India’s Energy Security in a Fragmented Global Order

After Reading This Article You Can Solve This UPSC Mains Model Question:

“Energy security in the 21st century is no longer limited to access to oil, but includes resilience, diversification and supply-chain security.” Discuss in the context of India’s changing geopolitical environment. 15 Marks (GS 3 Economy|)

Context

The recent conflicts in West Asia and the Russia-Ukraine war have highlighted how geopolitical crises directly affect India’s economy, especially through energy prices and supply chains. India’s energy security is no longer only about cheap imports; it now depends on resilience, diversification, and strategic preparedness.

The Evolving Paradigm of Energy Security

• From “Cheap Fuel” to “Strong Buffers” Energy security has shifted from simply finding the lowest price to building a system that can survive sudden global shocks. Nations are now choosing to pay more for “insurance” such as extra storage and spare supply capacity prioritizing economic safety over simple market efficiency.
• Diversification and “Power of Choice” True security now depends on having a diverse “basket” of suppliers, allowing a country to quickly pivot if one region becomes unstable. India’s strategy of balancing Russian imports with traditional Gulf ties is a prime example of using “optionality” to maintain steady supplies.
• The Fragility of Sea Lanes Even with many suppliers, the physical journey of oil remains a major risk because it often passes through narrow “chokepoints” like the Strait of Hormuz. Because 25% of global oil travels through these vulnerable areas, protecting sea routes with naval strength has become as important as the fuel itself.
• Energy as a Shield for the Economy Steady energy supplies are now seen as the foundation of a healthy domestic economy, directly affecting inflation and growth. By securing supply chains, a nation protects its citizens from “imported” economic crises, ensuring that global volatility doesn’t derail domestic prosperity.

Global Energy Market: Breakdown of the Old Order

• From Pipelines to Sea Routes: The Russia-Ukraine war destroyed the myth of pipeline reliability, pushing the world toward sea-borne LNG. This shift has elevated the strategic risk of maritime chokepoints, such as the Strait of Hormuz, where local conflict now dictates global prices.
• Security Over Savings: The “just-in-time,” low-cost procurement model has been replaced by a “security-first” approach. Nations now treat energy as an insurance policy, investing heavily in massive strategic reserves and spare capacity to buffer against supply shocks.
• The Power of “Optionality”: Fixed, long-term dependencies on single suppliers are over. Large importers like India now utilize “optionality” the ability to switch between diverse sources like Russia, the US, and the Gulf—to maintain leverage and stability.
• Europe’s Strategic Pivot: Europe has permanently severed its reliance on cheap Russian gas, which once met 45% of its demand. This collapse forced a rapid grid redesign, a 20% drop in consumption, and a total commitment to the global LNG market.
• New “Green” Vulnerabilities: The energy transition is trading oil dependency for a reliance on critical minerals. The global risk is shifting from “extracting fuel” to “controlling processing,” creating new geopolitical dependencies on nations that dominate the battery supply chain.

Government Initiatives on India’s Energy Security

1. Strategic & Maritime Security

• Operation Sankalp: Launched by the Indian Navy to ensure the safe passage of Indian-flagged vessels through the Strait of Hormuz and the Gulf region.
• Strategic Petroleum Reserves (SPR) Programme: To create a “national insurance” against supply chain breaks, India is building massive underground storage facilities. Current capacities in Visakhapatnam, Mangaluru, and Padur are being expanded to increase the number of days India can survive without imports.

2. Diversification of Energy Mix

• National Green Hydrogen Mission (NGHM): With an outlay of ₹19,744 crore, it aims to make India a global hub for Green Hydrogen. The goal is to produce 5 MMT per year by 2030, potentially saving over ₹1 lakh crore in fossil fuel imports.
• PM JI-VAN Yojana: Focuses on creating an ecosystem for Second Generation (2G) Bioethanol. By converting agricultural waste (like stubble) into fuel, it supports the Ethanol Blending Programme (EBP) and reduces reliance on imported crude.
• PM-KUSUM & PM Surya Ghar: These schemes focus on “solarizing” the demand side agriculture and households to reduce the burden on the national grid and decrease the fiscal cost of energy subsidies.

