The ongoing instability in West Asia, particularly the escalation involving the United States and Iran, has once again exposed the structural risks embedded in global energy dependence. For India, these risks are immediate and measurable. Nearly 65% of its LPG supplies originate from Gulf countries, and a significant portion of both crude oil and LPG shipments pass through the Strait of Hormuz—a narrow 33 km maritime chokepoint through which over 20% of global LPG trade moves. Any disruption in this corridor—whether due to conflict, sanctions, or strategic signalling—translates directly into higher energy costs for over 320 million Indian households. This is not a theoretical vulnerability; it is a recurring economic stress point that affects inflation, fiscal stability, and household welfare.
India had already recognised the importance of reducing such vulnerabilities during the Covid-19 pandemic, when the vision of Atmanirbhar Bharat was articulated as a framework for building domestic resilience. That vision must now be extended more decisively to energy and critical technologies—ensuring that essential sectors such as cooking fuel, petroleum, and semiconductors are not excessively exposed to external shocks. Each of these sectors reveals the same pattern: high import dependence coexisting with significant untapped domestic potential.
The case of cooking fuel is the most immediate and actionable. India spends Rs 12-13 lakh crore annually on importing crude oil and LPG, reflecting an energy import dependence of over 85%. A calibrated national transition toward ethanol-based cooking fuel offers a viable pathway to simultaneously reduce the import bill and moderate external energy dependence. Ethanol can be produced entirely within India from sugarcane, maize, bagasse, rice straw, and other agricultural residues. With nearly 2,000 crore litres of ethanol production capacity, India already possesses the scale to substitute up to one-third of its LPG consumption. As several researches suggest, such a transition can simultaneously enhance energy security, stabilize domestic prices, and create a robust agri-energy ecosystem.
The policy feasibility of scaling ethanol is already established. The Ethanol Blending Programme achieved its 20% blending target in petrol ahead of schedule, demonstrating that production, supply chains, and institutional coordination can operate at scale. Extending ethanol into cooking fuel would therefore not require a conceptual shift, but an expansion of an existing model. The economic benefits are substantial. India could save an estimated Rs 1.8 lakh crore annually in foreign exchange by reducing LPG imports. The transition could generate between 3.5 to 5 million direct jobs and create a domestic industry valued at approximately Rs 45,000 crore.
The impact at the farm level is equally significant. Sugarcane diverted toward ethanol production fetches Rs 3,500-4,200 per tonne under the Government of India’s Fair Remunerative Price mechanism, offering roughly a 40% premium over open-market sugar prices. This creates a stable and predictable income stream for farmers. At the same time, second-generation ethanol technologies enable the monetisation of crop residues. Farmers in Punjab and Haryana can earn around Rs 2,500 per tonne for rice stubble, which would otherwise be burned, contributing to severe air pollution episodes across North India. This links energy policy directly with environmental outcomes and rural income enhancement.
The petroleum sector presents a longer-term but equally critical dimension of energy sovereignty. India currently consumes approximately 5-5.5 million barrels of oil per day while producing only 600-700 thousand barrels, resulting in an import dependence of 85-88%. Annual crude import costs range between $130-137 billion, making energy one of the largest contributors to the current account deficit and a key driver of inflation volatility. Historically, the sector evolved under a state-led framework dominated by institutions such as Oil and Natural Gas Corporation. While this ensured strategic control, it also resulted in relatively low exploration intensity compared to global benchmarks.
The most important insight, however, is that India’s challenge is not merely limited reserves but insufficient exploration. The country has 26 sedimentary basins covering approximately 3.36 million square kilometres, yet only about 10% of this area has been explored. Even with ongoing policy efforts, this is expected to rise only to around 16% in the near future. This leaves the overwhelming majority of India’s hydrocarbon potential untapped. According to S&P Global, four largely unexplored frontier basins—Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan—alone may contain an estimated 22 billion barrels of undiscovered hydrocarbons. This figure is more than four times India’s currently proven reserves and places these basins in the category of high-potential deepwater regions, with some assessments suggesting that their scale could be comparable to the Permian Basin in the United States.
In addition, India’s total hydrocarbon resource base is estimated at around 12 billion tonnes of oil equivalent, with a comparable volume still undiscovered. Nearly 38% of recoverable reserves lie offshore, particularly along the eastern coast and the Andaman region, reinforcing the importance of deepwater exploration. The implication is clear: India is not resource-poor, but under-explored. Notably, India has already undertaken major reforms such as the Hydrocarbon Exploration and Licensing Policy (HELP), which has opened up sedimentary basins, simplified licensing, and attracted new private and foreign participation. These initiatives have led to the award of over 140 exploration blocks and improved ease of doing business in upstream exploration. Unlocking this potential further will require advanced technology, stable policy frameworks, and sustained investment over the long term. Even partial success in these frontier basins could significantly reduce import dependence and enhance strategic autonomy.
The third pillar of sovereignty lies in semiconductors, which underpin modern economic and strategic systems. India’s engagement with semiconductor manufacturing began in the 1980s with Semiconductor Complex Limited, which had achieved 3-5 micron fabrication capability. However, disruptions and a lack of sustained scaling prevented India from developing a full manufacturing ecosystem. Over the following decades, the global semiconductor industry expanded to over $600-650 billion and is projected to exceed $1 trillion by 2030. India, meanwhile, became heavily import-dependent, sourcing 90-95% of its semiconductor requirements from abroad.
This dependence is strategically significant because semiconductors are foundational to defence systems, telecommunications, automobiles, consumer electronics, and emerging technologies such as artificial intelligence and electric mobility. India’s current semiconductor demand is estimated at $45-50 billion (Rs 3.7-4 lakh crore) and is expected to reach $100-110 billion by 2030, with long-term projections of nearly $300 billion by 2035. In several years, semiconductors have been among India’s largest import categories. Despite this, India has strong structural advantages. It accounts for nearly 20% of the global semiconductor design workforce, with over 125,000 engineers currently engaged in chip design and a projected talent pool of 350,000-400,000 by 2030. The country hosts numerous design centres of leading global firms, providing a strong upstream base. Global leaders such as Taiwan Semiconductor Manufacturing Company have demonstrated that long-term ecosystem development—integrating design, fabrication, and supply chains—is key to success.
Under the present government, India has initiated this process through the Semiconductor Mission, with financial commitments of Rs 76,000 crore and proposed investments exceeding Rs 1.5-1.6 lakh crore. However, global comparisons underscore the need for sustained scale: the United States has committed over $52 billion under the CHIPS Act, while China has invested more than $150 billion over the past decade. A phased approach is therefore essential. India must leverage its design strength, expand into assembly, testing, and packaging, and gradually build fabrication capacity, particularly in mature nodes such as 28nm-65nm, which account for a large share of global demand in sectors like automotive and telecom.
Across cooking fuel, petroleum, and semiconductors, the pattern is clear: India’s dependence remains high, but so does its potential. With a strong agricultural base for ethanol, significant hydrocarbon reserves, and growing human capital for semiconductors, the constraint is not capability but execution—aligning policy, investment, and institutions over time. In an era of geopolitical shocks and supply disruptions, resilience must be built through domestic strength. Advancing ethanol as a cooking fuel, accelerating hydrocarbon exploration, and scaling semiconductor capacity can together reduce structural vulnerabilities while strengthening India’s global economic position.
- Kartikeya Sharma is Independent Member of Parliament (Rajya Sabha).
