Mukul Asher
I Introduction
Reducing India’s current high dependence in a prudent and sustainable manner on fossil fuels for its overall energy needs, and thereby progressing towards Atmanirbharta in this sector, is among the priorities of the Indian government. Some observers argue that India needs energy Atma nirbharta in not just oil and gas, but also in nuclear, coal, solar, and wind.
It should be noted that Atma Nirbharta does not necessarily require India to fully meet its demand for energy from domestic production, but to create strategic alliances for long term availability of the energy sources from global partners, even as domestic production is encouraged.
Saudi Aramco’s CEO Amin Nasser has rightly stressed that fossil fuels will continue to play a key role in energy mix for a much longer time, and he has therefore urged the world leaders to continue investing in fossil fuels. This observation is supported by other observers.
The rest of the paper is organized as follows. Section II sets the global and Indian contest for the oil and gas sector and alternatives to reduce relative dependence on them. This is followed by a brief statement of India’s renewable energy goals at UN climate change conferences. Section IV discusses avenues which India is pursuing to bring about greater Atma nirbharta in the oil and gas sector. The final section provides concluding remarks.
II The Context
Figure 1 presents oil demand dynamics of the world and of selected groupings and countries, including India. In 2019, India accounted for only 5.2 percent of global oil demand; though between 2000 and 2019, its contribution to world oil demand growth was 13.5 percent, as compared to 45.5 percent for China, and negative 0.8 percent for the United States.
Figure 2 shows carbon emission per- capita by country. While India’s per capita carbon emission at 1.7 is relatively low, (corresponding figures for the United States and China are 14.4 and 7.1 respectively). This figure will increase as India progresses from USD 3 trillion plus economy in 2022 to USD 10 trillion plus economy by mid 2030s. It is in this context that India’s policy goal to minimize increase in per capita emission per trillion USD GDP added acquires significance.
Figure 1: Oil Demand Dynamics
Two of the key reasons for the continuing role of fossil fuels are The first reason, as for key metals, is the demand that is expected to exceed supply. (Figure 3)
The second reason is that supply of these metals is concentrated in only a handful of countries, potentially reducing India’s leverage and resilience. (Figure 4)
India is, however, engaging in creative diplomacy with several countries, such as Russia, Australia, Brazil, the USA, and South Africa, which have metal reserves to manage the metal supply chain. Another critical area is metal and minerals refining capacity. China has a large share of global refining capacity and global diversification at a measured pace is a necessity.
Atmanirbharta requires India to creatively manage and counter this global reality. This is among India’s key geo-economic geo-strategic goals.
Figure 2: Carbon Emission Per-Capita by Country
Figure 3: Demand and Supply of Key Metals
Accessed on 8 December 2021
Figure 4: Major Producers of Key Metals
Accessed on 8 December 2021
Figure 5 shows 20 top producers of oil globally. From India’s perspective, US, Saudi Arabia, the UK (Shell is now a UK company), Russia, and France could be key partners for India in this sector. The absence of any Indian company in the top 20 is noticeable.
Figure 5: Top 20 Oil Producers Globally
III. India and UN Climate Change conference Renewable Goals
At COP 21 (United Nations Climate Change conference) in Paris in 2015, as part of its Nationally Determined Contributions (NDCs), India had committed to achieving 40 per cent of its installed electricity capacity from renewable energy sources. It achieved this in November 2021 itself, according to the Ministry of New and Renewable Energy.
India’s installed renewable energy (RE) capacity around 2020 stands at 150.05 GW, a sharp increase from just 30 GW in 2015. India aims over next eight yea TO add 35 GW of capacity addition per year to achieve 500 GW by 2030
The 2021 nuclear power capacity of India was 6,780 MW, and the plans are to increase it to 22,480 MW by the year 2031 on progressive completion of projects under construction and accorded sanction.
At the COP26 meet in Glasgow in 2021, PM Modi announced that by 2030, India would increase its non-fossil energy capacity to 500 gigawatts (GW), fulfill 50 per cent of its energy requirements from renewable source; reduce its carbon intensity of economy by 45 per cent; and reduce total projected carbon emissions by 1 billion tonnes. These are indeed ambitious goals for which Atma Nirbharta in various energy sources would be needed.
