India’s energy security endures ongoing tests from geopolitical conflicts, including the Russia-Ukraine war and tensions involving Iran. These events underscore the vulnerabilities of an economy reliant on 88-89% imported oil.
Surge in Import Dependence
Crude oil demand in India continues to rise while domestic production remains stagnant. Import dependence climbed from 83-85% in FY19-FY22 to 88.3% in FY25 and 88.6% in April-January FY26. Crude imports reached 206 million tonnes in the first ten months of FY26, compared to domestic output of 23.5 million tonnes. Self-sufficiency in petroleum products hovers at just 11-12%.
Shifts in Crude Sourcing
The Russia-Ukraine conflict reshaped import patterns. Russia’s share in India’s crude imports grew from under 1% in 2018-19 to 35-40% by 2024-25, driven by discounted Urals crude. Volumes surged from 4 million tonnes in 2021-22 to over 87 million tonnes in 2024-25. In May 2023, Russia supplied 42% of imports, or 1.96 million barrels per day, at 9-14% discounts versus Iraqi grades.
Iran’s role diminished sharply, dropping from about 10% pre-sanctions to nearly zero after 2019 when U.S. waivers ended. India-Iran trade fell 87%, with oil imports collapsing 99% from 2008 peaks. Escalation in Iran risks disrupting Gulf chokepoints, elevating freight, insurance, and price volatility for Middle Eastern oil flows.
Expanding Strategic Reserves
India requires deeper buffer stocks. Current strategic petroleum reserves (SPRs) total 5.33 million tonnes at Visakhapatnam, Mangaluru, and Padur, with expansions planned to 11.83 million tonnes at Chandikhol and Padur. Even expanded, these cover only weeks of net imports amid annual consumption exceeding 200 million tonnes.
Policies should mandate 60-90 days of net imports via SPRs and commercial stocks. Accelerate Chandikhol and Padur under public-private partnerships, add two more cavern sites, and employ financial hedging plus diversified freight to counter Strait of Hormuz or Red Sea disruptions.
Enhancing Logistics and Diversification
Beyond volumes, focus on logistics resilience. Incentives for west-coast refineries to process Atlantic, African, and Latin American crude, plus Indian-flagged tanker charters, mitigate sanctions and disruptions. Total imports rose from 196 million tonnes in 2021-22 to 244 million tonnes in 2024-25, offsetting reduced Iraq, Saudi Arabia, and UAE shares without absolute declines.
Enforce a ‘no-supplier-above-25%’ guideline for public sector undertakings while allowing flexibility for discounts.
Accelerating Renewables and Electrification
India surpassed its 175 GW renewable target for 2022 and targets 500 GW non-fossil capacity by 2030, including hydro and nuclear. Non-fossil sources now exceed 50% of installed power capacity, curbing coal and gas reliance.
Prioritize grid-scale storage like batteries and pumped hydro. Electrify freight corridors and urban buses, link rail and EV incentives with renewable charging, and apply time-of-day tariffs to optimize solar and wind.
Reviving Domestic Production
Domestic crude output declined from 24 million tonnes to 23.5 million tonnes year-on-year. Streamline exploration contracts to cut regulatory hurdles, unlock $500 billion in opportunities across exploration, refining, and LNG. Advance industry and household gasification via LNG and pipelines for future hydrogen transitions.
Refining Upgrades and Geopolitical Agility
Refineries like Jamnagar process more Russian crude, with imports up 64% in early 2025. Upgrade for feedstock flexibility across Urals, Middle Eastern, and Atlantic crudes, producing export-quality fuels for regional swaps.
Energy security shapes foreign policy. Sustain discounted Russian supplies within G7 price caps, gradually balance the basket, rebuild sanctions-compliant Iran ties in petrochemicals and Chabahar logistics, and foster cross-border energy trade with neighbors like Bangladesh and Sri Lanka.
India transforms crisis responses into strategy: robust stocks, diverse suppliers and routes, greener consumption, and agile diplomacy secure long-term energy sovereignty.
