India’s Energy Strategy: Vision, Transformation, and Sustainable Growth

India stands at a crucial juncture in its energy evolution. As the third-largest producer and consumer of electricity, with an installed power capacity of 442.85 GW as of April 30, 2024, the country is undertaking a monumental energy transition. Power consumption grew by 9.5% in FY23, reaching ~1,500 Billion Units (BU), indicating robust demand fueled by population growth, urbanization, and electrification. According to the Economic Survey 2023-24, the energy sector is projected to attract investments worth Rs. 17 lakh crore ($205.31 billion) in the next 5-7 years, and the National Electricity Plan (2022-32) outlines the requirement of Rs. 33.6 trillion ($384.5 billion) to meet future power demands.

India’s roadmap, described as “a strategy fuelled by vision, powered by energy,” addresses the triple challenge of availability, affordability, and sustainability. As the world’s fourth-largest economy (surpassing Japan in 2025), India is not just expanding capacity but is reshaping the very foundation of its energy systems, integrating policy reforms, green energy initiatives, and technological innovations. The Union Budget 2025-26, Economic Survey 2024-25, and global reports such as IEA’s World Energy Outlook 2023 underscore the centrality of energy in achieving India’s development goals, including net-zero emissions by 2070.

What is India’s Present Energy Status?

India’s energy sector is one of the most diversified globally, encompassing coal, oil, natural gas, hydro, nuclear, wind, solar, and biomass. It is also, the third-largest energy and oil consumer, fourth-largest refiner and LNG importer, home to over 96,000 retail fuel outlets and a 25,000 km gas pipeline network. Noteworthy developments include:

• Installed Capacity: As of April 2024, the total installed capacity stood at 442.85 GW, including 125 GW from renewable energy. India’s renewable energy goal is to reach 500 GW by 2030.
• Rural Electrification: Through schemes like Saubhagya and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), over 2 crore households and 18,374 villages have been electrified.
• Renewable Push: India has already connected 200 GW of renewable energy (RE) capacity out of its 2030 target of 500 GW.
• Rooftop Revolution: PM Surya Ghar: Muft Bijli Yojana aims to bring rooftop solar to 1 crore households, with Rs. 20,000 crore allocated in Budget 2025-26.
• Exploration and Production (E&P): ONGC and Oil India have made over 25 hydrocarbon discoveries across multiple basins, adding over 75 MMtoe and 2,700 MMSCM of gas.
• City Gas Distribution (CGD): Expanded from 55 geographical areas in 2014 to 307 in 2025, with 1.5 crore PNG connections and over 7,500 CNG stations.
• Biofuel Leadership: Ethanol blending in petrol surged from 1.5% (2013) to 19.7% (2025), saving ₹1.26 lakh crore in forex and reducing emissions by 643 lakh MT.
• Energy Infrastructure: India operates 24,000 km of product pipelines and nearly 96,000 retail outlets. In National Infrastructure Pipeline, energy sector accounts for 24% of Rs. 111 lakh crore ($1.4 trillion).
• International Collaborations: ONGC-bp partnership and data sharing with the University of Houston enhance global investment and technology transfer.

Key Policy Initiatives:

1. SAUBHAGYA: Electrified over 2 crore rural households
2. Deen Dayal Upadhyaya Gram Jyoti Yojana: Electrified 18,374 villages
3. PM-Surya Ghar: Muft Bijli Yojana: Targeting rooftop solar installations in 1 crore homes with an allocation of Rs. 20,000 crores in Budget 2025-26
4. SATAT Scheme: Promoting compressed biogas (CBG); over 100 plants commissioned
5. Ujjwala Yojana: Ensuring affordable LPG access

What is India’s National Electricity Plan (2022-32)?