The Indian government has launched the National Hydrogen Mission to prepare stakeholders to progress towards developing a hydrogen-based economy. This Mission aims to meet the climate target and make India a Green Hydrogen Hub. A key challenge will be to produce it at affordable costs. Green hydrogen produced by renewables is far from competitive compared to other fuels, costing nearly double the price using coal, India’s main source of electricity.
IV Avenues for Greater Atmanirbharta in Oil and Gas Sector
As the nature of globalization undergoes a shift toward “common-interest country shoring’ rather than globalized shoring, economic and strategic diplomacy has acquired greater prominence. Or security and for national prosperity and resilience. India is pursuing three broad avenues for greater Atmanirbharta in the oil and gas sector.
Moreover, if India lacks critical capabilities and technologies, these can not just be acquired by trade. So, policies need to be consistent with developing needed capabilities and technologies if India is to acquire greater resilience.
The first avenue is creative strategic diplomacy with key global players who can help advance India’s goals in the oil and gas sector. The second avenue is investing in renewable energy supply chain with global participation and financing. The third avenue is exploring opportunities to reduce fossil fuel consumption
Creative Diplomacy:
Illustrative examples of such diplomacy are as follows.
(i) India’s CEPA (Comprehensive Economic Partnership Agreement) with UAE (United Arab Emirates),
a key strategic partner who has large oil and gas reserves for greater longer-term reliability of supplies as well as knowhow and investments, host to significant number of Indian workers and professionals, and home to Dubai, a strategic global hub and port, as well as a financial center, came into force on 1 May 2022.
India is expected to benefit from preferential market access provided by the UAE on over 97 % of its tariff lines which account for 99% of Indian exports to the UAE in value terms particularly from labour-intensive sectors such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and Automobiles. As regards trade in services, Indian service providers will have enhanced access to around 111 sub-sectors from the 11 broad service sectors.
The government projects that CEPA is expected to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years.
CEPA encourages mutual investments through establishing the UAE-India Technical Council on Investment with the objective of promoting, facilitating and monitoring the investment activities, as well as identifying new opportunities for investment. UAE is a large investor abroad, and the agreement should facilitate greater UAE investments within India and with Indian companies abroad.
There are other signs of increased density of India-UAE relations. Thus, Reliance Industries initiated first oil cargo from the UAE trade arm in December 2021. Being present in the UAE will help in searching for new economic opportunities for Reliance Industries in the oil and gas sector.
(ii) I2U2 Group
This group comprises India, Israel, United States, and UAE.
The first summit of this Group was held virtually on 14 July 2022. This reflects the fast changing geo-political developments.
“The I2U2 Group will advance a hybrid renewable energy project in India’s Gujarat State consisting of 300 megawatts (MW) of wind and solar capacity complemented by a battery energy storage system. The U.S. Trade and Development Agency funded a feasibility study for the $330 million USD project.
The Summit communique
UAE-based companies are exploring opportunities to serve as critical knowledge and investment partners. Israel and the United States intend to work with the UAE and India to highlight private sector opportunities.
Indian companies are keen to participate in this project and contribute to India’s goal of achieving 500 GW of non-fossil fuel capacity by 2030. Such projects have the potential to make India a global hub for alternate supply chains in the renewable energy sector.
As part of the Summit decisions is the setting up of UAE funded $2 billion agricultural parks project in India, with Israel to provide tech support, and US private sector will also be involved.
(iii) Deepening Strategic Partnership with Russia, a Major Producer of Energy, Metals, and Minerals and of Nuclear Technology
India and Russia are pursing creative economic and strategic diplomacy to give impetus to their partnership relevant for the twenty-first century. India’s economic and strategic diplomacy during the NATO (North Atlantic Treaty Organization)-Russia war, involving Ukraine, has been consistent with its national interests, balancing its relations with Russia, NATO, Ukraine, and other key countries.
At the 2021 Annual Summit between India and Russia, India’s Prime Minister urged that Russia and India need to guide their business communities to reach the target of USD30 billion trade and USD 50 billion investment between the two nations by 2025.
