India’s journey to becoming a global economic powerhouse faces a major hurdle—its growing reliance on imported crude oil and natural gas. While the country has taken major steps in infrastructure, manufacturing, and technology, its energy dependency on foreign countries is increasing steadily, raising serious concerns about energy security, trade imbalance, and long-term sustainability.
According to recent data from the Ministry of Petroleum and Natural Gas, India’s import dependence for crude oil in the financial year 2024–25 has touched a new high of 88.2%. In the same period, dependence on imported natural gas also jumped to 50.8%, the highest in four years. These numbers clearly show how the gap between domestic production and growing energy needs is becoming wider with each passing year.
Growing Energy Demand But Limited Domestic Supply
India’s energy needs are increasing at a fast pace due to several factors like:
- Rapid growth of energy-intensive industries
- Higher sales of two-wheelers, cars, and commercial vehicles
- Expansion of air travel and cargo movement
- Growing use of plastics and petrochemicals
- Rising population and urbanisation
All of these sectors require more oil and gas, and unfortunately, the country’s domestic production has not kept pace with this demand.
In FY 2024–25, India imported around 242.4 million tonnes of crude oil, while domestic production dropped slightly to 28.7 million tonnes. That means the country met only 11.8% of its petroleum needs from local sources. For natural gas, domestic production was 35.6 billion cubic meters (BCM), while 36.7 BCM was imported to meet demand.
Historical Data: Import Dependence is Only Rising
India has been dependent on imported oil for years, but the situation is getting worse. Take a look at the trend over the last few years:
| Financial Year | Crude Oil Import Dependence (%) |
| 2018–19 | 83.8% |
| 2019–20 | 85.0% |
| 2020–21 | 84.4% (COVID-19 impact) |
| 2021–22 | 85.5% |
| 2022–23 | 87.4% |
| 2023–24 | 87.8% |
| 2024–25 | 88.2% (new high) |
Clearly, there has been a steady rise in dependency, except during the pandemic year when energy use dropped sharply.
Impact of Import Dependence on Economy
India is the third-largest consumer of crude oil in the world. When a country like India relies heavily on imported energy, several economic risks increase:
- Trade Deficit: Higher oil imports lead to more money flowing out of the country, worsening the trade balance.
- Rupee Pressure: More imports mean higher demand for dollars, which weakens the Indian rupee.
- Foreign Exchange Reserves: High import bills can impact reserves, especially during global crises.
- Inflation Risk: Any global spike in oil prices directly hits transport, manufacturing, and food costs in India.
In FY 2024–25, India spent around $137 billion on crude oil imports, a 3% increase from the previous year. Natural gas imports cost the country $15.2 billion, up from $13.4 billion in FY 2023–24.
Why Domestic Production is Not Enough
One of the key reasons behind India’s heavy import dependence is the low and declining domestic production of oil and gas. Despite having oil and gas fields across regions like Assam, Mumbai High, Gujarat, Rajasthan, and the Krishna-Godavari Basin, output hasn’t improved much.
Challenges include:
- Limited discovery of large new oil and gas fields
- High cost of deep-sea exploration
- Delays in licensing and project execution
- Technical difficulties in boosting production from ageing fields
What the Government is Doing to Tackle the Issue
The Indian government is aware of the energy import challenge and has taken several steps over the years. In 2015, the government had set a target to reduce oil import dependence from 77% in 2013–14 to 67% by 2022. However, the reality has been the opposite, as current dependence is now over 88%.
Still, efforts are being made in multiple directions:
1. Promoting Domestic Exploration and Production
Through the Open Acreage Licensing Policy (OALP) and Hydrocarbon Exploration and Licensing Policy (HELP), the government is encouraging private and public sector investments in oil and gas blocks.
2. Increasing Focus on Natural Gas
The government wants to increase the share of natural gas in India’s energy mix from 6% to 15% by 2030. Even if some of this gas is imported, it is cleaner and cheaper than crude oil. LNG terminals are being expanded, and the national gas pipeline grid is growing rapidly.
3. Push for Electric Mobility and Biofuels
India is promoting electric vehicles (EVs) to reduce fuel consumption. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme is already in action. Along with this, blending biofuels like ethanol in petrol and biodiesel in diesel is being expanded.
4. Investing in Renewable Energy
Though oil and gas are still the primary fuels, India is also increasing investments in solar, wind, and green hydrogen. The goal is to reduce the overall carbon footprint and reduce fossil fuel dependence in the long term.
Why This Matters for India’s Future
To become a truly self-reliant and powerful nation, India must ensure that its energy needs are not tied too heavily to global markets. Any geopolitical conflict, supply chain disruption, or OPEC decision can directly hurt the Indian economy.
China, the US, and Russia—three powerful economies—have either strong domestic energy production or diversified energy sources. If India wants to stand with them on equal ground, energy independence must become a top priority.
Energy security is not just about keeping vehicles running or factories operating. It’s about national strength, stability, and sovereignty. No country can become a superpower if it depends on others for its basic energy needs.
Looking Ahead: The Road is Long, but Action is Needed
The rising numbers in energy imports should be seen as a wake-up call. India needs to act fast, not only to reduce dependency but also to shield itself from future global energy shocks. While renewable energy and EV adoption are long-term solutions, in the short and medium term, boosting domestic oil and gas production, improving efficiency, and diversifying import sources can provide relief.
India’s strength lies in its size, population, and economic potential. But to truly unleash this power, it must ensure that the engines of the economy—its energy system—are strong, secure, and self-reliant.