3. Securing Future Technologies

• National Critical Mineral Mission (NCMM): Launched in 2025, this mission is vital for the transition to EVs and renewables. It focuses on:
  • Domestic Exploration: Targeting over 1,200 sites for minerals like Lithium and Cobalt.
  • Overseas Acquisition: Through KABIL (Khanij Bidesh India Ltd), India is securing mineral assets in the “Lithium Triangle” (South America) and Australia.
  • Recycling Incentives: A ₹1,500 crore scheme to recover critical minerals from e-waste and old batteries.

4. Geopolitics and Diplomacy

• International Solar Alliance (ISA): A global platform led by India to promote solar energy deployment, particularly in “sun-shine” countries, reducing global dependence on fossil-fuel-rich regions.
• Global Biofuels Alliance (GBA): Launched during India’s G20 presidency to accelerate the global uptake of biofuels, creating a more stable and diversified alternative fuel market.

Challenges to India’s Energy Security

• Extreme Import Dependence: India remains structurally vulnerable, importing nearly 90% of its crude oil requirements while domestic production remains stagnant at around 28.7 MMT. This creates a direct link between global geopolitical volatility and domestic inflation/GDP growth.
• Geographic and Maritime Bottlenecks: Diversifying suppliers does not solve the “chokepoint” problem, as nearly 45% of imports still transit through the Strait of Hormuz. Regional tensions in these sea lanes necessitate costly military interventions, like Operation Sankalp, to ensure supply continuity.
• The “Processing” Monopoly: The shift toward green energy introduces a new reliance on critical minerals (Lithium, Cobalt, Rare Earths) where China controls over 90% of production. India currently processes less than 5% of its future battery-grade needs, risking a shift from oil-dependency to mineral-dependency.
• Strategic Reserve Inadequacy: Compared to peers like Japan (254 days of reserves), India’s strategic petroleum reserves (SPR) are still in an early stage of expansion. Current capacity lacks the depth required to cushion the economy against a prolonged total disruption of global supply chains.
• Energy Transition Paradox: While the transition to EVs and solar reduces long-term oil demand, the short-term cost of technology adoption and infrastructure overhaul is immense. Transitioning too fast without a secure mineral supply chain could destabilize the energy market before the benefits are realized.

Way Forward for India’s Energy Security

• Scaling Strategic Petroleum Reserves (SPR): India must rapidly expand its underground storage capacity beyond the current phases to match the resilience of nations like Japan. Increasing the “days of cover” ensures a larger buffer against sudden supply shocks or total blockages of maritime chokepoints.
• Securing Critical Mineral Supply Chains: To avoid a new dependency on China, India needs to aggressively pursue “mineral diplomacy” through the KABIL consortium. This involves acquiring overseas assets and building domestic high-end processing facilities for lithium, cobalt, and rare earths.
• Enhancing Maritime Defense and Diplomacy: Strengthening the Indian Navy’s “Blue Water” capabilities is essential for securing vital sea lanes like the Strait of Hormuz. Sustained initiatives like Operation Sankalp should be integrated into a broader maritime security framework with regional partners.
• Decarbonization and Demand Side Management: The “oil intensity” of the Indian economy must be reduced by accelerating the FAME-II scheme for EVs and shifting freight from road to rail. Incentivizing green hydrogen and biofuels will decouple industrial growth from global crude price fluctuations.
• Leveraging “Market Power” for Better Terms: As a rare engine of incremental oil demand, India should negotiate more favorable “destination-free” contracts and eliminate the “Asian Premium.” Using this leverage allows India to secure supply priority and pricing discounts during periods of global surplus.

Conclusion

India must transition from tactical agility to structural resilience. By securing critical mineral chains and expanding strategic reserves, India can decouple its macroeconomic stability from geopolitical shocks, ensuring a sustainable, self-reliant energy future.