Why India’s energy transition may not end import dependency?

The 30th edition of the Conference of Parties held in Belem reasserted the global push towards low-carbon alternatives, a shift now widely framed as the energy transition. For India, this transformation promises new technologies, cleaner energy systems and a reconfigured socio-economic and technical landscape. Yet beneath this optimism lies an uncomfortable continuity: the persistence of import dependence. While the fuels may change - from oil and coal to lithium, nickel and rare earths - the structural reliance on external supply chains risks remaining largely intact. The continuity becomes clearer when viewed against the backdrop of India’s present energy mix and the forces shaping it.

The current landscape

Despite decades of domestic resource exploration, India remains deeply reliant on imported energy to fuel its economic growth. Today, it imports nearly 88 per cent of crude oil, more than 50 per cent of its natural gas, and a rising volume of coking coal needed for steel and industrial production. In financial year (FY) 2025, India bought 234 million tonnes (MT) of crude oil from abroad, paying roughly USD 137 billion for it. Domestic output of oil was a modest 28 MT, a stark measure of the gap between demand and self-reliance.

This dependence is not merely an economic burden but a strategic vulnerability. Volatility in global crude prices widens India’s trade deficit, weakens the rupee, and strains public finances through inflation and subsidies. Energy supply routes passing through geopolitically sensitive regions, particularly West Asia and key maritime choke points, expose the economy to external shocks. Despite biofuel blending targets, coal expansion, and a gas infrastructure push, India’s energy security remains deeply shaped by global markets and geopolitics.

The new imports

The transition to non-fossil-fuel-based energy sources may reduce traditional energy imports, but newer forms of dependency would arise in the form of materials, technologies and inputs needed for renewable power, storage, electric vehicles and clean energy infrastructure. In fact, the current uptake of renewables in India is supported by imports of the critical minerals needed to manufacture solar PVs, wind turbines and batteries. As per estimates, the demand for critical minerals in India would more than double by 2030, while domestic mining operations may take over a decade to start producing. Currently, India imports nearly all its lithium, nickel and cobalt, in addition to the majority of its copper and graphite requirements.

The geography of the critical mineral supply chain presents deeper challenges for India. Although lithium and nickel are mined in countries such as Australia, Chile and Indonesia, refining and processing remain heavily concentrated in China, an increasingly adversarial actor. This growing dependency necessitates urgent diversification and de-risking of India’s supply chains.

De-risking measures

For a country still dependent on imported critical minerals, substituting oil dependence with mineral dependence is concerning, prompting government initiatives to strengthen the foundations of India’s clean energy transition. The central plank of these efforts is the recently launched National Critical Mineral Mission (NCMM), backed by an outlay of `34,300 crore to scale domestic exploration, mining, processing and refining. In addition, India has also overhauled its mining and regulatory framework to fast-track critical mineral leases and attract private and public investment into extraction and value addition. Material circularity has also entered the policy mainstream, with growing emphasis on recycling and recovering minerals from end-of-life batteries, solar modules and electronics. The `1,500 crore incentive scheme under the NCMM aims to build 270 kilotonne annual recycling capacity and produce 40 kilotonnes of critical minerals. The introduction of the `7,280 crore Rare Earth Permanent Magnet scheme, as a first-of-its-kind initiative, also marks a significant push for self-reliance in the renewable space. These initiatives signal long-term intent, but a key question looms large: can they meaningfully reduce India’s import vulnerability, or will mineral dependence merely replace fossil dependence in the decades ahead?

Reducing that vulnerability will require going beyond domestic reforms to reshaping India’s global positioning in the critical minerals landscape. In the near term, diversification of supply chains through targeted bilateral partnerships and resource diplomacy ought to be a priority of foreign policy to mitigate exposure to concentrated processing hubs. Over the longer horizon, import substitution through domestic exploration, processing and manufacturing must serve as the foundation of a resilient mineral ecosystem. The objective is not merely self-sufficiency, but reduced systemic exposure to geopolitical volatility, supply-chain disruptions and the import bill. Without a coherent and forward-looking mineral strategy, the country risks continuing the very dependency it seeks to escape.

These challenges highlight the need for deeper global cooperation as India pursues a secure and resilient energy transition. Such questions will be central to discussions at the World Sustainable Development Summit 2026, where energy transition, alongside climate finance, multilateralism, nature-based solutions and more, will shape pathways towards a low-carbon and strategically secure future.

Jay Ganesh Pandey is a Research Associate and Jayanta Mitra is a Senior Fellow at The Energy and Resources Institute. They work on people-centric transition, energy justice and sustainability; views are personal