India’s energy policy: India finds itself in a dilemma over its energy policy, as it attempts to reconcile the immediate imperatives of energy security with its long-term climate commitments. The government is aggressively pursuing oil and gas exploration to curb import dependency while also expanding renewable energy to meet climate goals. This dual-track approach raises important questions about policy coherence and long-term sustainability.
The passage of the Oilfields (Regulation and Development) Amendment Bill, 2024, marks a significant shift in India’s approach to hydrocarbon exploration. The new law enhances regulatory clarity, decriminalises provisions, extends lease periods, and allows international arbitration — making India’s oil and gas sector more attractive to global investors.
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As part of its strategy to boost domestic production, the government has also opened an additional 1 million sq. km of sedimentary basins for exploration, a move that is expected to attract investment and reduce reliance on imports. India currently consumes 5.5 million barrels of crude oil per day, and this is projected to rise to 6.5–7.0 million barrels per day in the coming years.
India’s energy policy: Renewables push
The government’s stance is clear: without a strong domestic production ecosystem, India risks becoming excessively dependent on volatile international markets. However, expanding fossil fuel exploration comes with risks. While enhancing energy security, it may lead to long-term carbon lock-in, potentially slowing down India’s clean energy transition. The government must carefully manage this trade-off to ensure energy security does not come at the cost of climate goals.
On the other side of the spectrum, India is making rapid strides in renewable energy. The country’s installed non-fossil fuel capacity has reached 220 GW as of early 2025, up from just 76 GW in 2014. The latest projections indicate that a high renewable energy pathway of 600 GW by 2030 — comprising 377 GW of solar, 148 GW of wind, 62 GW of hydro, and 20 GW of nuclear — is both viable and necessary to ensure reliable power supply in the face of rising demand.
A study by the Council on Energy, Environment, and Water (CEEW) says if India fails to achieve its clean energy targets and reaches only 400 GW of non-fossil capacity by 2030, power shortages could emerge. This would necessitate new coal capacity of 10-16 GW and significant enhancements in the transmission network to maintain grid stability. However, achieving the 600 GW target could eliminate the need for new coal plants, save between Rs 13,000 crore and Rs 42,400 crore in power procurement costs, and create up to 100,000 new jobs.
To support the transition, the government has mandated that all future solar tenders include energy storage components to improve grid stability. The declining cost of battery storage, with tariffs falling by 65% in just two years, strengthens the case for a high-renewable pathway.
Policy challenge: Alignment and coordination
While India has made commendable progress in both fossil fuel exploration and renewable energy expansion, the policies governing these sectors need better alignment. Expanding fossil fuel production while aiming to achieve a 50% non-fossil capacity share by 2030 creates potential conflicts.
The government must ensure that incentives for oil and gas do not undermine investments in clean energy. Securing international climate financing, improving private sector participation, and establishing a national strategy for grid integration and storage solutions are crucial. Additionally, ensuring that state and central policies are in sync will be vital to achieving the clean energy transition without economic disruption.
India’s path forward will be defined by its ability to balance economic growth with climate responsibility. Scaling up renewable energy is not just about meeting climate targets—it is a critical step toward energy security and economic resilience. While domestic fossil fuel production will remain a key component of energy security in the near term, over-reliance on hydrocarbons could prove costly in the long run.
The government must now take decisive steps: incentivising green hydrogen and carbon capture technologies, accelerating battery storage deployment, and reorienting public finance toward climate adaptation. India’s energy transition, if well-managed, can serve as a global model for balancing development with climate action. The next five years will be crucial in determining whether India can emerge as a leader in the clean energy revolution while maintaining economic growth and energy security.