India is advancing towards energy resilience, reducing vulnerability across the entire system. Atanu Mukherjee explains in talks with EPR.
“Today, India increasingly views energy through four simultaneous lenses: security, affordability, sustainability and reliability” Text Content:
What fundamental changes are you seeing in how India approaches energy today compared to its traditional reliance on imports?
India’s approach to energy is undergoing a fundamental strategic shift. Historically, energy policy was largely about securing enough supply to meet demand—if the economy needed more energy, the response was to import more crude, more gas, or more coal.
That framework is no longer sufficient. Today, India increasingly views energy through four simultaneous lenses: security, affordability, sustainability, and reliability. That marks a structural shift from thinking purely about energy supply to thinking about resilient energy system design.
In that sense, the national conversation is moving beyond the narrow language of “energy transition” toward something broader and more practical: energy transformation.
Recent geopolitical and market disruptions have reinforced this change. India has managed near-term shocks reasonably well through cargo rerouting, supply diversification, refinery optimisation and administrative interventions. But those are tactical responses. They buy time—they do not solve structural vulnerability.
The deeper realisation is that India cannot indefinitely manage energy risk simply by becoming better at importing.
India remains highly exposed: crude import dependence is over 85 percent, natural gas import dependence is about 50 percent, and nearly 60 percent of LPG consumption is imported, with roughly 90 percent of those imports transiting through the Strait of Hormuz. That level of dependence creates unavoidable geopolitical, geoeconomic, and pricing risk—and in certain cases, even physical shortage risk where import supply is geographically concentrated and alternative sourcing options are limited.
So, the real strategic shift underway is this: India is moving from an import-management model toward a resilience-building model—one focused not just on securing molecules, but on structurally reducing vulnerability across the entire energy system.
Which of the emerging solutions have moved beyond policy intent into real implementation?
Some solutions have clearly moved beyond policy intent into real implementation, while others remain in pilot or early scale-up stages. Renewables are the most mature example. Solar and wind are now mainstream components of India’s power system, and storage is steadily moving in the same direction.
On the fuel-substitution side, there is visible momentum around coal gasification and its downstream products—including synthetic natural gas, methanol, DME, ammonia, and hydrogen—but deployment remains far below the scale required to materially reduce import dependence.
Coal gasification is a notable example of a pathway that has moved into execution. The government has already backed it with an ₹8,500 crore incentive scheme and a target of 100 million tonnes by 2030, and there is now discussion of an additional ₹37,500 crore support package expected for Cabinet consideration. This indicates that coal gasification is no longer merely conceptual—it is becoming a strategic industrial priority.
Its strategic importance lies in the breadth of products it can enable. Coal gasification can produce synthetic natural gas, which can substitute for imported LNG at approximate import parity in many cases while improving domestic supply security. It can also produce methanol and DME for fuel substitution, hydrogen for industrial use, and, critically, ammonia for fertiliser manufacturing. That matters because India remains dependent on imported LNG for a significant portion of gas-based ammonia and urea production, while also importing finished urea. Domestic coal-based ammonia therefore strengthens both energy and food-security resilience.
Coal-gasification-based DME is another important pathway. It offers a direct substitute for LPG, and estimates suggest that a 20 percent DME-LPG blend could reduce LPG imports by roughly 6.3 million tonnes annually and save approximately ₹34,200 crore in foreign exchange. But realising that potential requires domestic DME production capacity, blending infrastructure, and clear long-term policy support.
Similarly, coal-gasification-based methanol and DME can displace a meaningful portion of petrol and diesel demand through blending and fuel-substitution pathways. At sufficient scale, these routes could substitute a material share of transportation fuel demand in selected segments, reducing crude import requirements over time. Compressed biogas is also progressing, though more slowly than policy ambition initially envisioned. The SATAT program targeted 5,000 plants and 15 million tonnes per year, but actual operating capacity remains well below those aspirations.
Overall, I would characterise the landscape this way: renewables are already mainstream; coal gasification has entered execution at a strategic level; and downstream pathways such as SNG, DME, methanol, and CBG are transitioning from policy intent to selective implementation—but all still require scale, capital deployment, and sustained policy consistency to become systemically meaningful.
Where are companies already seeing energy cost savings, and what areas have the biggest potential to cut costs next?
Companies are already seeing meaningful savings in areas where they have improved efficiency, diversified energy sourcing, or secured access to lower-cost renewable electricity. In many energy-intensive sectors, renewable power procurement is delivering savings today—particularly for companies with flexible operating profiles and sophisticated power-management capabilities.
There are also substantial gains from process integration, waste heat recovery, and digital energy-management systems. These may attract less public attention, but they often provide some of the fastest and most reliable returns on investment. Looking ahead, I see the next major wave of cost reduction emerging from three areas.
