How India balances energy security with a clean transition amid global risks

While West Asia remains at war and volatile, India has successfully utilised high-level diplomacy with Iran to secure safe passage for its oil and LPG tankers through the tense Strait of Hormuz, maintaining critical energy supplies. But India continues to be heavily dependent on imported petroleum, which is also crucial for its economic rise.

India is the world's third-largest oil consumer and importer, with over 85 per cent dependence on imported crude oil and 55 per cent for natural gas. Consumption is rising, with 21.05 MMT petroleum products used in January 2026, up 2.5 per cent year-on-year, driven by transport and industrial demand. Russia has emerged as the top supplier with nearly 40 per cent of imports, followed by Iraq and Saudi Arabia and diversified procurement covering over 40 countries. Average consumption for the April-January financial year (FY) 26 was roughly 5.43 million barrels per day (bpd).

More from Opinion

India is a major refining hub with capacity reaching roughly 258 million metric tonnes per annum (MMTPA) as of FY25. Petroleum products are used mostly in transportation (road/rail), aviation, petrochemicals, and cooking (LPG). To secure supply, India has reduced reliance on the Strait of Hormuz, with roughly 70 per cent of crude imported via alternative routes. Indian refiners are investing heavily to increase refining capacity by approximately 309.5 MMTPA by 2028–2030.

India’s key growth drivers are rapid urbanisation, industrialisation, and electric mobility, which are driving electricity demand. As of early 2026, India’s energy mix is dominated by coal but is shifting rapidly toward renewables. Total power capacity has exceeded 476 GW, with non-fossil sources (renewables and nuclear) making up nearly 49 per cent of the mix, driven by significant solar and wind growth. As part of a strategic shift, India is investing heavily in green hydrogen and biofuel to reduce its massive fossil fuel import bill by 2030. India has pledged to achieve net-zero emissions by 2070. There is a need to expand non-fossil sources of energy and especially reduce petroleum dependence.

Key Components of India’s Energy Mix

As of January 31, 2026, India’s total installed electricity generation capacity reached approximately 520.5 GW. Non-fossil fuel sources generate 271.97 GW (52.3 per cent), of which solar, wind, and large hydro account for 50.6 per cent and nuclear 3.1 per cent. Fossil fuel sources generate 248.54 GW (47.7 per cent). Coal (thermal) remains the primary energy source for electricity generation, with solar energy being the fastest-growing source, exceeding 130 GW by late 2025. Oil and gas comprise about 30 per cent of the energy mix, used predominantly in transport and industry. Nuclear provides a small, stable, low-carbon contribution. Nuclear power capacity has been increasing. India aims to have 500 GW of non-fossil fuel capacity by 2030.

Global Energy Mix

The global energy mix is also currently dominated by fossil fuels, which account for roughly 80 per cent of primary energy consumption, comprising oil (31-33 per cent), coal (26-27 per cent), and natural gas (23-24 per cent). While renewables, including wind and solar, are growing rapidly, accounting for 38 per cent of demand growth, fossil fuels remain central to global supply, heavily driven by coal consumption in Asia (China and India). In electricity alone, coal leads (35.5 per cent), followed by natural gas (22.1 per cent), hydropower (14.6 per cent), and nuclear (9.1 per cent).

While renewable adoption is increasing, the global energy transition from fossil fuels is a slow, multi-decadal process. In 2024, renewable energy consumption grew by 8 per cent, with China responsible for more growth than the rest of the world combined. Global energy demand soared in 2024 by 4.3 per cent, fuelled by AI and data centres, air conditioning, and industrial growth.

Major Oil and Gas Producers and Importers

The United States, Saudi Arabia, and Russia are the world's leading oil and gas producers. The US leads in crude oil (over 13 million bbl/day) and total petroleum liquids driven by shale, while Russia and Iran hold massive natural gas reserves. Saudi Arabia is a leading Opec producer with massive, low-cost reserves. Other top producers include Canada, a significant producer with large oil reserves. China, Iraq, Iran, the UAE, Brazil, and Norway are other large producers.

Venezuela holds the largest proven oil reserves, followed by Saudi Arabia. Russia consistently ranks among the highest in natural gas production. The US is a major natural gas producer, particularly from shale. Iran holds vast, underutilised natural gas reserves. Qatar is a leading LNG exporter and producer. Canada and Algeria are significant natural gas contributors. North America and the Middle East produce nearly 60 per cent of the world's oil.

