India and the Strait of Hormuz crisis: India, the sixth-largest economy and third-largest energy consumer, stands at a critical juncture of development with dual aspirations — that of a Viksit Bharat (Developed India) by 2047, and Net Zero emissions by 2070. Ensuring reliable, affordable, and clean energy for all is essential to achieve the development goal, while energy transition is critical to meet the Net Zero target.
India’s energy sector depends heavily on imported fossil fuels. In 2024-25, import dependency was 89 percent for crude oil, 50 percent for natural gas, and 25 percent for coal. The Middle East plays a very important role in India’s energy imports. About 47 percent of crude oil imported in 2024-25 was sourced from the Middle East via the Strait of Hormuz, a key maritime route for India-Middle East trade.
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Hormuz crisis and energy security
This region was the major source of crude oil imports at 64 percent share in 2021-22, before Russia began offering cheaper crude in recent years. Moreover, LPG, the predominant cooking fuel in India, is even more dependent on West Asia. Almost 95 percent of LPG imports and 64 percent of natural gas (as LNG) imports are sourced from the Middle East via the Strait of Hormuz.
Natural gas is the second most important fuel for the transport sector as CNG, accounting for six percent of transport fuel consumption in 2024-25, and for cooking as PNG, accounting for nine percent of residential and 12 percent of commercial energy consumption in 2024-25.
Beyond LPG, LNG, and crude oil; the Middle East supplies 43 percent of India’s fertiliser imports and 73 percent of its urea. Natural gas is a key raw material in India with 45 percent of India’s natural gas consumption being used to make fertilisers for agriculture and chemicals for plastics and synthetic fiber for clothing. Supply disruptions of natural gas would therefore impact both sectors, threaten food security, and affect connected industries.
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Imported crude from the Middle East, and elsewhere, is domestically refined into petroleum products used mainly for transport and cooking. Energy use in India differs substantially across sectors: coal dominates the industry at 59 percent, with petroleum products and electricity at 19 percent each; petroleum products at 92 percent, followed by natural gas at six percent, are the predominant energy suppliers in the transport sector.
The residential, commercial, and agriculture sectors rely primarily on electricity, followed by petroleum products. In the residential and commercial sectors, electricity covers all non-cooking needs while cooking predominantly uses petroleum products (81 percent).
This diverse energy mix and uneven access to affordable green technology options make energy transition complex. With India’s energy demand large, varied, and rising, no single fuel or technology can drive the transition.
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Electrification of end-use services is usually considered a necessary strategy for energy transition. If electricity is generated from non-fossil sources, using such green electricity is another step forward for energy transition.
Currently, electricity contributes one-fifth of India’s total final energy consumption; a recent NITI Aayog study suggested that 60 percent electrification of this is required to ensure a Net Zero transition in India.
Although India has shown remarkable progress in the renewable energy sector by achieving more than 50 percent of installed capacity from non-fossil sources, actual green electricity generation is only about 27 percent.
Since renewable energy sources do not generate power consistently ensuring grid stability and managing green electrification is challenging. Battery storage as well as renewable technologies like solar panels and wind turbines use critical minerals intensively, especially rare earth elements.
India is highly dependent on rare earth imports. With the rare earths market dominated by China, India’s extensive import dependency on China may make its energy security vulnerable in the absence of alternative arrangements.
Nuclear power has the potential to provide clean and reliable power supply and being a non-fossil source and it can also contribute to decarbonization of India’s power sector. However, safety is a major challenge in nuclear power plants.
Passenger mobility in land transport can be fully decarbonised via fleet electrification and a shift to electricity-based public transport (train, metro, electric bus, electric three-wheeler). Insufficient charging infrastructure is, however, a key near-term constraint to this transition.
Cooking in both residential and commercial sectors relies heavily on LPG and PNG. According to National Family Health Survey-5, LPG or PNG is the primary cooking fuel for 89 percent of urban and 42 percent of rural households.
In rural areas, freely available solid biomass still meets a large share of cooking needs, despite expanded LPG access. Almost 95 percent of total LPG imports in India and 60 percent of domestic LPG demand are met by the Middle East. For natural gas used as PNG, the figures are 64 percent and 32 percent, respectively. With annual LPG consumption at 33 MMT and only 45 days of rolling stock, geopolitical disruptions can severely impact domestic availability, as has happened recently.
Geopolitical disturbances around Strait of Hormuz could also be used to drive adoption of alternative clean cooking fuels (beyond electricity) while ensuring energy sovereignty. Electric cooking has struggled in Indian households due to cooking styles, food preferences, and utensil compatibility.
However, recent innovations like plasma electric stoves address many of these challenges. Other alternatives include Dimethyl Ether (DME), a clean synthetic gas derived from coal that can effectively substitute LPG; solar cooking, which offers affordable green energy; and fuels like hydrogen, ethanol, and biogas. At present, all of these face affordability or supply-chain constraints that limit large-scale adoption.
As it is cleaner than petroleum products, natural gas can serve as a transitional fuel. Emerging green fuels like compressed biogas (CBG) and ethanol offer clean alternatives that also support energy self-reliance. For heavy duty freight, aviation, and marine transport, electricity is not a suitable fuel.
Disruption around the Strait of Hormuz has created an opportunity to facilitate an energy transition toward cleaner fuels. Sustainable aviation fuel (SAF) is a viable green option for aviation, while biofuels, green ammonia, green methanol, and hydrogen can meet the needs of marine and heavy-duty freight.
However, at present, green hydrogen, green methanol, and green ammonia face high upfront costs and scalability challenges. On the other hand, biofuels (including ethanol) also raise concerns over life-cycle emissions and competition with food crops.
Recent technological progress, and the Strait of Hormuz crisis and its aftereffects, present an opportunity for India’s energy transition goals. But it requires strategic planning, supportive policies, incentives for clean fuels, and sustained research and development for the country to achieve these goals.
Saswata Chaudhury is Senior Fellow & Area Convenor, Energy Assessment and Modelling Division, The Energy and Resources Institute, New Delhi. Originally published under Creative Commons by 360info
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