The National Electricity Plan (NEP) serves as the guiding document for India’s power sector expansion:

1. Capacity Addition: Target of 609 GW by 2031-32, including 500 GW from non-fossil sources. Peak Demand Forecast: 277.2 GW by 2026-27 and 366.4 GW by 2031-32.
2. Investment Needs: Rs. 33.6 trillion (US$ 384.5 billion) estimated investment.
3. Private Participation: Encouragement via Production-Linked Incentive (PLI), Viability Gap Funding (VGF), and 100% FDI allowance.
4. Coal-Based Capacity: Expected to increase by 80 GW to ensure baseload reliability.
5. Nuclear Vision: Targeting 100 GW nuclear capacity by 2047; Rs. 20,000 crore allocated for Small Modular Reactors (SMRs) in Union Budget 2025-26 to develop 5 indigenous Small Modular Reactors (SMRs) by 2033.
6. Green Hydrogen and Renewables: 8.62 lakh tonnes of green hydrogen production planned with major tenders awarded to Indian firms like L&T.\
7. Private Sector Participation Encouraged Through: 100% FDI in power sector, viability gap Funding (VGF), PLI schemes, and PPP models and Production-Linked Incentive (PLI) schemes for solar modules and battery storage

What is the Significance of Energy Sector for India?

1. Economic Growth Driver and Industrial Backbone: Energy generation supports over 55% of India’s GDP activity and underpins industrial and urban expansion. A 1% rise in energy supply boosts GDP by 0.8% (World Bank). India’s GDP grew 7.8% in 2023, powered by stable energy access. Example: GDP grew 7.8% in 2023.
2. Massive Employment Generator and Skill Demand: The National Electricity Plan projects a need for 3.78 million energy professionals by 2032. Green energy transitions and infrastructure expansion will generate direct and indirect jobs. Skill development is critical across thermal, solar, wind, and grid sectors. Example: NEP targets 3.78 million jobs.
3. Strategic Autonomy and Energy Security: India spent $158 billion on energy imports in 2022–23. Increasing biofuel, domestic oil, and renewable capacity reduces dependency on volatile markets. The National Bio-Energy Mission (NBEM) and ethanol blending help ensure energy resilience. Example: $158 billion import bill, 2022–23
4. Inclusive and Equitable Development: Schemes like Saubhagya, DDUGJY, and PMUY electrified 2.86 crore homes and provided 9.6 crore LPG connections. Access to clean energy improves health, productivity, and gender outcomes in rural areas. Energy access bridges urban-rural development divides. Example: 2.86 crore homes electrified.
5. Climate Commitments and Environmental Goals: The energy sector contributes over 40% of India’s CO₂ emissions. As India aims for 500 GW non-fossil capacity by 2030 and net-zero by 2070, solar, wind, and green hydrogen are central to India’s updated NDC targets. Example: 500 GW clean energy target 2030.
6. Innovation, Technology, and Modernization: Vital for India’s grid digitization, hydrogen R&D, and AI adoption enhance efficiency and resilience. Projects like GEAPP in Rajasthan deploy AI for real-time grid balancing. Bharat Small Reactors and hydrogen electrolysers push domestic innovation. Example: AI-grid pilot in Rajasthan, 2023.
7. Strategic Diplomacy and Geopolitical Leverage: Like India’s energy collaborations with France, UAE, U.S., and Australia cover hydrogen, solar, and nuclear. As a major market, India influences global energy pricing and policy (IEA-OPEC dialogues). Cross-border pipelines like India-Nepal boost regional integration. Example: India-UAE hydrogen pact, 2024.
8. Investment Magnet and Economic Multiplier: According to IEA, 2023 India attracted $68 billion in clean energy investment. The sector offers Rs. 40 lakh crore investment potential by 2032 (Motilal Oswal). Energy is central to India’s $5 trillion economy vision. Example: $68 billion clean energy FDI.

What are the Challenges and Risks in India’s Energy Sector?

