By Athar Shahab, Managing Director, Zuari Industries Limited
Every minute the clock ticks, roughly Rs 2 crore leaves India’s borders. By the end of a typical business day, the country has spent nearly Rs 5,000 crore. This is not investment in infrastructure or development. It is simply the price India pays to keep its economy running. It is the nation’s petroleum import bill, and it represents one of the most critical structural vulnerabilities in the Indian economy.
India consumes about 5.6 million barrels of crude oil every day, importing 85-90% of its requirement. At illustrative prices of around $109 per barrel and an exchange rate near Rs 92 to the dollar, the annual crude import bill approaches $200 billion, or roughly Rs 18 lakh crore. This alone makes imported energy one of the most consequential macroeconomic variables in the country. The dependence extends beyond transport fuels. India imports over 60% of its liquefied petroleum gas (LPG) consumption as well, linking even household and commercial kitchens to global markets.
The risk lies not just in the scale of imports but in their sensitivity to external factors. A Rs 1 depreciation in the rupee increases the annual crude bill by roughly Rs 20,000 crore. A $1 rise in crude prices adds nearly Rs 18,000 crore to the outflow. Geopolitical tensions, especially around chokepoints like the Strait of Hormuz, can trigger immediate economic effects. Higher crude prices feed into freight costs, industrial inputs, and eventually consumer inflation. Energy imports are therefore the first link in a broader macroeconomic chain reaction.
This Rs 18 lakh-crore outflow is effectively a transfer of national income abroad. It is capital that could otherwise fund domestic infrastructure, technology, or employment. Addressing this vulnerability requires a coordinated strategy across the energy system. Four pillars are critical: reducing demand, substituting imported fuels, expanding renewables beyond solar, and strengthening strategic buffers.
The most direct way to reduce dependence is to use less oil. In transport, electrification of two-wheelers, three-wheelers, and urban bus fleets offers the fastest gains. India has already begun this transition, with electric two-wheelers gaining share and cities adopting electric buses.
However, mobility is only part of the picture. A major and often overlooked source of fuel demand is commercial cooking. Hotels, restaurants, cloud kitchens, and millions of street vendors rely heavily on commercial LPG. Transitioning even partially to electric cooking for baseload operations can significantly reduce this dependence. Hybrid systems that combine electric cooking for steady heat with gas for high-flame applications can meaningfully cut LPG consumption without disrupting practices. At India’s scale, such incremental changes can yield substantial aggregate impact.
Reducing demand must be complemented by replacing imports with domestic fuels. India’s ethanol blending programme has shown how coordinated policy and industry action can reduce crude dependence. Blending levels have risen significantly over the past decade, creating additional income streams for farmers and distilleries. The next step is to enable higher blends where feasible and support the adoption of flex-fuel vehicles.
Beyond ethanol, India has a large, untapped bioenergy opportunity. The country generates about 62 million tonnes of municipal solid waste annually, much of which ends up in landfills. Properly managed, this waste can be converted to energy. Under the Sustainable Alternative Towards Affordable Transition initiative, compressed biogas production from agricultural residue and urban waste is being promoted. Scaling this ecosystem can address multiple challenges simultaneously—waste management, sanitation, and energy imports.
Global examples underline the potential. Sweden diverts nearly all of its waste away from landfills and uses waste-to-energy systems to heat over a million homes. Singapore’s integrated facilities combine waste processing with water treatment and power generation. Reframing municipal waste as an energy resource rather than a disposal problem can unlock a significant domestic fuel source for India.
India’s renewable transition is often viewed through the lens of solar power, which will remain central. However, a resilient system requires diversification. Solar generation is concentrated in daylight hours. Meeting round-the-clock demand requires complementary sources.
Onshore wind already plays a role, but offshore wind represents the next frontier. India’s coastline, particularly along Gujarat and Tamil Nadu, holds an estimated 70 gigawatts of offshore wind potential. Offshore wind offers more stable and consistent generation patterns, helping balance the grid. It can also be located near coastal industrial clusters, reducing transmission constraints.
A combination of solar, onshore and offshore wind, bioenergy, and storage will be essential to create a stable renewable backbone capable of displacing imported fuels at scale. Even with aggressive transition efforts, India will remain dependent on imported oil for years. Building resilience against supply disruptions is therefore essential. India’s strategic petroleum reserves currently provide a modest nine to 10 days of consumption cover. Expansion plans for facilities such as Chandikhol and Padur are steps in the right direction. In an uncertain geopolitical environment, such buffers are instruments of economic security.
India stands at the centre of global economic growth, but heavy reliance on imported hydrocarbons leaves it exposed to external shocks. The Rs 18 lakh crore spent annually on petroleum imports is not just an energy bill. It is a structural drain on national wealth.
Reducing this dependence requires action across the entire system. Every electric vehicle, every unit of waste converted to fuel, every offshore wind installation, and every litre of domestically produced ethanol strengthens economic resilience.
In a volatile world, energy policy can no longer be viewed only through environmental or technological lenses. It must be seen as a core pillar of economic and national security.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.