Energy crisis and India's diplomatic limits

If the country's energy vulnerability is structural, so must be the response to it

9 min read

Updated On: Jul 10 2026 | 6:09 AM IST

(From left) EU High Representative Kaja Kallas, German Foreign Minister Johann Wadephul, South Korean Foreign Minister Cho Hyun, UK Foreign Secretary Yvette Cooper, Indian External Affairs Minister S Jaishankar, US Secretary of State Marco Rubio, Fr

Every few years, a geopolitical crisis reminds India of a stubborn reality: Despite its growing economy, expanding military capabilities, and rising profile, it remains vulnerable to energy shocks originating abroad. War in West Asia, instability in the Gulf, sanctions on major oil producers, or disruption to shipping can quickly raise energy prices at home. When that happens, the question inevitably follows: Why can’t a country that aspires to great-power status , shield itself from external energy turmoil? The answer lies less in the success or failure of diplomacy than in the limits to what diplomacy can realistically achieve when a country remains heavily dependent on imported energy.

India’s inability to insulate itself from an external energy shock is sometimes misinterpreted as diplomatic weakness. In reality, a country that imports 88 to 90 per cent of its crude oil remains exposed to disruption in global energy markets regardless of the skill of its diplomats or the reach of its armed forces.

India is far from being helpless: It has choices over suppliers, shipping routes, and key partnerships. Yet it cannot free itself entirely from turbulence in regions that produce the energy on which its economy depends.

India today is the world’s third-largest consumer of crude oil. Ironically, the country’s energy dependence is not merely a consequence of policy choices; it is also a byproduct of its economic success. Rapid industrialisation, urbanisation, rising incomes, and expanding mobility have sharply increased energy demand. In that sense, vulnerability is not simply the result of weakness. It also reflects energy demand outpacing domestic production.

Much of India’s import of crude oil travels through a finite number of maritime chokepoints, the foremost among them being the Strait of Hormuz, through which roughly a fifth of globally traded oil passes and around half of India’s own imports flow. Any threat to traffic through that narrow waterway inevitably reverberates through global markets. Oil prices respond not only to disruption but also to expectations of disruption, placing import-dependent economies at the mercy of risks they did not create.

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Recent tensions in West Asia illustrate the limits of even successful diplomacy. India maintains productive relations across divides in the same way with Gulf states, including Iran, as with Israel, but even such broad diplomatic engagements cannot guarantee reliable energy supplies from a region shaped by rivalries beyond India’s control.

Beyond economics, energy security also underpins military effectiveness. Armed forces need assured fuel for mobility, logistics and sustained operations, making energy resilience critical for defence preparedness. A country whose transport systems, industries and households rely heavily on imported fuel inevitably finds its freedom of action constrained. Decisions taken elsewhere, conflicts abroad, or disruption in maritime routes can all impose costs at home. This problem is not uniquely Indian: From the 1973 oil embargo and the Iranian Revolution to the Gulf War, the Ukraine crisis, and recurrent tensions in West Asia, the vulnerabilities of energy-importing states have repeatedly stood exposed.

The lesson of oil shocks

India’s management of the energy consequences of the Ukraine conflict has demonstrated the value of pragmatic diplomacy. By maintaining ties across competing geopolitical camps and preserving its freedom of decision-making, India secured access to alternative supplies at a time of considerable uncertainty. After 2022, discounted Russian crude oil rose from having a negligible share in India’s imports to becoming one of its largest. Yet that shift underscored an enduring reality: Diversification reduces vulnerability to particular suppliers but not to imports themselves.

The episode illustrates a broader point: Diplomacy can mitigate the consequences of structural vulnerabilities; it cannot eliminate them. When markets react to geopolitical uncertainties, even major powers find themselves up against forces beyond their control. Diplomacy can buy alternatives abroad; it cannot create domestic energy out of thin air. The same logic applies to military power. India has expanded its protection of sea lines of communication across the Indian Ocean. Naval deployments reassure shipping, deter threats, and demonstrate national resolve. Yet they too have limits. Warships can escort tankers through dangerous waters; they cannot create energy supplies.

Over the past decade, India has taken steps to reduce vulnerability to imported energy. Energy imports have diversified and Indian refiners source crude oil from 40 countries. Strategic petroleum reserves cover 9.5 days of demand, with total national cover of 74 days, including stocks held by state-owned oil refiners. Maritime security has strengthened the capacity to respond to disruption. Together, these measures have reinvigorated resilience.

