Introduction
- India is considered relatively resilient to global energy shocks due to diversified energy sources and policy buffers.
- However, its high dependence on imported hydrocarbons (≈85% crude oil, ~50% gas) exposes it to external vulnerabilities.
Sources of Structural Resilience
Diversified Energy Mix
- Increasing share of renewables (~45% of installed capacity, 2025) reduces reliance on fossil fuels.
- Initiatives like National Solar Mission and Green Hydrogen Mission enhance long-term security.
Strategic Policy Interventions
- Strategic Petroleum Reserves (SPR) provide short-term supply cushioning.
- Flexible crude sourcing (Russia, Middle East, US) mitigates geopolitical risks.
Domestic Demand Management
- Energy efficiency programs like UJALA (LED) and PAT Scheme reduce consumption intensity.
Refining and Export Capacity
- India’s strong refining sector allows export of petroleum products, partially offsetting import costs.
Continuing Vulnerabilities
High Import Dependence
- India imports majority of crude oil, making it vulnerable to price volatility and supply disruptions (e.g., Ukraine war).
Current Account and Fiscal Pressure
- Rising oil prices widen CAD and increase subsidy burdens, affecting macroeconomic stability.
Limited Domestic Production
- Stagnant output despite policies like HELP (Hydrocarbon Exploration and Licensing Policy).
Energy Transition Constraints
- Coal still dominates electricity generation (~70%), and renewables face intermittency and storage issues.
Geopolitical Risks
- Heavy reliance on politically volatile regions like the Middle East.
Way Forward
Accelerate Energy Transition
- Scale up renewables, storage technologies, and green hydrogen.
Enhance Domestic Exploration
- Improve ease of doing business in upstream sector.
Diversification of Imports
- Expand supplier base and long-term contracts.
Strengthen Energy Diplomacy
- Leverage platforms like International Solar Alliance (ISA).
Promote Electrification
- EV adoption to reduce oil dependence in transport sector.
Conclusion
- India’s resilience is relative, not absolute; while policy buffers and diversification provide stability, deep structural dependence on hydrocarbon imports continues to pose significant economic and strategic risks.