Context: India energy vulnerability
West Asia conflict highlighted India’s vulnerability to global energy shocks due to heavy crude oil import dependence, while also underlining the importance of diversification and energy transition.
Key Data & Facts
Energy Dependence
- India imports 85%+ of crude oil needs
- Import dependence reached 89.4% in FY2024-25
- Domestic crude production: ~28.7 MMT
Economic Impact
- Brent crude crossed $109/barrel, touched nearly $120
GDP growth projection:
- FY26: 7.4% → FY27: 6.5%
Inflation projection:
- 2.3% → 4.4%
India’s Diversification Strategy
Top Crude Import Sources (FY2024-25)
Russia (35.6%) → Iraq (19.8%) → Saudi Arabia (13.6%) → UAE (8.9%) → USA (4.4%)
- Russia emerged as India’s largest supplier after Ukraine war
- Diversified sourcing reduced dependence on a single supplier/region
Energy Transition & Emerging Risks
- Solar, EVs and batteries may reduce long-term oil dependence
- However, dependence may shift towards:
- Lithium
- Cobalt
- Nickel
- Copper
- Rare earth minerals
China’s Dominance
- China controls around 91% of global rare-earth processing
- India processes <5% of projected battery-grade mineral requirements domestically
Way Forward
- Expand strategic petroleum reserves
- Diversify supply chains
- Strengthen maritime and energy security
- Develop domestic critical mineral processing capacity
