India's energy consumption

Official Name: Republic of India

Summary: India relies on thermal, hydro, renewable, and nuclear energy to meet the demands of its large population and growing economy.

India is a developing nation with a rapidly growing economy and one of the world’s largest populations, estimated at more than 1.40 billion people in 2024. India’s large and diverse geography has provided large supplies of both nonrenewable fossil fuels and renewable energy resources. It is one of the world’s leading nations in terms of energy consumption growth rates, and it was the third-largest consumer of energy in the world in 2022, following China and the United States. Coal (44.6 percent) was the largest source of energy in India in 2021, followed by biomass and waste (21.6 percent) and petroleum and oil (23.7 percent). Other energy sources include natural gas, hydroelectric, and nuclear.

Energy has been an essential component of India’s modernization and economic development, but growing domestic energy shortages and increased reliance on importation threaten future economic growth and environmental sustainability. The national government has targeted energy as key to the country’s continued development and has implemented a variety of measures to increase energy efficiency, domestic production, energy imports, and the development of renewable resources and nuclear power.

Energy Resources and Industries

India is the second-largest coal-producing, as well as the second-largest coal-consuming, country, with coal supplying nearly half of the country’s energy needs. Several key Indian industries are dependent on coal, including power generation, steel, and cement. Coal is expected to remain a leading energy source in the foreseeable future. India’s coal reserves are estimated to be approximately the fifth-largest in the world. Coal and lignite deposits are found in several Indian states, with the most prominent deposits in Tamil Nadu. Others are in Gujarat and Rajasthan. The Indian coal industry utilizes both open-pit and underground mining operations. Coal production has been unable to meet demand growth, resulting in critical shortages and increasing dependence on imported fossil fuels. Small quantities of coal are exported to neighboring countries, such as Bangladesh, Bhutan, and Nepal, although India is a net coal importer.

Nationalization of the coal industry occurred under the Coal Mines Act of 1973. India’s leading coal companies have begun to develop domestic and international coal and lignite projects, such as underground coal gasification in cooperation with international corporations. These foreign companies provide the assistance of their expert knowledge.

India’s production and consumption of crude oil, petroleum products, and natural gas increased in the 1970s. Production has begun to slow, however, in areas such as crude oil production. From 2000 to 2021, the country’s total crude oil production ultimately dropped by about 7 percent. India contains less than 1 percent of the world’s proven crude oil reserves. Together, oil and natural gas provide more than two-thirds of the country’s energy needs. By 2023, India trailed only the United States and China in terms of oil consumption. Natural gas has seen the largest consumption increase of all fuels. Industries utilizing natural gas include power generation, fertilizer, and petrochemical production. Industries reliant on oil include power generation and transportation.

Crude oil and natural gas production occurs at both onshore and offshore fields. Onshore fields are located in the states of Assam, Gujarat, Andhra Pradesh, and Rajasthan. Offshore fields include the Mumbai High complex and the Krishna-Godavari basin in the Bay of Bengal. India continues to expand its refining capacity as well as its place in the global refining market. As of 2024, the country had twenty-three refineries, most of which were in the public sector. Reliance Industries Limited operates the world’s second-largest single-place refinery, located in Jamanagar, Gujarat.

Two state-owned companies, the Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), control most of the production and refining activity in the country. Other notable state-owned companies include the Gas Authority of India Limited (GAIL) and the Indian Oil Corporation Limited (IndianOil). Private companies within the sector include Reliance Industries, Cairn India, and BG Exploration and Production India Limited. The Petroleum and Natural Gas Regulatory Board (PNGRB), created in 2006, represents consumer interests while ensuring steady supplies and competitive markets within the industry. The national government regulates natural gas prices and heavily subsidizes domestic oil product prices. National and state governments tax crude and petroleum products. Subsidization was originally designed to protect consumers from high prices but has hurt domestic industry development by forcing state-controlled companies to operate at a loss while forcing private companies to focus on international rather than domestic sales. In 2013, India began implementing pricing reforms to promote sustainable investment and reduce subsidy costs. While these reforms led to meaningful progress, the 2022 energy crisis forced the Indian government to enact measures like price caps in order to combat rising fuel costs.

