It took hardly any time for the war in West Asia and the consequent near-halt in shipments through the Strait of Hormuz to trigger a runaway spike in global crude oil prices. While knocking the global and Indian economies off stronger growth paths and reigniting inflation worries across the globe, the military conflict also quickly exposed the soft underbelly of India’s energy management systems.
Last week, five weeks after the war broke out, the government stated that the country’s oil stocks—including a modest, fledgling strategic reserve and larger stockpiles and inventories held by domestic oil companies—were enough for 74 days. Further, it asserted that with a 40% post-war ramping up of domestic liquefied petroleum gas production, import dependence for the cooking fuel reduced to 40%, and that, with cargoes secured from the US, Russia, and Australia, supplies would be ensured. Iran’s gesture allowing safe Hormuz passage for India-bound ships is also a morale booster. All this has reinforced the notion that essential hydrocarbon supplies might not be immediately disrupted.
Vulnerability Gap
What cannot be brushed aside, however, is that India is hardly an energy-secure country and can’t be one even in the medium term. Neither is the contingency preparedness satisfactory or comparable to how other large economies have managed for themselves. India is highly exposed to the current West Asia crisis, for instance, with 45% of its crude and 55% of natural gas imports coming from the region. A $10/barrel rise in benchmark oil price could widen India’s current account deficit by 0.5% of the GDP.
Less than a month of the war pushed state-run oil marketing companies into steep losses, forcing the government to cut auto fuel taxes. This move could require the government to absorb an annualised fiscal cost of a whopping `1.7 lakh crore while shielding end consumers. To be sure, India’s oil reserves are significantly below the International Energy Agency-prescribed threshold of at least 90 days of net oil imports. Among other large Asian economies, China holds reserves for 110-140 days of net imports.
Dual Challenge
Energy security has acquired a new meaning and dimension in the evolving global landscape. Rapid transition away from fossil fuels to green energy of assorted forms and the artificial intelligence boom that has made every data centre a power-guzzling factory are posing immense challenges to most countries, except a few naturally endowed ones. The task is far more daunting for India which needs a high-growth path over the next few decades to accomplish Viksit Bharat goals, but its domestic energy production is seriously constrained.
Low-cost energy supplies are a key national security imperative, increasingly so in today’s world. Despite the significant energy deficit, India seems to place great importance on fulfilling its green and sustainable development obligations. Although non-fossil fuels accounted for 52.6% of installed electricity capacity as of February 2026, the Cabinet recently set a more ambitious target of 60% for 2035 and vowed to cut emission intensity by 47% by 2035 from 2005 levels.
This tenacity towards climate justice is creditworthy, but a far more aggressive policy is required to keep energy supplies intact and costs manageable. Objectives that need greater vigour include boosting nuclear energy and future fuels like green hydrogen, fast-tracking electric mobility, creating a unified national electricity grid, and accelerating battery storage capacity. Regarding hydrocarbons, the policy approach should be more pragmatic, emphasising equally both tapping domestic resources and forging cost-effective overseas alliances.