Speaking at the same Summit, India’s Foreign Secretary noted,
“On the trade and investment side, there are some specific plans which include long-term corporation in the areas of inland waterways, fertilizers, coking coals, steel, skilled manpower. We have expressed interest in further investments in the oil and gas sector, as well as in the area of petrochemicals. “
Russia has reportedly agreed to to supply state-of-the-art technology to India’s Kudankulam nuclear. Plant. Nuclear energy is increasingly accepted as among the cleaner energy sources available.
It is noteworthy that the European Union Parliament in Juny 2022 declared nuclear, and LNG as “green” sources of energy.
Russia has welcomed India’s participation as a reliable partner in the development of the Russian Far-East, identifying sectors such as energy, transport and logistics, maritime connectivity, diamond processing, forestry, pharmaceuticals and healthcare, tourism, and humanitarian fields.
Many Indian businesses have expressed interest to explore these sectors in the Russian Far-East.
The two countries are exploring a shorter sea route between Chennai in India and Vladivostok in Russia’s far east, which will replace sea route between Mumbai and St. Petersburg. (Figure 6).
This shipping link would enable to transfer cargo between Chennai and Vladivostok in 24 days in comparison to over 40 days currently taken to transport goods from India to Far East Russia via Europe. Passing through the Sea of Japan, South China Sea and Strait of Malacca, the maritime corridor is designed to protect India’s strategic interests, especially in engaging with other major maritime powers, including China.
Figure 6: A shorter Sea Route between India and Vladivostok in Russia’s Far East
(iv) India-Australia Economic Cooperation and Trade Agreement (AI ECTA)
Both India and Australia are members of QUAD, an informal strategic group comprising United States, Japan, India, and Australia. Its main aim is to keep the strategic sea routes in the Indo-Pacific free of any military or political influence. The QUAD group has gradually expanded its scope of activities in line with multi-dimensional risks to national and international security and prosperity.
Thus, the leaders of the Quad nations met on May 24, 2022 in Tokyo for the fourth time and the second time in person. The Quad summit witnessed the launch of a new initiative for continuous collaboration in the maritime domain, space, climate change, health, and cyber security.
India and Australia have decided to deepen and widen their economic and other engagements beyond Quad. Thus, they signed AI ECTA on 2 April 2022. It is an interim agreement, with comprehensive agreement to follow by end of 2022 or first half of 2023. Under it, Tariffs will be eliminated on more than 85 per cent of Australian goods exports to India (valued at USD12.6 billion a year), rising to almost 91 per cent (valued at $13.4 billion) over 10 years. Australian households and businesses will also benefit, with 96 per cent of Indian goods imports entering Australia duty-free on entry into force.
https://www.trademinister.gov.au/minister/dan-tehan/media-release/historic-trade-deal-india Accessed on 2 April 2022
According to the above source, AI ECTA will also facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies in both countries. Australia and India have also agreed to undertake cooperation to promote agricultural trade as part of the agreement and will now work toward concluding an enhanced agricultural Memorandum of Understanding (MoU).
Australia is a major producer and refiner of critical metals and minerals (Figure 4), and has an ageing population which complements India’s relatively young population. A trade agreement with Australia would facilitate better access to supply of important metals and materials necessary to achieve mass-scale transport electrification. As Australia has rich supplies of these minerals and commodities and India has vast demand both could reap significant benefits.
Australia and India have agreed to a partnership to strengthen their co-operation in developing critical metal projects and supply chains. India’s coal and Mines Minister is visiting Australia to explore joint investment possibilities in Lithium and Cobalt Projects in Australia, which is critical for India’s transition towards clean energy ambitions.
(v) Engagement with Iran, Central Asia and Mongolia
India is also engaging energy and minerals and metals rich countries of Iran, Central Asia, and Magnolia/ Access to them also facilitates greater security space globally.
India and Iran continue their cooperation on the development of the Chabahar Port in Iran as a transit hub for the region, including Central Asia. Delegates from the two counties will meet soon to address operational aspects of the key port. This port is a more economical and stable route for landlocked countries of the region to reach India and the global market.