The national Ministry of Petroleum and Natural Gas has implemented a variety of measures to increase domestic exploration and production. The New Exploration License Policy of 2000 allowed public and private entities to compete for exploration territories by granting them the ability to hold 100 percent equity ownership in such projects. Other measures include increasing recovery rates in existing fields and developing new ones. The state-controlled Oil Industry Development Board began the development of a national strategic petroleum reserve managed by Indian Strategic Petroleum Reserves Limited. Storage facilities at Visakhapatnam, Mangalore, and Padur were planned for completion by the end of 2012. State-owned GAIL is developing a national gas grid.

Despite overall growth in natural gas production in the twenty-first century, India is no longer able to meet its natural gas needs entirely through domestic production due to increased demand and has begun to seek outside sources. India is one of the leading oil importers in the world, and imports of crude oil and petroleum products are steadily increasing. India imports more than 85 percent of its oil, mainly from Middle Eastern nations such as Saudi Arabia and Iraq. One possibility is the importation of liquefied natural gas (LNG). Two terminals have been commissioned, and others are under consideration.

The Indian government has reached an agreement to begin importation of LNG from Iran and has purchased a development stake in an Iranian offshore oil field. The government has also begun negotiating for the construction of transnational gas pipelines, including the proposed Iran-Pakistan-India (IPI) Pipeline and the proposed addition of India to the existing Turkmenistan-Afghanistan-Pakistan, or Trans-Afghan, Pipeline (TAP). Various public and private companies have also begun investing in overseas exploration and production activities. In 2015, the administration of Prime Minister Narendra Modi established a goal of cutting India’s import dependency on oil and natural gas to two-thirds by 2022 and to half by 2030.

The country’s production and consumption of electricity have steadily grown, resulting in the technological modernization of the electric infrastructure. Most residents have electricity, but about 2.4 percent of Indian households still lacked electricity in 2020, according to that year's India Residential Energy Survey (IRES). Improvements have included increased physical transmission and distribution network size and higher-voltage bulk transmission capacities. In 2017, the Indian government launched an initiative to provide free or low-cost electricity connections to 40 million Indian households that did not yet have electrical power. Most of India’s electric power plants rely on coal, oil, or natural gas for energy. The remainder is provided through nuclear energy and renewable resources, such as hydroelectricity and geothermal energy. Rural domestic households with a lack of or inadequate commercial energy resources also utilize historically prominent noncommercial energy sources, such as wood, crop residue, animal waste, and human and animal power, but at lower levels as modern commercial energy sources have become increasingly available.

The national and state governments control most of the country’s generation capacity, with the private sector playing a minor role. Most of the few private electric generation companies are required to market through state electricity boards. One of the earliest pieces of national legislation regulating the industry was the Indian Electricity Act of 1910. The electricity sector has undergone a series of reforms beginning in the 1990s. A 1991 amendment to the Electricity (Supply) Act of 1948 opened the power sector to private investment and independent producers. Next, regulatory reforms resulted in the 1996 passage of the Common Minimum Action Plan for Power and the 1998 Electricity Regulatory Commissions Act, which provided for the establishment of national and state regulatory commissions. The Electricity Act of 2003 is the current national regulatory legislation in effect. There is also state-level legislation, which may not contravene the national act.

India cannot generate enough electricity to meet demand. The country experiences severe shortages of electricity, particularly during peak hours of demand, which result in rolling blackouts that can last for several hours to days in certain parts of the country. India’s electricity sector problems include the need for greater investment and market competition, the constraints of government regulations, shortages of coal and other industry energy needs, and problems gaining approval and funding for energy alternatives such as hydropower projects. As a result, India suffers from low per capita electricity consumption and poor power supply quality, which leads to frequent shortages and blackouts. The national government is seeking to meet the shortfall through an expansion of electricity generation and transmission capabilities, improved energy efficiency and conservation, further diversification of energy sources, and importation. India imports electricity from Bhutan and Nepal and began importing from Bangladesh in 2010. In its twelfth Five-Year Plan (2012–17), India set a goal of adding more than 118 gigawatts of power capacity to the grid; by early 2016, 87 percent of the targeted additional capacity had been brought online. In 2024, the installed capacity of India's national electric grid reached 442 gigawatts.

