India's fossil fuel insecurity now a broader economic risk, not just import dependence issue: CEEW study
New Delhi, June 17
India's energy security challenge has evolved beyond dependence on imported fossil fuels and now poses wider risks to inflation, industrial competitiveness, public finances and strategic autonomy, according to a new study released by the Council on Energy, Environment and Water.
The study, 'How Secure is India's Energy Future? Assessing Accessibility, Reliability, and Affordability', said India's fossil fuel system remains vulnerable due to concentrated suppliers, exposed shipping routes, limited reserves and storage capacity, refinery constraints and exposure to global price volatility.
"India's energy security challenge is no longer just about how much coal, oil, and gas the country imports. The deeper risk is that India's fossil fuel system is exposed across the board - through concentrated suppliers, vulnerable shipping routes, limited reserves and storage, refinery constraints, and direct exposure to global price volatility," the study said.
According to the report, India imported 88 per cent of its crude oil, nearly 48 per cent of its natural gas and about 26 per cent of its coal in 2024. Fossil fuels accounted for more than 28 per cent of India's total import bill in 2024-25.
Highlighting the growing complexity of energy security risks, Hemant Mallya, Fellow at CEEW, said, "India has strengthened energy access, diversified supplies, and scaled clean energy. However, our study shows that energy security risks are becoming more complex."
He added, "Disruptions in crude oil, LNG, LPG, coal, or key shipping routes can quickly affect cooking costs, transport fuel prices, fertiliser subsidies, industrial competitiveness, and inflation."
The study found that over 85 per cent of India's crude oil imports come from just six countries, including Russia and West Asian nations, limiting flexibility during supply disruptions. It also noted that India's strategic petroleum reserves cover only 9-10 days of net crude imports, with another 64 days available through refinery operational stocks.
The report flagged natural gas as another area of concern, noting that India imports nearly half of its gas requirements as LNG but has no dedicated strategic gas storage.
"The study estimates that if the share of imported gas in city gas distribution rises from 15 per cent to 50 per cent, CNG prices could increase by 15-17 per cent under high global price conditions," it said.
The study also identified LPG as a major household energy security vulnerability. It noted that nearly 95 per cent of India's LPG supply depends on imports, either directly or through domestic production linked to imported crude oil.
On coal, the report said India's energy security risks are increasingly shaped by dependence on imported coking coal, particularly from Australia, which remains critical for steel production.
The CEEW study argued that accelerating clean energy adoption could provide a long-term hedge against fossil fuel-related vulnerabilities.
"India's next phase of energy security must move beyond securing fossil fuels to a clear transition plan: optimising gas system utilisation, avoiding further refinery expansion, accelerating viable EV adoption, electrifying industry, reconfiguring refineries for lower gasoline demand, and building resilient green technology supply chains," Mallya said.
The study said India's energy security strategy should gradually shift from managing fossil fuel supply risks to reducing fossil fuel exposure through clean energy, electrification, strategic reserves and resilient technology supply chains.
— ANI
Reader Comments
The study is correct about LPG vulnerability. My family uses LPG cylinders and we've seen prices rise every few months. If 95% depends on imports, then one geopolitical tension and we could be paying double for cooking gas. The government's Ujjwala scheme was great, but we need domestic alternatives too.
This is a fascinating analysis. India's strategic petroleum reserves covering only 9-10 days is shocking when you compare it to the US or Japan which have 90+ days. The recommendation to avoid further refinery expansion and focus on electrification seems wise. The global energy transition is happening, and India needs to be ahead of it.
I appreciate the study but it's a bit too optimistic about clean energy. Yes, solar is growing, but what about when the sun doesn't shine? Storage is expensive. And what about industries that need high-temperature heat? Steel, cement, chemicals cannot run on batteries alone. We need a realistic mix, not just wishful thinking.
The bit about concentrated suppliers is scary. 85% of crude from just 6 countries, mostly the Middle East and Russia. That's like putting all your eggs in one basket. Remember what happened during the Ukraine war? Prices shot up overnight. India needs to diversify trade partners and build more strategic reserves fast.
As someone living in a metro where I use CNG for my auto, this directly affects me. The study says CNG prices could rise 15-17% if imported gas share increases. That would kill our monthly budget. I wish the government would focus more on domestic gas production and also incentivize
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.