Figure 7 provides a map of International North South Transport Corridor (INSTC). It connects Mumbai to Moscow through a multi-modal transport system, and also connects Chabahar port in Iran. The NATO-Russia war focusing on Ukraine, and sanctions on Iran could give project an impetus.
On July 7, 2022, Iran announced the completion of the first transport of Russian goods to India through the INSTC. (https://twitter.com/TheCradleMedia, 7 July 2022)
Figure 7: International North South Transport Corridor (INSTC)
India is also contusing intense diplomatic engagement with the Central Asian countries. Central Asia is rich with diverse energy resources. In the downstream countries of Kazakhstan, Uzbekistan, and Turkmenistan there are significant reserves of oil, gas, and coal. The upstream countries, Tajikistan and Kyrgyz Republic, are rich in undeveloped hydropower potential.
India is also involved in an oil refinery project in Mongolia, contributing to its energy security.
(2) Investing in Renewable Energy Supply Chain with Global Financing
U.S. International Development Finance Corporation (DFC), the country’s development bank, announced on 7 December 2021that it approved up to $500 million of debt financing for First Solar Inc., the largest American solar manufacturing company to build a solar-panel factory in Tamil Nadu, India.
The DFC financing will support the First Solar’s previously announced vertically integrated photovoltaic (PV) solar module manufacturing facility in Tamil Nadu, India, with a projected annual capacity of 3.3 gigawatts (GW). The USD 684 million facility will commence operations in the second half of 2023.
(3) Finding New Opportunities to Reduce Fossil Fuel Consumption
There are a large number of such opportunities in transport, infrastructure and other sectors as well as in changing consumption patterns. Illustrative examples are given below.
Reforming Electricity Distribution companies for more reliable and efficient supply could significantly reduce the use of economically costly use of generators in residences, businesses, and industrial units.
India can reduce its carbon foot print by partly replacing chemical fertilizer and coal fired electricity, with natural manure and gobar gas. It is reported that in the United States, states such as California has developed significant gobar gas industry.
Another major opportunity is reducing reliance of around 400,000 telecom towers in India on fossil fuels.
Telecom tower operators currently use diesel generators, batteries, and a variety of power management equipment to address the demand-supply gap. The resulting energy costs alone account for 25 percent of the total network operating costs, affecting the profitability of the operators.
This could help in reducing demand for fossil fuels.
India is developing on its eastern coast the LNG terminals at Kakinada, Andhra Pradesh, and in Dhamra, Odisha, with global partners. These are designed to meet India’s growing demand for LNG, a cleaner fuel. The existing LNG import terminal at Ennore, Chennai, will also play an important role in LNG-related import and distribution.
India is also investing heavily in modernizing and expanding its existing oil refineries to make them more efficient, as it approaches Atma Nirbharta in the oil and gas sector in a nuanced manner.
There are also possibilities to reduce fossil fuel consumption in agriculture by measured moderate shift towards crops which are less water and energy intensive; and by a shift to economically more rational pricing policies to wards water, fuel, and other resources. Change in consumption habits could support such a production shift.
(vi) Concluding Remarks
Progressing towards the goal of greater Atma Nirbharta represents major challenges for India. This reduction should however be undertaken in a sustainable manner, particularly not reducing fossil fuel usage and investments pre-maturely.
Three avenues which could help in progressing towards the goal are creative diplomacy with key global players to enhance capabilities; investing in renewable energy supply chain within India, including in hydrogen technology; and pursuing greater fossil fuel efficiency in both production and consumption.
Edited by- Parisha Bhatia, M.A. Economics (CITD) Student at Jawahar Lal Nehru University
Read another piece by Mukul Asher- Union Budget 2022-23: Valid Economic Reasoning and Social Policies. But is that What India Needs? in IMPRI insights.
Read another piece by Mukul Asher- How Does India’s Services Trade Perform Compared to Selected Countries? in IMPRI insights.
Read another piece by Mukul Asher- India’s Agricultural Trade: An International Perspective in IMPRI insights.
About the Author

Prof Mukul Asher, Former Professor, Lee Kuan Yew School of Public Policy, National University of Singapore
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