Energy Crises and Growth Initiatives

India’s domestic energy resources and production have been unable to grow fast enough to meet the higher growth in domestic energy consumption and demand, causing the national government to switch from an energy policy emphasizing increased domestic production to one more heavily reliant on external sources. Although India has one of the lowest rates of energy consumption in the developing world, it is increasing at one of the fastest rates in the world. Reasons for surging demand include one of the world’s largest populations, increased modernization and rural electrification, and an expanding economy. Although India enjoys a high overall energy efficiency rating compared to those of other nations, this efficiency has been declining.

India’s growing energy consumption and reliance on nonrenewable resources have also created growing awareness of accompanying sustainability and environmental issues. Energy industries such as mining and coal burning for power generation cause air, soil, and water pollution; population displacement; health issues; and forest and land degradation. Rising carbon emission levels from industry and vehicle exhaust also contribute to climate change. Air pollution is an especially critical problem in urban areas. The national government began implementing environmental legislation and programs in the 1970s in response to the growth of the global environmental and green culture movements.

National government planning initiatives have emphasized the health of the energy sector as critical to the country’s continued development. In 2005, A. P. J. Abdul Kalam, the president of India, announced that energy independence was of the highest priority and that the country should strive to achieve it within the next twenty-five years. India has pursued a variety of measures to counter its growing energy shortfall. The national government’s planning commission developed its Integrated Energy Policy as a key part of the process of developing the country’s energy independence and security. Government measures have included increased domestic resource exploitation and production, conservation and efficiency efforts, the development of renewable energy resources, energy sector reforms, and the increase of India’s overseas equity stake. The Indian government has also developed an ever-growing reliance on imported energy resources since the 1990s. The government also seeks to ensure its energy policies avoid international complications, such as competition with China for new energy sources and foreign policy conflicts with countries such as the United States.

The government established the National Committee on Environmental Planning and Coordination in 1972 and the Department of Environment in 1980. The National Environmental Engineering Research Institute monitors environmental issues and seeks solutions at its field offices throughout the country. Scientists at more than one hundred research institutions are working toward the implementation of the national government’s national action plan on climate change in an effort to achieve sustainability. The government also plans to utilize satellite technology to monitor future greenhouse gas emissions and progress toward reduction goals. Other programs and agencies have included Green Building Water Management, the National Clean Energy Fund, and the Green School Program.

Energy sector industries have also adopted a variety of strategies to improve India’s energy future. The energy sector organized through the 2001 creation of the Indian Energy Forum to represent its needs as an independent advocate and work in partnership with national and state government institutions. Organization members include most of the major public and private energy organizations in power generation, oil, natural gas, coal, and renewable energy sources. Organization membership also includes a variety of experts in the energy field. Goals include the development of a competitive yet sustainable energy sector, the development of a national energy policy and regulatory framework, and the promotion of energy efficiency and environmental sustainability. The country is also pursuing energy trading as an avenue of diversification with the opening of the Indian Energy Exchange Limited, which is the country’s first power exchange.

Government leaders and environmentalists have touted renewable energy resources as key to the country’s future energy sustainability. India’s large and varied geography provides a variety of potential renewable energy resources that are beginning to be intensively developed. Benefits of renewable energy include environmental sustainability, job creation, increased rural electrification, reduced reliance on poor-quality, expensive, and nonrenewable traditional energy supplies, and enhanced national energy security. Renewable energy resources and technologies in use or under consideration include wind, small hydropower, biomass, geothermal, and solar energy.

Currently, wind power and hydroelectric power generation are India’s leading renewable energy resources. India was fifth in the world in terms of wind power generation in 2021, while renewable energy sources accounted for approximately 30 percent of the country’s total installed power capacity in 2023. In 2015, the government established a plan to more than quadruple electricity capacity from renewable sources to 175 gigawatts by 2022, with the largest gains coming from wind (60 gigawatts) and solar (100 gigawatts). One of the most promising and controversial renewable energy projects in India has been the movement to increase the country’s hydroelectric power generation capacity. India is one of the world’s leading nations in terms of dam construction, as thousands of dams either have been constructed or are in the planning stages in the Narmada River Valley region. The dams are meant to serve as sources of both irrigation and electric power generation.