Yet they all share an important limitation: They buy time, not energy freedom. Strategic petroleum reserves are finite. Diversification reduces dependence on a supplier but not on imports. Alternative routes reduce exposure to one chokepoint while leaving others in place.

Naval escorts protect shipping but cannot prevent price shocks. Even prudent restrictions on fuel consumption during periods of stress are primarily tools in crisis management. They cushion the impact of disruption without addressing its underlying cause.

The result is a paradox often overlooked in discussions on national power. A country may have capable armed forces, sophisticated diplomacy, and growing international influence, and yet be vulnerable because a critical component of its economic life depends on resources beyond its control. That reality lies at the heart of India’s conception of strategic autonomy.

Strategic autonomy

This is where freedom of action and national capability intersect. For decades India has pursued a foreign policy aimed at preserving freedom of judgement, avoiding exclusive alignment with any major power, and maintaining productive relations with multiple influence centres. Strategic autonomy is often described as a diplomatic doctrine when, in reality, it is a capability doctrine. Freedom of judgement ultimately depends on how much external pressure a country can withstand without altering its decisions. Indeed, capability does not merely compensate for the limits of diplomacy; it is itself a source of diplomatic leverage and freedom of action.

Energy illustrates this clearly. A country that imports most of its fuel will face constraints that diplomacy alone cannot remove; the challenge is not a lack of diplomatic skill but the presence of structural dependence. Countries dependent on other nations for energy, technology, finance or other critical inputs find their freedom of action narrowing during periods of geopolitical strain.

Modern economies are interconnected and absolute energy sovereignty is unattainable. The practical objective is resilience: The ability to absorb disruption without strategic paralysis. The challenge is to prevent interdependence from becoming vulnerability or coercion.

Complete insulation from global markets is not a realistic objective for Indian energy policy. The practical goal is to reduce the degree to which external disruption translates into domestic vulnerability. Domestic oil and gas exploration, improved and enhanced oil recovery, biofuels, strategic petroleum reserves, diversified suppliers, renewable energy, domestic manufacturing, and technological capability all serve this larger purpose. While they do not eliminate interdependence, they make it more manageable.

If energy vulnerability is structural, so must be the response to it. One requirement is diversifying suppliers, routes and infrastructure, so that dependence is not concentrated in a few locations.

Another is larger strategic petroleum reserves, matching the International Energy Agency’s recommended 90-day benchmark.

A third is the continued development of maritime capability for protecting the energy flows on which India depends. Most important, however, is reducing dependence itself. The long-term solution to imported energy vulnerability is not securing more import but requiring less of it. In energy security, as in national security, durable protection comes from reducing dependence rather than managing it.

This is why India’s investment in renewable energy, electricity storage, green hydrogen, and civilian nuclear power should be viewed not merely as climate policy but as elements of national-security strategy. Every unit of energy generated domestically reduces exposure to geopolitical disruption elsewhere. Yet reducing one dependency does not necessarily eliminate dependency itself. The green transition carries vulnerabilities of its own, often obscured by enthusiasm for clean power.

Key clean-energy inputs — processed lithium, cobalt, rare earths, solar cells, and advanced batteries — remain concentrated in a handful of suppliers, especially China. India has expanded solar-module manufacturing, yet much of the upstream supply chain remains import-dependent. Recent restrictions on access to rare earths and processing technologies show how readily such concentration creates leverage. A green-energy transition not built at home does not end dependence; it changes its form and its address.

The transition must be pursued as an industrial undertaking, not merely an environmental one, because energy security will depend not only on generating clean power but also on commanding the technologies, manufacturing capacity, minerals and supply chains that make it possible.

For defence planners the point is sharper: Advanced batteries, semiconductors and resilient power systems are becoming consequential components of national security. The objective must be to build capability across the energy chain, from minerals and manufacturing to generation and storage.

Building this capability is harder than declaring it and will be the work of private enterprise as much as the state. Strategic industries, from cells and processed minerals to semiconductors, are costly, technologically demanding, and slow to develop, while private capital in India has tended to favour quicker returns.

The government’s task is less to build these industries than to make building them worthwhile: Through deeper long-term capital markets, credible demand, and, above all, regulatory continuity, since patient capital fears repeatedly changing rules more than long horizons. India has begun this turn, with incentives and import protection, which have built a competitive solar-module industry from almost nothing, but the effort has faltered upstream, where it matters most. Sustaining it will demand consistency across political cycles. That, more than diplomatic initiative, will determine whether today’s vulnerabilities get reduced tomorrow.

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