Executive summary

Global energy markets have faced heightened volatility in recent years (2020 onwards). The Russia–Ukraine conflict in 2022 exposed Europe’s gas vulnerability, Indonesia’s coal export ban in January 2022 spiked Asian prices, and sanctions on Iran and Venezuela disrupted oil flows. As of early 2026, escalating tensions in West Asia and attacks on shipping routes have renewed concerns over maritime energy trade. The Strait of Hormuz alone handles one-fifth of global oil trade and a significant share of liquefied natural gas (LNG) flows (IEA 2026). The resulting supply disruptions and price hikes underscore that energy security directly affects economic stability, inflation, and livelihoods.

For India, the world’s third-largest energy consumer, these global pressures are exacerbating existing domestic challenges. Domestic energy production has not kept pace with rising demand driven by rapid economic growth. India imported 88 per cent of its crude oil, nearly 48 per cent of its natural gas (in the form of liquefied natural gas), and about 26 per cent of its coal in 2024 (MoSPI 2025). This reliance also makes India a significant player in global energy trade. It accounts for roughly 8.6 per cent of global oil imports, 4.3 per cent of global liquefied natural gas (LNG) trade, and 14.7 per cent of global coal imports (Energy Institute 2025). This dependence not only risks widening India’s trade deficit but also exposes the economy to external shocks.

This report evaluates India’s energy security using a three-pillar framework derived from established methodologies (APERC 2007; Kruyt et al. 2009; IEA 2014):

• Accessibility: Can India secure the fuel it requires in the right grade and form? We assess supplier concentration, import dependence, and domestic allocation constraints across coal, oil, and gas.
• Reliability: Once secured, can the system deliver an uninterrupted supply? We evaluate strategic reserves, infrastructure adequacy, and exposure to geopolitical disruptions.
• Affordability: Is the cost burden economically sustainable, and is the system protected from extreme price volatility? We analyse price transmission mechanisms, fiscal exposure through subsidies, and the cost competitiveness of fossil fuels relative to clean alternatives.

We discuss our findings under each pillar and recommend policy interventions across short- and medium-to-long-term horizons to strengthen India’s energy security.

Key findings

India’s energy insecurity is not just an importdependence problem. It is a systems-level vulnerability. India’s energy security challenge is no longer limited to the question of how much fuel the country imports. The deeper concern is how vulnerable the overall energy system becomes when global markets tighten, shipping routes are disrupted, or prices rise sharply. Across coal, oil, and gas, India faces overlapping risks linked to import dependence, supplier concentration, limited storage, infrastructure bottlenecks, and direct exposure to global price volatility. These pressures affect households, industries, government finances, and inflation simultaneously.

The findings below show that India’s energy insecurity is not confined to a single fuel or sector. Instead, it cuts across accessibility, reliability, and affordability, creating system-wide risks that can quickly spill over from one part of the economy to another.

Accessibility

LPG is India’s hidden household energy-security vulnerability, with aggregate import exposure nearing 95 per cent - LPG1 is the cooking gas used by over 330 million households. India directly imports more than 60 per cent of its LPG. The rest is produced domestically, but mostly from imported crude oil. Together, this means nearly 95 per cent of LPG depends on imports. If global crude supply is disrupted, cooking gas for hundreds of millions of homes is at risk.

India’s crude security is constrained by six-supplier concentration and refinery inflexibility. More than 85 per cent of India’s crude oil comes from just six countries, several of which have been involved in recent conflicts, including Russia and several Middle Eastern nations. Indian refineries are also built to process specific grades of crude, so switching suppliers quickly is not easy. This narrows India’s options during a supply shock.

India’s coal and gas supply chains are vulnerable to import concentration and geopolitical chokepoints. India has large coal reserves at home, but it still imports high-quality coking coal needed for steel, mainly from Australia. Imports of non-coking thermal coal also depend heavily on Indonesia’s export policies, while domestic coal allocation rules limit access for nonpower industries such as steel and cement. India’s gas supply is similarly exposed to a concentrated set of LNG suppliers, led by Qatar and the USA. Most LNG cargoes pass through narrow maritime routes that can be disrupted during geopolitical conflicts, as seen in the Strait of Hormuz. Long-term LNG contracts provide price stability but reduce flexibility to redirect cargoes during emergencies.

Reliability

India’s fuel buffers are too thin for a major disruption: oil reserves cover only 9 to 10 days, and gas needs strategic storage - India’s strategic petroleum reserves hold enough crude oil for just 9 to 10 days of net imports. Another 64 days of cover comes from operational stocks at refineries. Japan, by comparison, holds around 200 days and South Korea around 207 days. For natural gas, India currently does not maintain dedicated strategic storage, even though it imports nearly half of its gas. LNG import terminals and pipelines are underused, and fertiliser plants and city gas distribution networks have little cushion if imports are interrupted.

India’s coal supply is growing in volume but weakening in quality. The quality of India’s domestic coal is declining. The energy content of coal (gross calorific value) is falling, more rock has to be moved to extract each tonne (rising stripping ratios2 ), and most mining now happens in open pits. This raises questions about how long domestic coal can reliably meet demand.

Affordability

Gas may not remain an affordable transition fuel if city gas and fertiliser become more LNG-dependent. Natural gas is often promoted as a cleaner bridge fuel, but its prices are volatile. Domestic gas production has stagnated while LNG imports have doubled. When global LNG prices spiked in 2022 to 2023, India’s fertiliser subsidy bill rose sharply. Our analysis shows that if the share of imported LNG in city gas networks rises from 15 per cent to 50 per cent, compressed natural gas (CNG) prices for vehicles could go up by 15 to 17 per cent during periods of high global prices.