Nuclear Power

Nuclear energy has also proved controversial, with past concerns centered on weapons development and India’s absence from the international Nuclear Nonproliferation Treaty, and present concerns centered on its potential environmental and health dangers. Nuclear energy represents a small segment of the Indian energy sector but has grown in the twenty-first century. Nuclear energy is a central component of India’s national energy planning, as the national government has identified it as a key source for growth. The Nuclear Power Corporation of India was registered as a public limited company in 1987 and is under the national Department of Atomic Energy’s administrative control. The corporation operates nuclear power plants and implements other atomic power projects under the auspices of the Atomic Energy Act of 1962. In 2024, India had twenty-two operational nuclear reactors at seven nuclear power plants. Several additional nuclear power plants were also scheduled to be built, with projections that India's nuclear capacity would reach 22,480 megawatts by 2031.

The controversial aspects of this potential power source have lessened since the 2005 signing of the civil nuclear energy cooperation agreement between the United States and India. India will benefit from US expertise in the development of nuclear energy for civilian uses as well as other energy technologies. India began worldwide nuclear trade in 2008 when it became a party to the Nuclear Suppliers’ Group agreement and has signed nuclear power contracts with a number of countries, including the United States, Russia, France, the United Kingdom, South Korea, and Canada. Russia emerged as a leading supplier of India’s nuclear fuel as India’s domestic uranium sources deteriorated. India is also seeking to develop a thorium-based fuel cycle to utilize this more abundant domestic resource. India is a member of the International Atomic Energy Agency (IAEA) and reached a safeguards agreement with the IAEA to protect its nuclear facilities beginning in 2010.

Nuclear energy ranks fourth among India’s electric power-generation sources, and the country’s nuclear power industry is rapidly expanding. The government has announced plans to increase the nuclear share of total generation from 3 percent in 2014 to 25 percent in 2050. Notable nuclear power stations include Kaiga in the state of Karnataka, Kalpakkam in Tamil Nadu, Kakrapar in Gujarat, Rawatbhata in Rajasthan, Tarapur in Maharashtra, and Narora in Uttar Pradesh. India bolstered its Maharashtra and Tamil Nadu nuclear power projects through the purchase of ten nuclear reactors from French and Russian companies. Additional plants are in either the planning or the construction phases.

Other Initiatives

National legislative initiatives include the Energy Conservation Act of 2002 and the subsequent establishment of the Bureau of Energy Efficiency. The national government established the Commission on Additional Sources of Energy (CASE) in 1981 and the Ministry of Non-conventional Energy Sources (MNES) in 1992. The latter replaced the earlier Department of Non-conventional Energy Sources.

Various Indian states have also established their own renewable energy agencies. The Indian Renewable Energy Development Agency, established in 1987, provides project financing. Initiatives have included financial incentives such as grants, subsidies, loans, and lower duties and taxes and have increased incentives for private-sector growth. Funding for renewable projects has also come from international organizations such as the World Bank, which funds several hydroelectric projects.

Other public and private renewable energy initiatives have also arisen. One of the largest has been the 1974 establishment of The Energy and Resources Institute (TERI), headquartered in New Delhi and active both nationally and internationally. Its projects include research, technological development, training, and demonstration. TERI established its own graduate-level degree-granting university and hosts the World Sustainable Development Forum (WSDF). TERI also established the India Energy Portal (IEP) under the auspices of the National Knowledge Commission to provide an online site for knowledge and resource sharing.

The Centre for Science and Environment (CSI), also headquartered in New Delhi, is pursuing renewable resource projects such as rainwater harvesting. Eco-friendly and renewable energy businesses have become increasingly popular, especially in larger urban areas such as New Delhi. Communities have adopted green measures such as alternative forms of transportation, solar-powered water heaters, streetlights, and stoves, and energy conservation measures.

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