IN recent weeks, as the LPG crisis and hoarding made headlines and commercial demand was curtailed, a familiar anxiety gripped the middle class. The government’s move in recent years to increase ethanol blending in petrol to 20%, boost LPG output from refineries, and push schemes to incentivise domestic natural gas production have all helped shore up our precious fuel reserves.
But the West Asia conflict is a stark reminder that despite our GDP growth rate and significant forex reserves, the energy that powers our kitchens and keeps us moving arrives through a very long shipping route that can close at any time. We must ensure India’s energy security is not exposed to the kind of supply vulnerabilities seen in earlier ‘ship-to-mouth’ situations.
The echo of the 1960s
To understand the precariousness of 2026, a trip down memory lane to the mid-1960s helps. Before the Green Revolution and on the back of successive droughts, India survived on the ‘PL-480’ lifeline — an American programme to deliver grain just in time to prevent famine. Our national sovereignty was tethered to the arrival of the next bulk carrier.
We overcame that crisis through a large, state-led investment in research and development, which resulted in hybrid high-yielding crops supported by resource-intensive farming. While there have been environmental fallouts of the Green Revolution, we tripled wheat output within 15 years and helped alleviate crippling poverty at the time.
Today, we face an identical crossroads, but with crude oil and natural gas. Behind the story of a rising India lies an uncomfortable truth: our modern economy is powered by a fuel we do not control, priced in a currency we do not print, while also relying on IT services exports that are facing headwinds from rapid developments in artificial intelligence.
The arithmetic of vulnerability
In FY25 alone, we spent Rs 14.7 lakh crore on imports of crude oil, products and natural gas. In a typical year, this spend accounts for up to a quarter of our total import bill. In other words, about one out of every four import dollars is spent on energy. This is not just a line item in a budget; it is a massive transfer of national wealth to global energy markets.
When global markets rattle — as they have recently with tensions in Iran — India’s fiscal health takes a blow. As per an RBI staff paper, a mere 10% increase in the price of an oil barrel can result in an increase in inflation of 0.3%.
Our internal analysis suggests that a prolonged crude oil price of $100 per barrel would add approximately Rs 45,000 crore to our monthly import bill and result in an inflationary shock of 1.5%.
A new ‘Clean Green Revolution’ for Viksit Bharat
The reform we need is not just an adjustment to subsidies, but a fundamentally new energy system to power much of our needs. We need a ‘Clean Green Revolution’ — albeit with guardrails — for energy.
First, cooking. While the Pradhan Mantri Ujjwala Yojana (PMUY) brought LPG to millions, the penetration has plateaued. Rural households in the bottom decile still consume only 25-30% of the LPG that the wealthy do. We have widened the base but not deepened the adoption, leaving the poor vulnerable to price shocks.
Aggressively promoting electric cooking (beyond cookstoves) and ensuring reliable electricity supply is the primary pathway to insulate the poor and the middle class from volatile LPG prices. Tapping into the biogas potential offers an alternative pathway but is riddled with supply chain issues.
Second, transport. Petrol and diesel prices, though officially ‘market-determined’, remain a political lightning rod. We must accelerate the electric vehicle transition and scale public transit in all our urban centres to curb the fuel appetite of our transportation needs, which account for 50% of our petroleum products demand.
This will also address the issue of growing air pollution, as transport can contribute up to 40% of urban PM2.5. In the interim, reduce unnecessary commuting through regulations and encourage work-from-home.
Finally, industry. Our industrial fuel mix — accounting for nearly half our natural gas and 12% of oil products demand — remains tethered to imported energy. This makes “Make in India" vulnerable to global price cycles. The fertiliser sector specifically absorbs Rs 1.7 lakh crore in annual subsidies in addition to being the main driver of industrial gas consumption.
We need to rationalise fertiliser use in our farms and enable the industry’s transition to domestically produced green hydrogen. Scaling the investments needed to produce green hydrogen and its derivatives would, in turn, spawn a new manufacturing and innovation ecosystem.
Weathering the storm
By 2030, India will have over six decades of LPG usage in households that has ameliorated the cooking experience of millions.
However, true energy security will only come when the energy that cooks our food and moves our people is harvested from the sun that shines amply, our monsoon winds, or indeed the abundant thorium in our beach sands.
Alongside, we will need to manage our water resources better and the environmental fallouts of coal-based power generation, which continues to be the backbone of our power system.
It is time to start building an energy system that we can flex to our needs and one that serves us and does not enslave us to geopolitics.
Views are personal