Recent disruptions around critical energy chokepoints have exposed the fragility of global fossil fuel systems. For energy-importing countries like India, the Iran war is a recurring reminder of how fossil fuel dependence transmits supply risk and economic volatility. At the same time, it reinforces the case for faster investment in resilient and domestically anchored clean energy systems.
A substantial share of India’s crude oil, LPG and natural gas imports passes through maritime chokepoints such as the Strait of Hormuz. While recent energy shocks have pushed India, like many other energy-importing economies, to diversify fuel sourcing, the underlying challenge runs deeper than supply diversification alone.
Diversifying supplies may reduce short-term risk, but it does not reduce exposure to volatile fuel prices and vulnerable maritime routes. The scale of India’s import dependence amplifies these vulnerabilities. The country imports over 85% of its crude oil, with an import bill exceeding $137 billion in the financial year 2024-25. Every $10 increase in crude oil prices adds roughly $13-$14 billion to India’s import bill, directly impacting current account and currency stability.
This dependence extends beyond crude oil. India imports around 50% of its natural gas, nearly 20% of its thermal coal, and over 95% of the coking coal used in steel production. For India, this means energy imports are not just an economic cost, but a recurring source of inflation, industrial cost pressures, fiscal strain and currency volatility. India is not just importing energy; it is importing volatility.
India’s near-term response is pragmatic. Diversifying crude sourcing, managing prices and maintaining thermal power generation are short-term system stabilisers. But these are not structural solutions. Fossil fuel supplies, no matter how diversified, must still move through fragile global networks.
Recent demand-side measures from the Prime Minister’s Office, including calls for fuel conservation and faster adoption of EVs, reflect growing recognition that long-term energy security requires not only supply diversification but also the reduction of structural dependence on imported fuels.
This moment therefore is not just an energy crisis, but a structural signal to redesign India’s energy architecture. Energy security is no longer defined by securing more fuel but must reduce dependence on volatile fossil fuel systems and build a domestically anchored clean energy supply. Increasingly, energy security and energy transitions are linked policy imperatives.
Clean energy transitions as an economic opportunity
This shift opens a strategic economic opportunity for India: replacing imported fuels with domestic, scalable alternatives across sectors, turning vulnerability into competitiveness.
Heavy industry presents one of India’s largest transition opportunities. Steel production, currently around 168 million tonnes annually and expected to grow, remains heavily reliant on imported coking coal. At the same time, annual urea production of around 25–30 million tonnes depends substantially on imported natural gas. Together, these sectors illustrate how fossil fuel dependence is embedded within India’s industrial systems.
Beyond steel and fertilisers, wider industrial electrification offers a major opportunity to reduce fossil fuel dependence across the economy. Nearly 50% of industrial final energy consumption is used for heat, much of it still fossil fuel-based. Expanding electrification, heat pumps and thermal storage can reduce import dependence while improving competitiveness. In hard-to-abate sectors, green hydrogen and green ammonia powered by India’s low-cost renewables can reduce reliance on imported fuels and support globally tradable clean industrial products.
Over time, these solutions can lower exposure to global price volatility, strengthen energy security and support domestic clean industrial development under India’s Make in India ambition. They also position India to compete in emerging clean industrial markets shaped by decarbonisation pressures and shifting global supply chains.
India’s power sector economics is already shifting. Renewables backed by storage are increasingly competitive with new coal when fuel, transport and wider system costs are considered. Coal will play a near-term stabilising role, but long-term energy security and competitiveness will depend on clean energy systems. The global energy conversation is moving from ambition to implementation, with a growing set of countries now focusing on how to reduce structural reliance on fossil fuels. Across Asia, this shift is already beginning to influence financing, industrial strategies and investment decisions. Countries are increasingly linking energy security with a clean industrial transition.
The question is no longer whether this transition will happen, but how quickly India can scale it. Rather than following a global template, with strong momentum in renewables, green manufacturing and electrification, India can shape its own pathway linking energy security, industrial competitiveness and long-term resilience.
The current crisis is a strategic window to build a more secure, competitive and self-reliant economy. This is why timing matters now.