First, targeted fuel substitution where economics are favourable and infrastructure exists. Not every fuel can be substituted everywhere, but selective substitution can create significant savings.
Second, system-level optimisation—using storage, smarter scheduling, diversified procurement, and intelligent energy management to optimise the full energy portfolio rather than relying on a single source.
Third, domestic conversion of local resources into higher-value fuels and feedstocks.
That is where coal gasification becomes strategically relevant. Coal remains India’s largest domestic energy resource. If it can be converted efficiently into methanol, DME, ammonia, hydrogen, or synthetic natural gas in commercially viable configurations, it creates meaningful potential for both cost reduction and import substitution. We are already seeing early indications of this potential in pilot-scale methanol production assessments, where pricing economics have been discussed at roughly $450 per tonne—equivalent to around ₹30 per litre—which compares favourably to the administered ethanol prices often referenced in India. That illustrates why industry is beginning to examine these pathways more seriously.
That said, the key point is this: the cheapest option on paper is not always the cheapest in practice. The lowest nominal fuel cost is not necessarily the lowest real fuel cost. Actual savings depend on delivered economics, reliability, logistics, capital intensity, integration complexity, and long-term operational viability.
How viable is large-scale fuel substitution across LPG, diesel, and natural gas, and what constraints could limit adoption?
Large-scale fuel substitution is viable, but it is important to understand the degree of substitutability and to recognise the fact that this is not a simple one-for-one replacement story. No single alternative will fully displace LPG, diesel, or natural gas at scale in the near term. In LPG, there is meaningful room for substitution. PNG can help in urban areas where pipeline networks already exist, DME can potentially be blended into the LPG pool, and in certain applications, biogas or compressed biogas can contribute. But none of these individually can replace the full LPG basket quickly.
PNG is useful where infrastructure exists, but much of the gas behind PNG is imported LNG—so India must be careful not to merely shift dependence from one imported fuel to another. DME is particularly promising because it can directly substitute part of LPG demand through blending, but that requires domestic production, blending infrastructure, and supply-chain readiness. Even a 20 percent blend could have material impact, but it is only a partial solution.
For natural gas, particularly in industry, substitution pathways include synthetic natural gas, syngas-based industrial fuel systems, selective electrification, and other alternate fuels. These are technically and economically viable, but commercial scale-up takes time and cannot happen overnight. With disciplined execution, meaningful substitution at scale could emerge over a three- to five-year horizon.
Diesel is more difficult. Alternatives such as methanol, ethanol, and other substitute fuels can play targeted roles, but diesel remains deeply embedded in freight, heavy transport, construction, and backup power. Substitution will be slower and more selective. The limiting constraints are fairly obvious.
First, economics—many alternatives will become competitive only once they are implemented at commercial scale or where policy support helps bridge the gap during scale-up.
Second, infrastructure—pipelines, blending systems, storage, transport, and distribution networks must be built or adapted.
Third, domestic production capacity—substitution only improves resilience if the substitute fuel itself is available at scale.
Fourth, execution risk—not every technology that works in principle scales smoothly in practice.
And fifth, policy continuity—industry will invest only where long-term regulatory and commercial signals are credible.
So yes, fuel substitution is viable—but only as a diversified portfolio strategy pursued pragmatically over time, not as a simplistic overnight replacement narrative.
How are global uncertainties like fuel prices and supply risks shaping industrial investment decisions, and what should companies prepare for over the coming years?
Global uncertainty is now influencing industrial investment decisions far more directly than in the past. Energy volatility is no longer viewed as a temporary disturbance—it is increasingly treated as a structural business risk.
When fuel prices swing sharply, freight costs rise, shipping routes are disrupted, or LNG and LPG supplies tighten, the impact flows directly into operating margins, capital allocation, and long-term competitiveness. As a result, companies are asking much harder strategic questions: How exposed are we to imported fuels? Can we diversify our energy mix? Can we localise part of our feedstock base? Can we build greater flexibility into plant design? Can we invest now to avoid far larger cost shocks later?
That represents a significant shift in industrial thinking.
Over the coming years, companies should prepare in three ways.
First, they should build greater fuel flexibility into operations wherever technically feasible.
Second, they should more rigorously evaluate domestic substitutes and strategic hedges—whether through renewable power, storage, gasification-based fuels, methanol, DME, syngas, or local feedstock conversion.
Third, they need to elevate energy strategy from a procurement function to a core element of business strategy.
The companies that will outperform over time are likely to be those that stop treating energy purely as a cost line and begin treating it as a strategic capability.
That is where resilience will increasingly come from.
And the scale of the issue justifies that focus: India’s crude import bill was approximately $137 billion in FY25, while natural gas imports reached roughly $15.2 billion. Those numbers underscore why energy security is no longer merely a policy issue—it is becoming a boardroom issue.