Electrification of transport is the most practical way India can increase its energy security as the conflict in the Middle East exposes its vulnerabilities, relying on imports for 85% of its crude oil needs, the Institute of Energy Economics and Financial Analysis said on Friday.
India, now the world's most populous country, ranks as the third biggest consumer of crude oil, with 45% of this sourced from origins that rely on the now-closed Strait of Hormuz waterway, IEEFA said.
Measures to diversify that supply in response to the strait's closure mean India now sources 70% of its imports from outside the strait. But this also exposed that India needs to change strategy and reduce reliance on foreign imports overall, IEEFA said.
The institute sees the electrification of transport as the most feasible way to achieve that, offering both national security and environmental benefits in one go.
As with other countries that have made more progress with such a transition, India faces the obstacles of sparse charging infrastructure and high up-front costs for vehicles.
What applies for crude oil in India also applies to LNG imports, with just over half its supply delayed or cancelled over force majeure declarations. The United States is a growing alternative supplier to the Middle Eastern origins India has traditionally relied on, however.
IEEFA notes that India began diversifying transportation fuels in the early 2000s, incorporating some ethanol and piloting biodiesel into the mix, but 96% of road vehicles still use gasoline or diesel and just 1.3% are electric.
India now has a 20% blend of ethanol in its gasoline since 2024, up from 5% previously, which eradicates about 45 million barrels of oil imports each year or about 2.5% of the total. IEEFA points out however that production of the energy feedstocks is a much less efficient use of land than using it to generate solar power.
As an illustration, producing the energy produced by a one-hectare solar installation requires planting 187 hectares of corn-derived ethanol.
The increased use of compressed natural gas has reduced diesel needs but it still emits pollutants and embeds reliance on natural gas imports, IEEFA said. Green hydrogen has promise in trucking but production on a scale that would make an impact is a long way off.
IEEFA said that battery electric vehicles are "a clear choice" for India, both commercially ready and strategically sound, and applicable to two and three-wheeled vehicles, passenger cars, light commercial vehicles and buses and they run on domestically produced electricity.
Despite some state-led support and incentives, the share of battery electric vehicles or BEV sales remains below 10% of the total, except among three-wheelers, due to higher purchase costs and lack of charging infrastructure.
IEEFA said addressing this will require sustained policy support at union and state level, including tax incentives and supply-side mandates and targets for fleet decarbonization. The country will also need to invest in domestic BEV production and roll out charging equipment.
Current investments in this areas are 82% shy of what is needed, IEEFA said.
Perhaps most important, IEEFA said, is that India must set up domestic supply chains within both auto and auto component manufacturing including securing access to critical minerals.
"Without this, India risks trading one form of import dependence for another," the research said.