Ficci director general: India must act now to create a resilient energy ecosystem for the future

India’s energy story is inseparable from its growth trajectory. As one of the world’s fastest-growing major economies, its energy demand is rising rapidly. India is now the world’s third-largest energy consumer, and peak electricity demand is projected to reach 345–365 gigawatts (GW) by 2030. With rising industrialization, urbanization and incomes, energy demand is expected to remain high over the coming decades.

Energy availability directly influences production costs, inflation, currency stability and overall market sentiment, making it a critical aspect of economic resilience.

Yet, India’s current energy mix underscores a structural vulnerability. Fossil fuels continue to dominate, with oil and gas forming a significant share of the energy basket. Despite progress in renewables, oil remains critical for transport and industry, while gas is essential for power, fertilizers and manufacturing.

This dependence is more concerning when viewed alongside India’s import profile: almost 90% of crude oil and more than 50% of natural gas requirements are met through imports. Such reliance exposes the economy to global price shocks, geopolitical disruptions and other supply chain uncertainties.

India has made a decisive push towards diversifying its energy mix. The country has already reached 250GW of non-fossil fuel power capacity and is targeting 500GW by 2030. We achieved 50% renewable capacity as a proportion our total power generation five years ahead of this target’s 2030 deadline, driven by policy support measures, solar park development, wind expansion and green corridor investments.

Initiatives such as the National Green Hydrogen Mission, Production Linked Incentives (PLI) for advanced chemistry cells and FAME schemes for electric mobility are reshaping the energy landscape. Ethanol blending in fuel has reached 18–20%, while a nuclear energy target of 100GW by 2047 and the Shanti Bill’s passage signal a long-term commitment to clean baseload power.

However, progress on diversification does not eliminate immediate risks. Recent global disruptions, including the Russia-Ukraine conflict and the war in West Asia, have shown how fragile energy supply chains can be. The Strait of Hormuz remains a serious concern as a West Asian chokepoint. In this context, strengthening energy resilience requires a calibrated mix of short, medium and long-term interventions.

The short-term focus must be on managing supply shocks and moderating demand without disrupting economic activity. The government has diversified crude import sources, deepened diplomatic engagements and enhanced domestic LPG production, which should help reduce risks.

Logistical bottlenecks such as rising shipping costs and freight disruption need to be addressed through trade facilitation moves, alternative routes and temporary financial support to industry. The recent Relief scheme announced under the Export Promotion Mission is important in this context.

Demand-side management can also play a crucial role. Take India’s transport sector, our largest consumer of petroleum. Measures such as staggered office timings, work-from-home, car-pooling and enhanced public transport can reduce fuel consumption without affecting productivity.

We must increase ethanol blending and accelerate electric vehicle adoption. Industrial fuel use can be optimized by shifting to electricity where feasible. Energy efficiency must remain a priority, as reducing energy intensity can be a cost-effective way to enhance security.

In the medium term, we must expand India’s Strategic Petroleum Reserve capacity and integrate it with commercial storage for resilience against external shocks. However, the emphasis must shift towards reducing structural import dependence.

This requires scaling domestic manufacturing across the renewable value chain, including solar modules, batteries and critical components, while securing supply chains for critical minerals like lithium, cobalt and nickel. Strengthening the financial health of power distribution companies, ensuring cost-reflective tariffs and improving payment discipline will be essential to sustain investments in the power sector.

We also need to expand energy storage capacity and modernize grid infrastructure for renewable reliability.

Domestic manufacturing must achieve greater self-reliance. Despite policy reforms such as the Hydrocarbon Exploration and Licensing Policy, domestic oil and gas production has not significantly scaled. While India is largely self-sufficient in thermal coal, reliance on imported uranium and critical materials continues.

In the long term, India’s energy security will hinge on building domestic capacity and technological leadership. Accelerating domestic oil and gas exploration, scaling green hydrogen for hard-to-abate sectors and expanding nuclear power will be key. Investments in offshore wind, pumped hydro storage and advanced battery technologies will further enhance resilience. Equally crucial is a comprehensive strategy for critical minerals.

Energy security is not merely about reducing import dependence, but about building a resilient, diversified, affordable and efficient energy ecosystem. As India aspires to be an economic powerhouse, we must combine immediate safeguards with medium-term capacity building and a long-term transformation.

The author is director general, Ficci.