Major Oil and Gas Consumers and Importers

The US, China, and India are the world's largest consumers of oil and gas, together driving a significant portion of global demand. These nations account for over 60 per cent of total global consumption, with demand focusing heavily on petroleum products like diesel, gasoline, and liquefied petroleum gas (LPG). The US consumes nearly 20 million barrels per day (mbpd), representing roughly 18.7 per cent of global consumption. China 16.4 mbpd (16.1 per cent), India 5.6 mbpd (5.5 per cent), Saudi Arabia 94.0 mbpd (3.9 per cent), Russia 3.8 mbpd (3.8 per cent of total) and Japan 3.2 mbpd (3.2 per cent).

Oil and gas are used for transportation, plastic production and manufacturing, power generation and fertilisers. China is the world’s top crude oil importer, followed by Europe and the United States. India is the third-largest consumer and a major importer, heavily reliant on Russia, Iraq, Saudi Arabia, the UAE, and the US. For LNG (natural gas), top importers include China (76.5 billion kg), the European Union (72.7), Japan (65.8), South Korea (46.3), and India (27.7 billion kg).

India's oil imports were over $140 billion in FY25. Crude oil imports reached 244 million tonnes in FY25, while natural gas imports were around 31.80 billion cubic metres (BCM). Crude oil imports are increasing by 5.43 per cent year-on-year. India imports about 60 per cent of its LPG requirements, which accounted for 40 per cent of all petroleum product imports by volume in 2024-25. Due to geopolitical tensions in the Middle East, India has increased its non-Hormuz sourcing, with 70 per cent of crude imports now routed outside the Strait of Hormuz. India's oil demand is projected to reach 11 mbpd by 2045.

Major Global Users of Coal

China is the world's largest coal user, consuming around 56 per cent of the global total, primarily for electricity generation and steel production. Together with India (14 per cent), the US (5 per cent), Indonesia (3 per cent), and Japan (2.5 per cent), these nations dominate global consumption and demand, largely driven by industrial growth. The US primarily uses coal for electricity (approx. 91.7 per cent of its domestic consumption).

The leaders in coal production (million tonnes) are China (4,780), India (1,085), Indonesia (836), the US (464), Russia (427), and Australia (462). Despite high production, India remains a top importer for coking coal and high-grade thermal coal to meet industrial demand for steel and power plants. Albeit, India's coal imports in FY 2024-25 decreased by 7.9 per cent largely due to rising domestic production. Indonesia, Australia, and Russia are primary sources of India’s imports. The Indian government is encouraging domestic production through commercial mining and “Mission Coking Coal” to reduce non-essential imports. The goal is to maximise domestic production to 1.5 billion tonnes (BT) by 2029-30. The Coal Logistics Plan was implemented in Feb 2024 to improve the distribution and transportation of domestic coal.

Major Global Oil Chokepoints

Major global oil chokepoints are narrow, strategic maritime channels through which significant volumes of oil are transported, with the Strait of Hormuz, Malacca, the Suez Canal, and Bab el-Mandeb being the most critical. These routes carry over 90 per cent of global maritime oil trade, making them vulnerable to geopolitical instability and supply chain disruptions.

The Strait of Hormuz has over 20-25 per cent of global petroleum liquids (approx. 25 mbpd) passing through from the Persian Gulf. The Strait of Malacca, the busiest route connecting the Indian Ocean to the Pacific, also transits nearly 25 mbpd, critical for Asian oil imports. The Suez Canal and Sumed (Suez-Mediterranean) Pipeline connect the Red Sea to the Mediterranean, acting as a key route for Middle East oil to Europe and North America (6 mbpd). The Sumed pipeline is a strategic 320-km petroleum conduit in Egypt, running from Ain Sokhna on the Red Sea to Sidi Kerir on the Mediterranean.

With a capacity of roughly 2.5 mbpd, it acts as a crucial, secure alternative to the Suez Canal. Bab el-Mandeb, a chokepoint between Yemen and Djibouti/Eritrea, acts as the gateway to the Suez Canal and has recently been heavily impacted by shipping security threats. The Turkish Straits (Bosporus & Dardanelles) are vital for transporting oil from the Black Sea to the Mediterranean (4 mbpd). Danish Straits for Russian oil leaving the Baltic Sea (6 mbpd). Panama Canal for US oil shipments to Asia (2.5 mbpd). These bottlenecks are sensitive to regional conflicts, piracy, and closures. Increased tensions in the Middle East (Hormuz) or Houthi attacks (Red Sea/Bab el-Mandeb) can trigger significant price surges.

Of most immediate concern for India are the Strait of Hormuz for oil and gas imports and the Bab al-Mandab Strait for exports. The Russian oil tankers pass through the Malacca Strait very close to India’s Andaman and Nicobar Islands. The Indian Navy is in a position to dominate or influence both the critical chokepoints.

