A fast-growing economy, rising global ambitions — yet nearly 90% dependent on imported oil. India’s energy story is not about scarcity, but structural vulnerability. Part I of V | The Energy Security Question India Can No Longer Ignore
This is Part I of a five-part series examining India’s energy dependence, structural gaps, and the road to energy sovereignty.
By Vivek Bhavsar, Editor-in-Chief of TheNews21
Mumbai: India today stands at an uncomfortable intersection. On one hand, it is the world’s fastest-growing major economy, positioning itself as a manufacturing hub, digital powerhouse and geopolitical player. On the other, it remains deeply dependent on forces it does not control — oil tankers crossing volatile waters, gas contracts negotiated thousands of kilometres away, and geopolitical decisions taken in capitals far removed from Delhi.
The contradiction is stark, and it is growing.
India imports close to 88–90 per cent of its crude oil requirement. Natural gas dependency has also steadily increased, with nearly half of domestic demand now met through imports in the form of Liquified Natural Gas (LNG). LPG imports have crossed 60 per cent, and a significant portion of this supply passes through the Strait of Hormuz — one of the most geopolitically sensitive choke points in the world. Every escalation in West Asia, every military conflict, every shipping disruption translates almost immediately into pressure on India’s economy.
The recent tensions involving Iran have once again exposed this fragility. Oil prices react first. Shipping insurance rises next. Then comes the cascading effect — rising input costs, pressure on the rupee, inflation concerns, and eventually, political and economic consequences back home.
Yet, the question that must be asked — and asked bluntly — is this: is India dependent because it has no resources, or because it has not built the systems to use what it has?
The answer lies somewhere in between, and it is not flattering.
India is not a resource-rich country in the way the Middle East is. It does not have vast, easily extractable crude reserves. But it is not empty either. The Krishna–Godavari basin, offshore fields, North-East reserves, coal abundance, and rapidly expanding renewable capacity together form a base that could have, over time, reduced dependence. That reduction has not happened at the required pace.
Instead, what we are witnessing is a widening gap between demand and domestic supply.
India’s oil consumption has been rising steadily, driven by urbanisation, mobility, infrastructure expansion and industrial growth. The country is now the third-largest oil consumer in the world. But domestic crude production has not kept pace. In fact, it has declined over the past decade. Government data itself shows a steady fall in output, largely due to ageing fields such as Mumbai High and lack of major new discoveries.
Gas tells a similar story. Domestic production has fluctuated, occasionally rising with new projects but unable to consistently match demand growth. The result is a structural reliance on imported LNG, exposing India to global price volatility. When global prices spike, sectors such as fertilisers, power and city gas distribution feel the impact immediately.
This is not merely an economic issue. It is a strategic one.
Japan, often cited as a benchmark for efficiency despite resource scarcity, imports energy because it has no alternative. India imports despite having alternatives that remain underdeveloped. That is a far more complex problem, because it reflects not just geology, but governance, policy continuity, investment climate, and long-term planning.
At the heart of India’s energy paradox is a simple imbalance: demand has grown faster than the country’s ability to build reliable domestic supply systems.
Part of this is structural. Exploration is risky, expensive and time-consuming. Deepwater drilling, such as in the KG basin, involves high capital costs and uncertain outcomes. Even when discoveries are made, translating them into steady production requires technology, pricing clarity and regulatory stability.
Part of it is policy-driven. For years, pricing controls, contractual disputes and regulatory delays discouraged aggressive exploration. Private investment remained cautious. Public sector companies continued to dominate, but with ageing assets and limited breakthrough discoveries, their ability to expand production remained constrained.
And part of it is strategic choice. India has deliberately diversified its import basket, buying oil from the Middle East, the United States, and more recently, Russia at discounted rates. This has helped manage costs and ensure supply continuity. But diversification does not eliminate dependence. It merely spreads the risk.
What is missing is a clearly articulated, long-term energy security doctrine that goes beyond immediate supply management.
Because the reality is uncomfortable: India’s growth story is being fuelled by energy it does not control.
Every refinery that runs, every truck that moves, every aircraft that flies, every fertiliser plant that operates — all of it depends, directly or indirectly, on external supply chains. And in a world that is becoming increasingly fragmented, this dependence is no longer just an economic vulnerability. It is a national security concern.
The solution does not lie in a single silver bullet. India cannot suddenly discover massive oil reserves. Nor can it replace fossil fuels overnight. But it can reduce vulnerability through a combination of steps — strengthening domestic exploration, improving recovery from existing fields, building larger strategic reserves, expanding gas infrastructure, and accelerating the shift towards alternative energy sources not just for climate reasons, but for strategic autonomy.
That transition, however, requires clarity of intent.
Because energy policy cannot remain a collection of schemes, targets and announcements. It must become a coherent national strategy that aligns economic growth with energy independence.
This is where the next phase of India’s story will be decided.
The question is not whether India can eliminate its dependence on imports. That is unrealistic in the foreseeable future. The real question is whether India can reduce its exposure to global shocks, build resilience into its energy system, and ensure that its growth is not held hostage by events beyond its borders.
That is the challenge. That is the opportunity.
And that is the paradox India must resolve.
(Part II: KG Basin — The Promise That Could Not Become Sovereignty | Coming Tomorrow)
(Vivek Bhavsar is Editor-in-Chief of TheNews21. He writes on power, policy and the structural risks shaping India’s economic and strategic future.)
