Why in News?
India’s energy security has come under renewed focus due to escalating geopolitical tensions in West Asia, which have exposed vulnerabilities in global energy supply chains and highlighted the risks associated with India’s heavy dependence on imported crude oil.
Introduction
Energy security refers to the uninterrupted availability of energy sources at affordable prices. Traditionally, the concept focused mainly on ensuring access to cheap fuel supplies. However, recent geopolitical conflicts and market disruptions have significantly broadened its meaning.
Today, energy security includes:
- resilience against supply disruptions,
- diversification of suppliers and transport routes,
- macroeconomic stability,
- strategic reserves,
- and secure access to critical minerals required for clean energy technologies.
For India, which imports more than 85% of its crude oil requirements, energy security has become a major strategic and economic concern.
Changing Nature of Energy Security
The global energy landscape has undergone significant transformation due to:
- geopolitical conflicts,
- trade disruptions,
- climate change concerns,
- and the ongoing energy transition.
The Russia-Ukraine War demonstrated the risks of overdependence on a single supplier. In response, Europe sharply reduced reliance on Russian gas and diversified towards LNG imports and alternative energy sources.
This marked a shift from an “efficiency-based” approach to an “insurance-based” approach, where countries prioritise resilience and supply security even at higher costs.
Impact of West Asia Conflict on India
The ongoing conflict in West Asia poses significant risks for India due to its dependence on maritime oil trade routes.
Importance of the Strait of Hormuz
The Strait of Hormuz is one of the world’s most important oil chokepoints, through which nearly one-fourth of global oil trade passes.
India imports around 45% of its crude oil through this route, making it highly vulnerable to:
- supply disruptions,
- shipping risks,
- and price spikes.
Any disruption in this region directly affects:
- fuel prices,
- inflation,
- fiscal stability,
- and economic growth.
Operational risks have also increased, as reflected during Operation Sankalp, where Indian naval escorts were provided to protect LPG carriers during heightened tensions.
India’s Growing Energy Demand
India is currently the world’s third-largest oil consumer, and its energy demand is expected to continue rising rapidly.
Projected Oil Demand
- Expected oil demand in 2025: 5.74 million barrels/day
- Expected oil demand in 2026: 5.99 million barrels/day
India’s demand growth is projected to surpass that of China, making India a key driver of global energy demand growth.
As demand in OECD countries declines, India’s energy consumption will become increasingly important for global energy markets.
Diversification of Energy Imports
India has adopted a flexible and diversified import strategy to reduce risks.
Rise in Russian Oil Imports
Following the Russia-Ukraine conflict:
- Russian oil imports increased from around 2% before 2022 to nearly 36% in FY2024-25.
This made Russia India’s largest crude supplier.
At the same time, India continues to import oil from:
- Iraq,
- Saudi Arabia,
- United Arab Emirates,
- and the United States.
This diversification strategy improves “optionality,” allowing India to switch suppliers depending on geopolitical and economic conditions.
Structural Challenges in India’s Energy Security
1. High Import Dependence
India’s crude oil import dependence reached nearly 89.4% in FY2024-25.
Low domestic production exposes India to:
- volatile global prices,
- exchange-rate fluctuations,
- and freight cost increases.
2. Geographic Constraints
Even with supplier diversification, maritime chokepoints such as the Strait of Hormuz remain unavoidable.
Thus, logistical and naval vulnerabilities continue to affect India’s strategic flexibility.
3. Risks from Energy Transition
The transition to renewable energy introduces new strategic challenges.
Clean energy technologies depend heavily on:
- lithium,
- cobalt,
- nickel,
- and rare earth minerals.
China currently dominates global rare-earth processing capacity, accounting for more than 90% in some segments.
India’s domestic processing capability remains limited and may meet less than 5% of projected requirements by 2035.
Thus, the energy transition may shift dependence from oil-exporting countries to mineral-processing economies.
Global Comparative Approaches
Several countries have adopted proactive strategies to strengthen energy security:
- China has secured long-term LNG contracts.
- Japan maintains strategic petroleum reserves covering around 254 days of consumption.
- South Korea has diversified oil routes to reduce chokepoint dependence.
These examples highlight the importance of long-term planning, stockpiling, and diversification.
Strategic Path Forward for India
To strengthen energy security, India must adopt a multi-dimensional strategy:
Expand Strategic Petroleum Reserves (SPR)
Larger reserves can provide protection against temporary supply disruptions and price shocks.
Reduce Oil Intensity
India must accelerate:
- electric vehicle adoption,
- public transport systems,
- and fuel-efficiency measures.
Enhance Maritime Security
Strengthening naval capabilities is essential to secure sea lanes and energy transport routes.
Develop Critical Mineral Ecosystem
India should invest in:
- domestic mining,
- refining capacity,
- recycling technologies,
- and overseas mineral partnerships.
Strengthen Supply Chain Resilience
Reducing dependence on any single supplier or country is critical for long-term stability.
Conclusion
Energy security has emerged as a central pillar of national security, economic stability, and strategic autonomy. In an increasingly conflict-prone and uncertain world, India must move beyond short-term price considerations toward a resilient and diversified energy framework. Balancing traditional energy security with clean energy transition goals will be crucial for ensuring sustainable economic growth and strategic independence in the coming decades.