsidiary Numaligarh refinery in the eastern region, which will be expanded to 9 million tpy in March next year, will add 3 million tpy of diesel production.
Some refiners, such as HPCL, buy refined products from private companies for sale by their retail outlets. The expansion will limit their purchases from other companies for local sales, and free up volumes for exports, officials said.
Additionally, India's expanding refining capacity is designed to process a broad range of crude grades and flexible petrochemical feedstocks, letting companies capitalise on price arbitrage and produce higher-value products.
Private refiners Reliance and Nayara now export refined fuels while state companies mainly meet domestic demand.
US Secretary of State Marco Rubio described India as a refining "superpower" during a recent visit to Reliance's massive refining complex in the port city of Jamnagar.
Puri said India aimed to become a global refining hub with fuel demand expected to rise to drive its economic expansion.
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