India must build energy resilience amid global volatility, industry leaders warn

India’s energy sector must urgently strengthen its resilience to withstand rising geopolitical volatility, supply chain shocks and regulatory complexity, industry leaders have cautioned.

Experts at an energy dialogue organised by consulting agency KPMG on September 16, 2025 noted that while the country has rapidly expanded renewable capacity and is building out its grid, the system remains exposed to fuel price fluctuations, chokepoint disruptions and technology dependence.

India imports 87 per cent of its crude oil and half of its natural gas, leaving refiners and utilities highly vulnerable to external shocks. A single disruption, such as the 2021 Suez Canal blockage that halted just 12 per cent of global oil flows but triggered widespread market upheaval, underlined the fragility of energy supply chains.

Although Indian refineries are designed with high feedstock flexibility, Industry leaders warned that reliance on imported catalysts and critical chemicals could still derail operations during supply disruptions. Mounting financial pressures were also flagged, as energy companies struggle to expand capacity while absorbing sharp price volatility.

Past ultra-low renewable auction tariffs had left several projects financially unviable, underscoring the need for realistic risk pricing and avoiding a “race to the bottom”.

The industry also faces layered and shifting regulations on emissions, sustainability and safety, which drive up compliance costs and uncertainty, particularly at state level.

“Energy has always been capital-intensive. Those without risk appetite cannot survive here,” said Arun Kumar Singh, Oil and Natural Gas Corporation Limited (ONGC) chairman and chief executive officer, noting that deepwater exploration, oil, gas and petrochemicals require sovereign-backed risk cushions given their capital intensity and long gestation.

The experts urged a shift from simply adding capacity to building a self-reliant ecosystem around it. Executives called for larger strategic reserves not only of crude but also of essential chemicals and catalysts to protect operations from sudden shocks. They stressed that for India to become a genuine global refining hub by 2050, it would need to develop indigenous technology, engineering services and manufacturing capabilities, not just physical infrastructure.

Adopting digital and AI-based tools was highlighted as another priority. Machine learning and predictive analytics are already being deployed across the power sector, from micro-siting and resource assessment to real-time forecasting, scheduling and revenue optimisation. These technologies, panellists said, could similarly enhance efficiency, profitability and resilience in fuels, petrochemicals and refining.

A balanced financing approach was also seen as critical: Public sector and sovereign funds should support large, capital-heavy projects, while private investors and global funds could drive innovation and renewable growth. Stable, long-term regulatory policies were described as essential to sustaining investor trust, with speakers noting that Indian courts upholding long-term power purchase agreements had reassured investors during past tariff disputes.

Sandeep Gupta, chairman and managing director of GAIL and D K Joshi, chief economist at S&P Global (Crisil), emphasised the need to balance the energy trilemma of security, affordability and sustainability — with the first two taking precedence when trade-offs arise.

While clean energy deployment is accelerating, they said India will continue to rely on coal, oil, gas and renewables in parallel until green alternatives are both affordable and reliable.

“If security and affordability come under threat, they will take precedence over sustainability — and this is true globally,” one panellist said, adding that India is “managing the dilemma reasonably well” for.