India’s oil price stability depends heavily on discounted Russian crude. India avoided the worst of the 2022 to 2025 global oil price shocks largely because it bought discounted Russian crude. This is a short-term advantage that depends on geopolitics, not a structural fix. If India had to buy oil at full market prices, petrol and diesel costs would rise significantly, pushing up inflation across the economy.

Coal is losing its traditional cost advantage as mining and imports become more expensive. Mining domestic coal is getting more expensive, and imported coking coal prices are volatile, raising costs for power and steel. Coal’s traditional cost advantage is also weakening as renewable energy paired with storage becomes cheaper.

Clean energy is becoming India’s energy-security hedge, but critical minerals are the next strategic dependence. Unlike fossil fuels, where the energy vectors themselves must be continuously imported and transported, renewable energy systems rely on domestically available energy vectors once capacity is installed, reducing exposure to fuel import dependence, geopolitical disruptions, and global fuel price volatility. While some dependence on imported technologies and industrial inputs may persist, this is fundamentally different from fossil fuels, where import dependence persists throughout the life of the energy system.

Overall, our findings suggest that India’s energy security challenge is no longer just about securing enough fuel. It is about building a more resilient system that can withstand geopolitical disruptions, price shocks, and long-term structural changes in global energy markets.

Figure ES1. India is highly dependent on imports from a concentrated group of geopolitically volatile regions

Coal imports

Crude oil imports

Natural gas imports

Policy recommendations

The findings provide a strong impetus to manage the risks of fossil energy dependence while hastening the transition to indigenous clean energy alternatives. Based on our analysis, we recommend the following measures to bolster India’s energy security.

Recommended immediate interventions

• Mandate and commercialise strategic oil, gas and LPG reserves. The government should legally mandate emergency stocks for oil and gas marketing companies alongside Indian Strategic Petroleum Reserves Limited (ISPRL) managed reserves. Accelerate the development of natural gas storage in depleted wells and include underutilised LNG storage at import terminals as part of strategic reserves. Recognise LPG as a strategic fuel by expanding underground storage. Commercialise the reserves as a tradeable asset via exchange-traded funds or government arbitrage to offset the cost of construction and operation.
• Accelerate transport fuel diversification. Prioritise EVs in segments where it is already commercially viable and use LNG as a transition fuel for road freight. Our prior analysis indicates that petrol demand may peak in the early 2030s, while diesel demand will only peak by the late 2040s due to a lack of feasible alternatives for heavy-duty road freight. LNG may be a necessity to abate diesel demand growth in this segment until electrification or green hydrogen-based powertrains become techno-economically viable.
• Mandate a national refinery transition plan. Align refinery configuration with evolving fuel demand to manage the potential divergence in demand for petrol and diesel post 2030. Divert diesel exports to the domestic market where possible to manage the need for additional refining capacity that may become stranded investments beyond 2040. Incentivise higher domestic LPG and petrochemical feedstock yield to reduce import dependence.
• Delink government revenue from fossil fuels. Develop alternative revenue instruments to ensure the energy transition is not constrained by fiscal dependence on petroleum. For example, distancebased taxation for mobility by expanding the scope of the proposed GPS-based toll collection system could equivalently offset the loss of government revenues from the sale of petrol and diesel.
• Promote electrification of cooking as a nearterm strategy to reduce LPG import dependence, supported by reliable and affordable electricity access. LPG consumers can be provided with free or discounted electric cooking devices and utensils, with the procurement cost offset by reductions to existing LPG subsidies and under-recoveries.

Medium-and long-term policy directions

Diversify supply sources and contract structures

• Expand crude sourcing from emerging Atlantic Basin suppliers such as Brazil, Guyana, and West Africa through long-term contracts and upstream equity partnerships.
• Maintain a balanced LNG contracting strategy that combines long-term Delivered Ex-Ship (DES)³ contracts for supply security with flexible Free on Board (FOB)⁴ contracts that allow diversion and opportunistic procurement.
• Increase the share of LNG contracts indexed to gas hubs (e.g. Henry Hub) to better reflect market fundamentals and reduce volatility compared to oillinked pricing.
• Broaden LNG sourcing beyond West Asia by scaling procurement from Canada, Australia, the USA and West African exporters like Mozambique.

Align infrastructure with future demand trajectories

• Substitute some coal-based capacity additions by improving utilisation of existing industrial captive coal power plants, reducing the risk of stranded assets while easing renewable integration.
• Modernise refineries by adding residue upgrading and hydro processing units to handle heavier and higher-sulphur crude, improving supply flexibility while meeting rising diesel demand.
• Align LNG terminal and pipeline expansion with downstream demand, addressing current underutilisation where most terminals operate below 50 per cent capacity.
• Guide steel capacity expansion towards gas-based pathways (e.g. DRI-EAF) that can transition to green hydrogen, while leveraging demand aggregation to secure better gas contracts.

Strengthen the domestic energy production base

• Continue developing domestic oil and gas resources to improve supply security during the transition, while prioritising cost-competitive projects and accounting for long-term transition risks.
• Evaluate coal gasification coupled with carbon capture for selective applications, such as at pithead locations, as a targeted transitional option for syngas production, recognising current constraints in technology, costs, and environmental performance.

Accelerate demand-side substitution

• Incorporate the full cost of coal, including logistics and environmental externalities, into power system planning to avoid locking in higher long-term tariffs.
• Expand electrification of low- and mediumtemperature industrial heat to shift demand away from imported fossil fuels towards domestically produced electricity.

By treating the energy transition as a national security imperative rather than only an environmental objective, India can reduce exposure to global fuel and technology shocks, strengthen system-wide resilience, and build a more self-reliant and stable economic engine.