India’s Solar and Wind Power

India has rapidly scaled its solar and wind power capacity, ranking among the top global leaders in renewable energy. As of late 2025, India's solar installed capacity reached over 132 GW, while wind power exceeded 54 GW. This surge, driven by projects in Rajasthan and Gujarat, has made non-fossil fuel sources account for over 50% of the total installed capacity. India's onshore wind power tariffs, determined by competitive bidding through SECI, have stabilised around ₹3.40 - ₹3.97/kWh for certain projects.

India added nearly 35 GW of solar capacity in 2025. Wind capacity potential is over 1,163 GW. India currently ranks 3rd in global solar capacity and 4th in wind power. India's solar PV module manufacturing capacity has experienced exponential growth, reaching roughly 162 GW by early 2026, up from just 2.3 GW in 2014. Driven by Production Linked Incentives (PLI) and the ALMM list, the capacity is projected to exceed 200 GW by FY28. Solar and wind are treated as “must-run” to support base load, reducing reliance on coal. Schemes like the PM Surya Ghar, Muft Bijli Yojana (for rooftop solar) and 100 per cent Foreign Direct Investment (FDI) under the automatic route are accelerating growth.

India’s Hydropower Capacity and Challenges

As of mid-2025, India's total installed hydropower capacity is over 54 GW, including large hydro (approx. 49.62 GW) and small hydro (approx. 5.11 GW). The sector accounts for roughly 11-12 per cent of total utility power generation capacity, with significant potential remaining in the Himalayan region. There is an estimated 148 GW of exploitable, large-scale hydro, with only around 29 per cent developed. Approximately 15 GW of additional hydro capacity is currently under construction. Hydropower is heavily concentrated in Northern and Northeastern India, particularly in Himachal Pradesh, Uttarakhand, Sikkim, Arunachal Pradesh, and Jammu and Kashmir. Capacity is expected to increase to 67 GW by 2031-32. Over 90 per cent of hydroelectricity is generated by public sector companies like NHPC, SJVNL, and NEEPCO.

Pumped Storage Projects (PSPs), known as "water batteries", have 8 operating plants (4.7 GW) and a high focus on new developments (63 sites identified) to support grid stability alongside solar energy.

India's hydropower sector faces significant challenges, including slow capacity addition due to geological surprises, environmental concerns in the fragile Himalayas, and high project costs. Vulnerability to climate-driven erratic rainfall (which caused a 16.3 per cent output drop in FY24), intense seismic risks in the Himalayan region, and financial distress among power distribution companies (discoms).

Over 59 per cent of India's potential lies in seismically active zones IV and V, leading to risks of landslides, floods, and earthquakes (Uttarakhand, Sikkim). Projects, particularly in the Himalayas, face opposition due to deforestation, biodiversity loss, involuntary displacement of local communities, and, in some cases, cultural/religious impacts. Hydropower projects are capital-intensive (₹70 million to ₹200 million per MW) with long gestation periods, often leading to cost overruns.

India’s Nuclear Power Capacity and Challenges

As of early 2026, India’s installed nuclear power capacity is 8.78 GW across 25 reactors. Recent additions include 700 MW PHWR units (KAPS - 3 & 4) in Gujarat, and more units under construction at Kudankulam (Tamil Nadu), Rajasthan, Haryana, and other locations. Nuclear energy contributes about 3.1 per cent to India's total electricity generation. India plans to increase this capacity to 22.3 GW by 2031-32. Through the Nuclear Energy Mission (NEM), India has set an ambitious goal to reach 100 GW by 2047, focusing on deploying both indigenous 700 MW Pressurised Heavy Water Reactors (PHWRs) and larger reactors with international cooperation.

India is launching an ambitious Nuclear Energy Mission with a ₹20,000 crore allocation in the 2025-26 budget to develop and deploy indigenous Small Modular Reactors (SMR). The plan aims to operationalise at least five SMRs by 2033 to support a net-zero 2070 goal, focusing on three designs: the 220 MWe Bharat Small Modular Reactor (BSMR), the 55 MWe SMR-55, and 5 MWth high-temperature reactors.

India's nuclear power expansion faces challenges primarily driven by high capital costs, lengthy project delays, and stringent liability laws deterring foreign investment. Key hurdles include land acquisition struggles, limited domestic uranium, public protests over safety, and competition from cheaper renewable energy sources.

India’s Strategic Oil Storage and Reserves

India maintains a strategic oil reserve of 74–77 days of demand, comprising 5.33 MMT in underground caverns (Phase I: Visakhapatnam, Mangaluru, Padur) and nearly 64.5 days held by oil marketing companies (IOCL, BPCL, HPCL). Managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a Special Purpose Vehicle (SPV) under India's Ministry of Petroleum and Natural Gas, this buffer guards against import disruptions.

