Last Updated on February 10, 2026 4:40 pm by BIZNAMA NEWS
R. Suryamurthy
NITI Aayog’s scenario studies on Viksit Bharat and Net Zero position India’s climate transition not merely as an environmental commitment, but as a long-term national development strategy. At the heart of this framework lies a critical macroeconomic priority: cutting India’s deep dependence on imported fossil fuels while ensuring that economic growth, inflation stability, and energy security remain intact.
For a country that imports more than four-fifths of its crude oil requirements—along with an increasing share of natural gas—fuel imports have historically been a major strategic and economic vulnerability. This dependence exposes India to global crude price volatility, external account pressures, currency fluctuations, and sudden geopolitical disruptions.
The Net Zero scenarios outlined by NITI Aayog aim to systematically redesign this dependence over the coming decades. Rather than attempting an abrupt break from fossil fuels, the modelling reflects a phased transition—one that gradually lowers exposure to external shocks while keeping the economy insulated from destabilising energy and inflation pressures.
Oil Dependence and the Transition Timeline
The modelling shows that oil imports remain elevated through the 2030s, driven by transport demand, petrochemicals and rising mobility. Electrification of transport and efficiency gains gradually slow demand growth, but absolute reductions materialise only later.
This sequencing has clear implications. India’s oil import bill remains a major determinant of the current account and inflation in the near to medium term, even as policy accelerates electric mobility. Net Zero, in other words, does not offer immediate relief from oil vulnerability—it offers a delayed but structurally durable exit.
Coal Imports: Domestic Reliance, External Exposure
Coal occupies a distinct position in the scenarios. While India’s coal consumption continues to rise until 2047, import dependence is expected to moderate as domestic production expands. This partially insulates the economy from global coal price volatility, but at the cost of higher domestic environmental and health externalities.
The implication is that coal reduces import exposure but not systemic risk. As global finance turns away from coal, India may face higher capital costs and reduced access to international funding, indirectly affecting energy affordability and trade competitiveness.
Natural Gas: The Transition Fuel with Import Risks
Natural gas plays a limited but important role as a transition fuel, particularly in industry and power balancing. However, India’s heavy reliance on LNG imports exposes it to high price volatility and geopolitical shocks, as seen in recent global gas markets.
The scenarios implicitly caution against over-reliance on imported gas as a bridge fuel. Instead, they prioritise electrification and domestic renewables to avoid swapping oil dependence for gas dependence.
Electrification as an Import-Reduction Strategy
Across all scenarios, electrification emerges as the primary mechanism for reducing fuel imports. Electric vehicles, heat pumps, and electrified industrial processes reduce long-term demand for imported oil and gas, while renewable power displaces imported fossil fuels in electricity generation.
Over time, this alters the composition of India’s import basket. Fossil fuel imports decline, but imports of capital goods, critical minerals and clean technologies rise. Energy security thus shifts from fuel access to supply-chain resilience.
Balance of Payments and Currency Stability
Fuel imports have historically been one of the largest drivers of India’s trade deficit. The Net Zero pathway gradually lowers this exposure, improving balance-of-payments resilience in the long run.
However, the transition period presents a mixed picture. High upfront investment and technology imports could offset savings from lower fuel imports, delaying net external gains. The report implicitly underscores the importance of timing and sequencing to avoid new external vulnerabilities.
Strategic Autonomy and Geopolitics
Reducing fuel imports carries strategic benefits. Lower exposure to oil and gas markets reduces India’s sensitivity to geopolitical tensions in West Asia and global shipping chokepoints.
At the same time, new dependencies emerge—particularly around critical minerals and clean technology supply chains. Energy security is redefined rather than resolved, shifting from hydrocarbons to materials and manufacturing capacity.
Coal Today, Imports Tomorrow?
One of the more nuanced implications of the study is that continued coal use buys time on fuel imports but delays deeper decarbonisation. If global climate action accelerates faster than expected, India could face trade penalties or carbon border measures that indirectly erode the gains from reduced fuel imports.
From Fuel Security to System Security
NITI Aayog’s Net Zero scenarios suggest that India’s fuel-import problem is solvable—but only over time and at significant upfront cost. The strategy is evolutionary, not revolutionary: reduce oil and gas dependence gradually, maintain coal for energy security, and build the infrastructure that enables long-term import substitution.
For Viksit Bharat, the critical test will be whether fuel-import savings eventually translate into lower inflation, a stronger currency, and greater strategic autonomy, rather than being offset by new forms of external dependence.
In that sense, the Net Zero pathway is not just a climate roadmap—it is a restructuring of India’s external economic vulnerability, with fuel imports at its core.
