India's Energy Security Crisis: Rising Import Dependence and Historical Policy Failures

Indian Express - Opinion · 23 Mar 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India faces its highest-ever oil and gas import dependence (90% and 55% respectively), highlighting systemic failures in energy policy despite historical lessons from past crises, with significant implications for economic stability and strategic autonomy.

Key points

Historical Context: India's oil consumption has grown tenfold since the 1970s (22 to 240 MMTPA), but import dependence has surged from 30% in the 1980s to 90% today, exposing economic vulnerabilities.

Geopolitical Risks: Half of India's LNG imports come from Qatar, creating concentrated supply risks, while 55% gas import dependence reflects infrastructure lock-ins without strategic reserves.

1970s Policy Response: Post-1973 oil shock, India electrified railways/agriculture, promoted coal substitution, and launched oil conservation campaigns ('Save the last drop'), reducing import dependence to 30% by the 1980s.

Policy Reversal: Domestic discoveries like Mumbai High and 1980s price drops led to complacency, with demand growing at 7-8% annually and efficiency standards neglected.

1991 Gulf War Impact: Oil price spikes contributed to India's balance-of-payments crisis, triggering economic reforms but shifting focus to supply security (strategic reserves, ONGC Videsh) over demand restraint.

[GS3-Environment] Energy Transition Gap: Unlike Europe/East Asia, India failed to invest sufficiently in efficiency or alternatives, leaving it disproportionately reliant on fossil fuels amid global decarbonization pressures.

Gas Infrastructure Lock-in: KG basin discoveries led to overinvestment in gas pipelines/power plants, creating inflexible dependencies now exposed by supply disruptions.

Institutional Memory Failure: Repeated cycles of crisis-response-complacency demonstrate poor policy learning, with current shortages mirroring 1970s patterns despite advanced warning.

Way Forward: India must diversify energy sources through renewables, enforce strict efficiency standards, expand strategic reserves to 90 days coverage, and establish a sovereign energy security fund to hedge price volatility.

Key terms

Strategic Petroleum Reserves

Underground storage facilities holding crude oil to mitigate supply disruptions, currently with 9.5 MMT capacity (22 days coverage) at Visakhapatnam, Mangaluru, and Padur. Critical for India's energy security under the International Energy Program.

ONGC Videsh Limited

Subsidiary of Oil and Natural Gas Corporation (ONGC) established in 1965 to secure overseas oil assets, operating in 20 countries with $28 billion investments. Key instrument for India's 'equity oil' strategy to reduce import volatility.

Krishna-Godavari Basin

Offshore hydrocarbon-rich zone in Andhra Pradesh, home to India's largest natural gas discovery (KG-D6 block). Accounts for 30% of domestic production but plagued by output declines, exemplifying challenges in upstream sector.

City Gas Distribution (CGD) Networks

Infrastructure for piping natural gas to households/industries, regulated by PNGRB under CGD Authorization Guidelines. Covers 70% population but creates inflexible demand dependencies, as seen in current shortages.