India’s Dependency on Foreign Countries for Energy Sector

Context: India’s energy security faces risks due to overdependence on select countries like Russia, prompting diversification efforts through renewables, strategic partnerships, and domestic production to ensure long-term resilience.

India’s Dependency on Foreign Countries for Energy Sector

• Oil: India imports nearly 85% of its crude oil
  • Top suppliers:
    • Russia (~36% of India’s imports as of 2025)
    • Iraq, Saudi Arabia, UAE (traditional suppliers from West Asia)
  • Shift to Russia was driven by discounted crude post-Ukraine war.
• Natural Gas (LNG): Around 50% of India’s gas needs are met through imports.
  • Key suppliers: Qatar, U.S., Australia, Russia
• Coal: Despite being a major coal producer, India imports coal for quality and blending reasons.
  • Main sources: Indonesia, Australia, South Africa
• Renewables & Uranium: Uranium imports come from Kazakhstan, Canada, and Australia for nuclear power.

Current Vulnerabilities in Energy Security and Diversification

• Overdependence on a Few Countries: Russia has become a dominant supplier of oil — a single-point risk if U.S. imposes secondary sanctions.
• Geopolitical Volatility: West Asian instability, Russian sanctions, or U.S. trade policy shifts can disrupt energy flow or increase costs.
• Transport & Supply Chain Bottlenecks: Shipping lane tensions (e.g., Red Sea, Strait of Hormuz) can delay or reroute energy supplies.
• Price Volatility: Sudden geopolitical escalations can spike global crude prices and strain India’s import bill and Current Account Deficit (CAD).
• Slow Transition to Renewables: Although installed capacity has grown, actual grid penetration and storage solutions are lagging.

Steps Taken by India to Diversify Energy Sources

Strategic and Policy Interventions

• International Energy Partnerships:
  • Long-term LNG deals with Qatar and the U.S..
  • Strategic petroleum reserve (SPR) expansion.
  • Indian Oil’s diversification into Guyana, Brazil, and Africa.
• Mission Innovation 2.0: India co-leads this global alliance for clean energy R&D.

Renewable Energy Push

• National Solar Mission:
  • Target: 500 GW non-fossil capacity by 2030.
  • India now ranks among the top 5 countries in solar installation.
• Green Hydrogen Mission: Outlay of ₹19,744 crore to make India a global hub for green hydrogen.
• PLI schemes for Solar Modules and Battery Storage: Encouraging domestic manufacturing to reduce import dependence.
• Offshore Wind Policy, Bioenergy Program, Hydrogen Valley projects – rolled out to attract investment and scale up clean energy.

EV and Energy Efficiency Policies

• FAME II, Battery Swapping Policy, State EV policies to reduce oil usage in transport.
• Perform Achieve and Trade (PAT) scheme – improves industrial energy efficiency.

How India Can Further Diversify Its Energy Sources

• Geographical Diversification:
  • Widen oil sourcing: Strengthen ties with Latin America (Brazil, Venezuela), Africa (Nigeria, Angola), Southeast Asia (Malaysia).
  • More LNG terminals: Increase import capacity from Australia, Mozambique.
• Technological & Infrastructure Investments: Invest in energy storage technologies and smart grids.
  • Expand nuclear power capacity with safer, modular reactors (SMRs).
• Decentralized Renewable Projects: Promote rooftop solar, community-level bioenergy and microgrids, especially in rural areas.
• Regional Energy Integration: Tap cross-border energy trade with Nepal (hydro), Bhutan, and Bangladesh.
  • Build regional power markets in South Asia.
• Strategic Reserves Expansion: Increase Strategic Petroleum Reserves to buffer against sudden shocks.

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