Journal des affaires commerciales et financières

Energy Crisis of India: In Search of New Alternatives

Abstract

Debasish Nandy*

India’s economic diplomacy partly has been transformed into oil diplomacy. India’s oil diplomacy can be divided into three phases (1) from independence to 1960s, (2) from 1960s to end of the Cold War and (3) since 1991 to present time. In the third phase, especially in 2000s India sought for alternative overseas sources of oil and gas. In the 21st century, oil issue has been key issue in India’s foreign policy. Regarding overseas oil, India started high-level diplomacy. India’s oil diplomacy had changed in 1960s onwards due to domestic policy and changing scenario of international political-economy. Due to rapid growth of oil price and other technical factors India had to tilt towards Soviet Union for its oil support. In 1960, India signed a treaty with USSR and started to import oil. The Western oil refinery firms were not interested to refine India’s imported oil from Moscow. Indian government decided to establish its own oil refinery company with the help of Soviet Union and Rumania government. During 1977-1982 periods, New Delhi was depended on Moscow; approximately, 5-15% of total India’s imported crude oil came from USSR. India’s quest for energy security leads to strengthen the oil diplomacy. India imported 23% of its total oil from USSR in 1984-85, 17% in 1985-86 and 17% in 1989-90 respectively. After end of the collapse of USSR India has stopped to import oil from Moscow and started to extend its dependency on other destinations. India’s shift of oil diplomacy from Cold War period to present world order has been evolved through continuous changing process. India’s Energy security question rose as a big question since 1991. Since 1990s, the suppliers of India’s oil supply have been changed. With the collapse USSR and end of the Cold War Russian oil supply to India has been almost ended. To augment commercial purchases on the world market, India’s government and oil firms sought to secure oilfields in abroad. These assets added 3 to 5 million tons annually to India’s oil supply in the mid-and late 1990s. India’s main sources of energy are coal, oil and gas which is 50% of the reservation of India’s own petroleum is very little. This paper is based on three hypotheses. (1) Energy security is closely related to diplomacy. (2) Oil is indispensable (3) Uncertainty of oil is a negative aspect of a country’s entire growth. In my paper I will critically analyze India’s energy crisis in present and future.