The underground caverns are designed to be used during supply chain disruptions and are built to withstand natural disasters or external threats. India fills its existing SPRs to capacity during periods of low global prices. The Phase II expansion underway will add 6.5 MMT more at Chandikhol and Padur. Finally, India will have an 86-day reserve. The International Energy Agency (IEA) recommends 90 days of reserve; India is continuously working to bridge the gap between its current capacity and this target.

India’s Oil Diplomacy

The Iran conflict is another test of India’s petroleum diplomacy. The rupee's value has fallen, and the price of crude oil is scaling new heights almost on a daily basis. India has skilfully managed Trump tariffs and continued imports from Russia. India repatriated non-essential crew members of the Iranian warship IRIS Lavan, which has been docked in Kochi since March 4 due to technical issues amid the escalating Iran-US conflict. India has kept back channels open with Iran and managed a few oil- and gas-laden ships through the Hormuz. India is more readily importing oil and gas from the US.

West Asia has been a land of promise for Indians, both the rich and the not-so-rich. The latter mostly comprising a labour force that sends back home substantial remittances. India has maintained very good relations with all the oil-rich nations in the Gulf.

Iran is a full member of Brics. India assumed the Brics presidency on January 1, 2026. Brics is often seen as an anti-US platform. India had till now stood up against a de-dollarisation move, which other countries like China, Russia, and Iran were keen on. Russia also looks to Iran as the key connector for the 7,200 km multi-modal International North-South Transport Corridor (INSTC) that would connect India, Iran, Russia, and Central Asia. India would have to continue diplomatic balancing in West Asia.

The Right Energy Mix Strategy for India

Oil is expected to maintain a share of around 28 per cent, with natural gas rising towards the target of 15 per cent by 2030 (presently around 6–7 per cent). India's energy mix strategy is currently navigating a "decarbonisation paradox", balancing the urgent need for a low-carbon transition with the necessity of fuelling rapid economic growth.

As of early 2026, the strategy centres on an “all energies, all technologies” approach, utilising record renewable energy growth alongside a necessary, yet managed, reliance on coal to ensure grid stability and base-load demand, aiming for net-zero emissions by 2070.

India is in for a massive renewable energy expansion with an ambitious target of 500 GW of non-fossil capacity by 2030. Non-fossil sources already contribute over 50 per cent of the total installed electricity capacity. Solar energy is the primary driver, growing at a 36.5 per cent CAGR, supported by initiatives like PM Surya Ghar (rooftop solar for 1 crore households).

Despite the renewable surge, coal remains central to India’s energy security, ensuring grid stability amid rising energy demand. The strategy involves flexing existing coal plants, lowering their minimum loads to 40 per cent to accommodate variable solar/wind, and upgrading ageing units (38.1 GW planned by 2033).

The National Green Hydrogen Mission (NGHM) is considered a game-changer and targets 5 MMT of production by 2030, aiming to decarbonise hard-to-abate sectors like steel, fertilisers, and refining.

To achieve 24/7 clean power, the strategy promotes nuclear expansion, aiming for 22.38 GW by 2031–32 and a long-term goal of 100 GW by 2047, supported by the new SHANTI Act, 2025, which allows limited private sector participation. Pumped Hydro Storage (PSP), a mature, large-scale, long-duration energy storage technology that balances power grids by acting as a giant “water battery", is being driven.

Decarbonising transport involves targeting 30 per cent EV sales by 2030 through schemes like FAME and PM E-Drive, alongside promoting 20 per cent ethanol blending (E20) in petrol by 2025–26.

Grid modernisation through the India Energy Stack (IES) initiative is being developed as a Digital Public Infrastructure (DPI) to integrate distributed renewable assets and manage the high variability of a solar-led grid. A ₹24,000 crore PLI outlay is strengthening domestic manufacturing of high-efficiency solar modules and battery storage to reduce import dependency (China). India is focusing on creating transnational grids (OSOWOG – One Sun, One World, One Grid) to facilitate the export of surplus renewable power.

There are challenges. State-owned distribution companies (Discoms) face high outstanding dues, affecting their ability to pay renewable energy developers promptly. Rapidly adding 500 GW of renewables requires enormous investment and expansion in transmission infrastructure to prevent underutilisation of green power. Large-scale solar and wind parks face challenges in land acquisition and environmental clearances, delaying project commissioning. India has to cater for huge power demands of AI and data centres.

The “right strategy” for India is a balanced, multi-layered approach that prioritises immediate energy access and security while aggressively building a future-ready, low-carbon infrastructure.

(The writer is former Director General, Centre for Air Power Studies. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)