India’s energy landscape is undergoing changes as the country strengthens its energy ties with the United States. Recently, Prime Minister Narendra Modi and U.S. President Donald Trump discussed enhancing India’s oil and natural gas purchases from the U.S. This commitment aims to increase energy security and diversify supply sources.
Current Energy Imports
India is the third-largest oil importer globally. The country relies on imports for over 85% of its crude oil needs. In 2024, India imported 234.26 million tonnes of crude oil, with a dependency rate of 87.8%. The domestic production of crude oil remains low at approximately 29.36 million tonnes. The import bill for oil decreased to $133.37 billion in 2023-24, influenced by lower international prices.
Natural Gas and LNG Supply
India’s natural gas consumption is on the rise. The country imported 31.80 billion cubic metres of liquefied natural gas (LNG) in 2023-24. The government plans to increase the share of natural gas in the energy mix to 15% from the current 6%. The U.S. has become supplier of LNG, which is crucial for India’s energy strategy.
Diversification of Energy Sources
India’s strategy includes diversifying energy sources to mitigate risks associated with geopolitical disturbances. The U.S. is expected to play a very important role in supplying crude oil and LNG. Additionally, India is exploring energy imports from other regions such as Brazil, Canada, and Guyana. This diversification aims to enhance energy security and reduce reliance on any single supplier.
Investment in Energy Infrastructure
The two countries have agreed to boost investments in energy infrastructure. This includes cooperation between energy companies and enhancing oil and gas facilities. Strengthening civil nuclear energy ties is also a focus area, with India seeking full membership in the International Energy Agency (IEA).
Future Energy Roadmap
India is pursuing a multi-faceted energy strategy. This includes reducing import dependency and promoting renewable energy sources. The government is investing in electric vehicle infrastructure and alternative fuels such as ethanol and biodiesel. The goal is to create a sustainable energy future while meeting growing demand.
Geopolitical Considerations
India’s energy procurement strategy is influenced by global geopolitical dynamics. The potential lifting of sanctions on Russia could impact India’s energy imports. However, the U.S. administration’s push for increased oil supply has created favourable conditions in global markets, benefiting India.
Questions for UPSC:
- Critically analyse the impact of India’s energy procurement strategy on its economic growth.
- What are the key factors influencing India’s shift towards natural gas in its energy mix? Discuss.
- Estimate the implications of geopolitical tensions on India’s energy security in the coming years.
- Point out the role of renewable energy sources in reducing India’s dependency on fossil fuels.
Answer Hints:
1. Critically analyse the impact of India’s energy procurement strategy on its economic growth.
- Increased energy imports from the U.S. could stabilize oil prices and reduce volatility.
- Enhanced energy security may attract foreign investments, boosting economic growth.
- Diversification of energy sources mitigates risks associated with geopolitical tensions.
- Higher energy supply reliability supports industrial growth and economic activities.
- Strengthening bilateral trade aims for a target of $500 billion, encouraging overall economic relations.
2. What are the key factors influencing India’s shift towards natural gas in its energy mix? Discuss.
- Government aims to increase natural gas consumption from 6% to 15% for cleaner energy.
- Natural gas is seen as a bridge fuel to transition from coal to renewables.
- Infrastructure development and domestic production recovery are critical for gas market growth.
- Global LNG supply is expected to increase, making it more accessible and affordable.
- Environmental policies and commitments to reduce carbon emissions drive the shift towards gas.
3. Estimate the implications of geopolitical tensions on India’s energy security in the coming years.
- Geopolitical tensions, such as the Russia-Ukraine conflict, impact global oil supply and prices.
- India’s reliance on diverse suppliers reduces vulnerability to single-source disruptions.
- Potential sanctions lifting on Russia may alter supply dynamics and pricing strategies.
- Increased competition among suppliers can lead to better pricing for India.
- Strategic partnerships with the U.S. and other nations enhance India’s energy resilience.
4. Point out the role of renewable energy sources in reducing India’s dependency on fossil fuels.
- Renewable energy investments are essential for achieving energy independence and sustainability.
- Government initiatives promote solar, wind, and biofuels as alternatives to fossil fuels.
- Transitioning to renewables can lower greenhouse gas emissions.
- Establishing electric vehicle infrastructure supports the shift away from oil dependency.
- Renewable sources can stabilize energy supply and reduce import bills over time.
