India needs to reduce its dependence on imported fuels


The Russia – Ukraine war has upset many an economy and there has been currency and food security turmoil in many countries. Infact, I don’t think any country has been untouched by the war and the impact has been in varying degrees.

Prime Minister Narendra Modi on Monday had made specific mention of the of the ongoing war in Ukraine and said that it has put immense pressure on the government due to a sharp spike in the prices of fertilisers, edible oil and crude oil.

Calling upon everyone to work towards self-reliance in mission mode, PM Modi said there was a massive effort on biofuels and ethanol to reduce dependence on oil and gas shipped from overseas.

As the Ukraine war rages on, India bought Russian Oil at a substantial discount despite US not liking it, one bit. Now. India is looking to diversify its import sources of crude oil and is considering purchasing the fuel from Guyana, Canada, Gabon, Brazil and Colombia amid a global rush away from gas.

India has been seeking to widen the pool of countries that sell crude in order to achieve energy security and cater to the growing domestic fuel demand. The Ukraine conflict has accelerated the process.

India, which imports nearly 85% of its fuel requirement. The remaining is met from our biggest domestic oil and natural gas fields in Assam, Gujarat Western and Eastern Offshore Bombay High and Rajasthan.

In 21-22, we imported 212.2 million tonnes of crude oil, up from 196.5 million tonnes in the previous year. This was, however, lower than pre-pandemic imports of 227 million tonnes in 2019-20.

The top 5 major import products of India are mineral fuels and oils, natural or cultured pearls, electrical machinery and equipment, organic chemicals, machinery and mechanical appliances.

The share of petroleum imports out of India’s total imports was 26 per cent in FY22 at around 160 billion dollars. Imagine, what can happen if we can cut down that crude import bill by 10% every year. That cannot be done unless we cut down the consumption by the transport sector – human and cargo sectors, that is buses and trucks.  

It cannot go on like this and with thousands of new vehicles being added every day, we as a country need to take a hard look at our future. The switch to electric vehicles is the only option in the long run, while bio-fuels are the short term strategy.

The Indian Railways has set a target of 100 per cent electrification of its network by December 2023. It has electrified 52,247 Route kilometers, which is about 83% of the total broad gauge network of Indian Railways  of 65,414 RKM, including Konkan Railway by 31 March 2022. A daily average of 13,555 trains are operating in India currently, and 37 per cent of these are being hauled by diesel locomotives. The remaining 63 per cent are hauled by electric engines. With more Vande Bharat trains being introduced, the electric component is likely to rise further.

As per annual statistical statements for the year 2019-20, total diesel and electricity consumed for running trains were 2,370 million litres and 13,854 million Kilo Watt Hour respectively, which work out to 6.49 million litres per day of diesel and 37.96 million KWH per day of electricity.

Let us look at how India’s automotive sector is stepping on the accelerator to the transition to e-mobility is the increase in prices for oil imports, rising pollution, and international pledges to battle global climate change. As a result, India committed to an aspirational goal of having at least 30% of private automobiles as EVs by 2030 at the Conference of the Parties 26 Summit.

The Indian automobile sector ranks fifth globally and is expected to rise to third by 2030. India is the world’s largest producer of two and three-wheelers, the second-largest manufacturer of buses, and the biggest producer of vehicles like tractors.

Many conventional automotive players and oil companies are investing heavily to boost EV demand to reach the aspirational goal.

The Indian government has also been implementing several programmes to encourage the growth of electric mobility, including 100 per cent FDI through the automotive route in the EV space, incubator programmes, shared facilities for prototyping and small-scale manufacturing, financial support through the Credit Guarantee Scheme for Start-ups, tax breaks, and subsidies for consumers.

The Production linked incentive scheme with a $ 3.5 billion budget for the automotive industry suggests financial incentives of up to 18 per cent to encourage domestic production of high-tech automotive products and draw capital to the industry’s value chain.

All these may sound a proverbial drop in the ocean, but we as a nation need to make this a mission of cutting down oil consumption in our transport sector. The money which we are spending on importing crude, can be better used by investing in developing our road, river and rail infrastructure.

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