English Hindi


Prelims Capsule


After Russia, Iran offers oil to India, proposes revival of Rupee

After Russia, Iran offers oil to India, proposes revival of Rupee


  • GS 3 || Economy || Infrastructure || Power & Energy

Why in the news?

  • Iran has offered to meet India’s energy demand at a time when global crude oil prices are at multi-year highs, threatening to push inflation, widening trade deficits that India runs with foreign countries, and weakening the rupee against the dollar.

What is Energy security?

  • It is defined as the uninterrupted availability of energy sources at an affordable price.
  • Long-term energy security deals with timely investments to supply energy in line with economic developments and environmental needs.
  • Short-term energy security focuses on the ability of the energy system to respond promptly to sudden changes in the supply-demand balance.

Status of India in consumption

  • India imports 80 percent of its oil needs.
  • India’s energy consumption is expected to grow 4.5 percent every year for the next 25 years.
  • India is the world’s fourth-largest energy consumer, with consumption anticipated to nearly treble by 2040. India’s energy and water demands are rising day by day. Increasing population, global warming, urbanization, and many other factors are the main cause behind it. While India is facing a water crisis situation it can jeopardize India’s energy security goals.
  • India will become more reliant on fossil fuel imports as its energy needs expand. There are several major threats to India’s energy security as a result of government plans for domestic oil and gas production.

Significance of Energy security

  • India aims to become the leading global economic power that will fuel energy needs for providing infrastructure, provisioning basic necessities, developing human skills, employment generation, and manufacturing abilities.
  • India’s economic fortunes continue to be tied to the sharply fluctuating international price of oil.

Challenges of Energy security

  • Economic Problems
    • Inadequate domestic coal, oil, and natural gas supplies, as well as ongoing oil volatility, put the country’s budgetary space under strain.
    • Western sanctions have put India’s energy interests in Russia in jeopardy. The value of ONGC’s interest in the Vankor oil field, for example, has plummeted.
  • Barriers to Accessibility
    • Dependence on natural resources such as rare earth, minerals, and components, which are essential to effect the transition to a clean energy system, is one of the most serious concerns in the field of clean energy systems.
  • Political Challenges
    • The supply, demand, and geopolitical factors all influence the energy market’s trajectory.
    • Sanctions on Iran and Russia have a significant influence on India’s energy sector. Sanctions on Iran, for example, reduce India’s oil imports.
    • The ability of OPEC+ countries to influence crude oil prices is a significant concern for India’s energy sector.
  • Environmental challenges
    • Electric vehicles will become more popular as the demand for air conditioners rises due to global warming. As a result, the demand for energy will rise.
    • In India, electricity is generated mostly by thermal power plants or coal-fired power plants, which may be forced to shut down due to increased pollution and a lack of water.
    • India’s water demands are also largely reliant on the monsoon. Environmental changes and population growth, along with a lack of long-term water resource availability, are a source of concern.
  • Increasing Population
    • India is on track to surpass China as the world’s most populous country. As a result, demand for electricity and water will rise.
    • Many water sources are also contaminated with biological and chemical pollution. This has resulted in a lack of clean water, putting India’s energy and water security at risk.

How India can safeguard its Interests?

  • To protect against unforeseen occurrences, strenuous efforts are required to build up strategic reserves.
  • It is necessary to divorce the clean energy supply chain from its reliance on China for minerals and components.
  • It is critical to rekindling discussions about a transnational gas pipeline with Iran and other countries in order to protect national energy interests.
  • India must strike a balance of ties with countries such as the United States, Russia, and other Arab countries, where the United States is rising as the world’s top oil producer and LNG exporter.

Way forward

  • Legislative Action-The government may pass an act titled “The Energy Responsibility and Security Act” (possible).
    • This Act should elevate the importance of energy by granting it constitutional sanctity; it should enshrine in law India’s responsibility to provide citizens with secure, affordable, and clean energy; and, in that context, it should establish measurable metrics for tracking progress toward achieving energy independence, security, efficiency, and “green” energy.
    • In essence, the Act should establish a constitutional mandate and framework for the development and implementation of a comprehensive energy policy.
  • Improving the efficiency of electrical plants and shifting to solar and wind energy. Under the Paris Agreement on climate change, India has set a strong goal of getting 40 percent of its power from renewable sources by 2030.
  • India can improve its resilience, save water, and reduce carbon emissions by prioritizing solar photovoltaic and wind energy in areas with severe water stress.
  • Technology solutions for enhancing energy efficiency in industrial, power production, and commercial buildings, as well as promoting renewable energy technologies in various end-use sectors, must be prioritized.
    • In rural areas, a careful provision of water and energy to agricultural and non-agricultural customers is required. It’s also crucial to improve transmission and distribution infrastructure.
    • With approximately 4% of the world’s renewable water resources and roughly 18% of the world’s population, India should use water more wisely.
  • Managing water stress-India will have to strike a balance between its burgeoning economic needs and its growing water stress.
    • It is critical that criteria for prudent water use by thermal power plants are strictly enforced.
  • Institutional Action-The government should restructure the current energy decision-making architecture. The development of an omnibus Ministry of Energy, which would manage the currently segregated verticals of the ministries of petroleum, coal, renewables, and power, would be preferred.
  • Fiscal Actions- Easy access to money is essential, and the government should foster renewable energy R&D and innovation.
    • To enhance public awareness about existing and emerging energy-related challenges, particularly global warming, it would be necessary to plan and implement a communication strategy.
    • The department would have a smaller mandate than the other energy ministries, but because of its position within the PMO, it would be the most powerful executive body in charge of managing the “green transition.”


  • The global energy sector is undergoing major changes, ranging from increased electrification to the rise of renewable energy, as well as changes in oil production and the globalization of natural gas markets. To deal with these changes in the energy sector, India has to increase its research and skill-building capabilities.
  • Challenges such as carbon emissions, air pollution, and energy access describe a variety of potential energy security scenarios. The India energy security scenarios, 2047(IESS) dynamic scenarios should serve as guidance for policymakers in the energy sector.
  • India must undertake long-term planning to enable universal energy access and meet its commitments under the Paris Agreement to ensure inclusive and sustainable growth.