Energy jitters: West Asia tensions test India’s resilience

India’s energy architecture, long calibrated for resilience amid volatility, is beginning to register early tremors from the geopolitical churn in West Asia. The ongoing conflict has cast a long shadow over global supply chains, particularly through the Strait of Hormuz — a narrow maritime artery that carries a substantial share of India’s crude oil, LNG and fertiliser imports. While New Delhi has struck a reassuring note, the stresses are no longer abstract; they are starting to ripple through industrial corridors and fuel markets.

Addressing Parliament on March 23, Prime Minister Narendra Modi termed the situation “concerning”, underscoring its implications for both the global economy and everyday life. His assurance that India remains prepared is not without basis. Over the past decade, the country has diversified its energy import basket, augmented strategic reserves, and strengthened logistical preparedness. Yet, as recent developments suggest, resilience is not immunity.

The most immediate pressure point lies in the natural gas ecosystem. With nearly half its gas requirements met through LNG imports, India remains exposed to disruptions in global shipping routes and supply availability. Industrial clusters, particularly those reliant on CNG and LPG, are already facing sporadic shortages. The response has been pragmatic, if imperfect: businesses are increasingly turning to coal to sustain operations.

This shift is not merely anecdotal; it is reflected in market signals. Coal India’s e-auction premiums have surged to around 35 per cent over notified prices as of February 2026, signalling heightened urgency among buyers. The resurgence in demand is driven by a confluence of factors — substitution from gas amid LNG constraints, seasonal spikes in power consumption, and a calibrated reduction in imports that has nudged users toward domestic supply. In effect, coal has reasserted itself as the system’s shock absorber.

This recalibration, however, must be viewed with nuance. India’s coal consumption has crossed 1.25 billion tonnes annually, propelled by the power sector and energy-intensive industries such as cement and sponge iron. Yet coal’s role as a substitute remains limited. Structural and technological constraints prevent its seamless adoption in sectors such as fertilisers and chemicals, where gas remains indispensable. The current shift, therefore, is tactical rather than transformational.

Encouragingly, the broader market context remains measured. Only about 47 per cent of auction volumes have been absorbed so far this year, and prevailing premiums remain below historical peaks. More importantly, coal stockpiles at power plants — hovering at a comfortable 18–20 days of consumption — provide a critical buffer against panic-driven procurement. These indicators point to a system under stress, but not under siege.

Vinaya Varma, MD and CEO of mjunction services limited, aptly describes the moment as an “early but clear behavioural shift” in fuel consumption patterns. His assessment reflects a marketplace responding rationally to uncertainty, rather than one spiralling into disorder. Coal’s renewed prominence, in this context, is less a regression than a reaffirmation of its role in India’s energy mix during periods of external disruption.

The larger lesson, however, lies beyond immediate adjustments. As global energy geopolitics grows more unpredictable, India’s long-term strategy must evolve from resilience to redundancy — building not just buffers, but alternatives. Investments in renewables, storage technologies, and diversified fuel pathways must accelerate, ensuring that no single disruption reverberates across the system.

For now, India’s energy story remains one of cautious stability under strain. The system is being tested, but it is holding. Whether it emerges stronger will depend on how decisively today’s warning signs are translated into tomorrow’s safeguards.