1. High Import Dependency and Volatility Exposure: India imports 85% of its crude oil needs, making it vulnerable to global price shocks. The energy import bill touched $158 billion in 2022–23. Strategic reserves and diversification remain limited. Example: 85% crude oil still imported.
2. Coal Reliance and Transition Delays: Coal is projected to contribute 52% of power by 2030, limiting decarbonization. Seasonal shortages impact 81 thermal plants slated for RE replacement by 2026. Renewable push faces resistance from legacy infrastructure. Example: Coal share 52% by 2030.
3. Grid Integration and Storage Gaps: Intermittent solar and wind energy strain the grid’s stability. Battery and pumped hydro storage infrastructure is still underdeveloped. Projects like GEAPP aim to improve AI-driven management but face scale issues. Example: Storage remains underdeveloped nationwide.
4. Discom Stress and Transmission Losses: As per Ministry of Power, 2024 distribution companies have outstanding dues over ₹1.3 lakh crore. AT&C losses remain high at ~20%, impacting cost recovery. Reform attempts like UDAY have yielded limited success. Example: ₹1.3 lakh crore discom dues.
5. Land Acquisition and Regulatory Hurdles: Large RE and nuclear projects face land disputes and delays due to fragmented land laws. States lack clear land pooling and resettlement policies. Teesta and Dibang protests illustrate ecological resistance. Example: Land disputes stall RE projects.
6. Investment Deficit and Policy Uncertainty: IEA estimates India needs $160 billion annually till 2030 for energy targets. Policy unpredictability and high capital costs deter private investors. States’ varying tariffs and PPAs worsen investor confidence. Example: Needs $160B yearly till 2030.
7. Technological and Manufacturing Lag: India lacks domestic capacity in electrolyzes, high-efficiency solar cells, and grid management tools. Heavy reliance on imports affects strategic autonomy and costs. National Green Hydrogen Mission (NGHM) aims to bridge the gap. Example: India lags in electrolyser tech.
8. Workforce and Climate Vulnerability Challenges: A skilled manpower gap remains, with 3.78 million professionals needed by 2032. Heatwaves and erratic rainfall reduce hydro and thermal plant efficiency. Adaptation planning is still in early stages. Example: 3.78 million workforce needed.

What can be the Way Forward?

1. Diversify and Decentralize Energy Mix: India must expand beyond solar and wind to include nuclear, hydro, and biomass in its energy basket. Decentralized Renewable Energy (DRE) like rooftop solar and mini-grids can power rural and remote areas. PM Surya Ghar Yojana and Bastar microgrids are models. Example: Rooftop solar under PM Surya Ghar.
2. Green Hydrogen and Battery Storage Push: Scale up the National Green Hydrogen Mission and pilot corridors in Panipat and Numaligarh. Boost Battery Energy Storage Systems (BESS) through Production-Linked Incentive (PLI) schemes and PPP models. Domestic gigafactories will reduce storage import dependence. Example: Panipat green hydrogen project scaled.
3. Reform Discoms and Strengthen Transmission: UDAY 2.0 must focus on smart metering, prepaid billing, and Direct Benefit Transfers (DBT). A ₹9.15 lakh crore grid expansion plan will ease RE evacuation. Cutting AT&C losses is essential for financial health. Example: ₹9.15 lakh crore grid plan
4. Digitalisation and AI-Driven Grid Management: AI tools like GEAPP in Rajasthan enhance demand forecasting, load balancing, and outage response. PM Gati Shakti and digital twins improve asset mapping and coordination. Integrated energy platforms will future-proof operations. Example: GEAPP pilot in Rajasthan grid.
5. Land, Water, and Environmental Efficiency: Floating solar, agrivoltaics, and hybrid leases (via Oilfields Act 2024) optimise land and water use. Green buildings and rooftop mandates can help reduce urban energy footprints. Just Transition frameworks must address displaced coal workers. Example: Agrivoltaic solar farms in Maharashtra.
6. Finance and Manufacturing Ecosystem: Mobilise green finance via ESG norms and sovereign green bonds (₹80 billion issued in 2023). Extend PLI schemes to solar cells, electrolysers, and batteries. Domestic supply chains will reduce cost and import reliance. Example: ₹80 billion green bonds issued.
7. Skilling and Innovation for Just Transition: NEP projects a demand of 3.78 million energy professionals by 2032. Energy Innovation Hubs and Skill India initiatives must bridge technical gaps. Coal belt reskilling is critical under Just Energy Transition models. Example: 3.78 million skilled jobs projected.
8. Global Partnerships and Regional Energy Diplomacy: Leverage platforms like ISA, Mission Innovation, and G-20 to shape global clean energy norms. Expand SAARC and BIMSTEC energy corridors and OSOWOG. India’s leadership must align with its market potential. Example: SAARC grid cooperation under study.

Conclusion:
India’s energy sector embodies the country’s developmental vision — “confidence, self-reliance, and strategic foresight.” As noted by the International Energy Agency (IEA), “India will account for the largest share of energy demand growth globally through 2050.” Also, as the former Chief Economic Adviser Arvind Subramanian said, “Energy is the golden thread that connects economic growth, human development and sustainability.” India is weaving that thread into its development fabric with resilience and resolve.