Energy wars and India’s industrial future | Hindustan Times – Hindustan Times

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When conflict erupts in West Asia, the first signs of stress in India often appear far from the battlefield. They show up everywhere from restaurant menus to factory schedules.
The events in West Asia are, of course, complex on multiple levels. It however also serves a potent reminder for why India should persist with its ambition to forge a uniquely Indian economic pathway of decoupling growth from conventional (fossil fuels based, high emissions) energy sources. War and conflict often also cause energy markets to tighten, shipping risks to rise and fuel prices to shoot up. Within days, industrial clusters begin adjusting production plans. A geopolitical shock thousands of kilometres away ripples through steel furnaces, ceramics kilns and manufacturing lines across India.
This is not a new phenomenon. But it remains a powerful reminder that energy security and industrial strategy are inseparable.
It is also why the case for industrial decarbonisation is no longer just about climate. It is increasingly about economic resilience.
India imports roughly 90% of its crude oil and a large share of its gas. Much of it flows through narrow maritime chokepoints such as the Strait of Hormuz.
When tensions escalate there, the ripples are felt in the Indian economy. Higher fuel prices drive up manufacturing costs, inflation pressures and uncertainty for supply chains.
For businesses already operating in volatile global markets and tight margins, unpredictable energy prices are not a distant macroeconomic issue. They shape day-to-day decisions on production, investment and competitiveness.
This is where the decarbonisation and energy security become complementary and not competing priorities.
Industrial systems powered by domestic renewable electricity and reinforced by higher energy efficiency are inherently less exposed to geopolitical shocks than those dependent on imported fossil fuels.
Yet the pathway to that future in India and other countries in the Global South is more complicated than global climate debates sometimes acknowledge.
Indian industry is already navigating one major shift in its energy mix.
For a couple of decades, policymakers have encouraged industries to move away from coal and furnace oil to gas. Pipelines, LNG terminals and city gas networks have expanded as part of this effort.
But a second shift is now emerging: From gas to electricity and zero-carbon fuels such as safer nuclear and green hydrogen. For many companies this creates a difficult reality. Investments made to move from coal to gas only a few years ago may soon need to evolve again.
A ceramics manufacturer that shifted kilns to gas may now face pressure to electrify them. This is a tale that’s repeated across a wide swathe of industry sectors, up and down individual firm sizes. For firms operating under a regime of high capital costs and only increasing competitive markets, especially smaller manufacturers, rebuilding energy systems twice within a short period is a daunting challenge.
Policymakers must recognise this challenge. Otherwise, the energy transition risks being seen not as an opportunity but as another cost burden. A transformational reimagining of policy and investment is the need of the hour.
India’s industrial economy is built not only on large corporations but on millions of small and medium enterprises.
These firms are critical to employment and exports. However, they also have limited access to capital and little space for repeated technological reinvestment. Yet the recent disruptions in gas supplies underscore their sensitivity to energy volatility.
A successful industrial transition must therefore work for MSMEs as much as for large companies. Financing mechanisms, shared infrastructure, technology transfers and cluster-level solutions are going to be urgently required.
One of the most underappreciated tools for strengthening both competitiveness and energy security is circularity.
Using materials and energy more efficiently, recycling industrial inputs (such as heat) and recovering value from waste significantly reduces both energy demand and emissions.
Producing steel from recycled scrap requires far less energy than producing it from iron ore. Recycled aluminium uses only a fraction of the energy needed for primary production. India needs to catch up with other nations – which are a diverse range from Turkey to the United States – in sourcing and processing more scrap.
For a resource-constrained economy like India, circularity is not simply environmental stewardship. It is a powerful industrial strategy.
Every tonne of material reused domestically reduces exposure to volatile global commodity markets and energy supply disruptions.
At the same time, the cornerstone of any nation’s energy system has to be diversity. Diversity reduces risk.
Renewable electricity will be the backbone of India’s transition. Solar and wind are already among the cheapest sources of power in the country. Electrons are more strategically and more environmentally more sustainable. And cheaper!
But electrification alone will not be sufficient.
Sectors such as steel, fertilisers, aviation and shipping will require low-carbon molecules such as green hydrogen, sustainable biofuels and synthetic fuels. Ensuring secure and sustainable supplies of these fuels will inventive and investment in the technology development and solutions deployment.
Energy security in the decades ahead will depend on diversity in both electrons and molecules.
History shows that energy crises often accelerate structural change. The oil shocks of the 1970s reshaped global energy systems. Europe’s recent gas crisis amplified the argument for renewables.
The current turmoil in West Asia obliges a similar moment for India.
Industrial decarbonisation must move faster. But it must also move intelligently, recognising the investment cycles of industry, the realities of MSMEs and the opportunities offered by circular manufacturing.
Those working closely with industrial transitions increasingly see the same conclusion emerging: the cleanest industrial systems will also prove the most resilient.
In a world where conflicts thousands of kilometres away can disrupt Indian factories overnight, that resilience will be central to sustaining India’s growth story.
This article is authored by Hisham Mundol, chief advisor, India, Environmental Defence Fund.

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