India turns the page on energy dependence

This article is authored by Vivek Rahi, partner and national head, Oil and Gas, KPMG, India.

When the Strait of Hormuz closed on February 28, 2026, the world expected India to buckle. It did not. A supplier base painstakingly widened from twenty-seven countries to forty-one was called upon all at once, and it held. Pumps stayed open, cylinders kept arriving, and retail fuel prices rose just over four per cent even as comparable economies absorbed double-digit increases. The International Energy Agency called it one of the largest supply disruptions in the oil market's history. India came through with its economy running and its people supplied, a genuine achievement of foresight, refining flexibility and diplomatic bandwidth.

Vessels at the Strait of Hormuz, as seen from Musandam, Oman, July 21, 2026. REUTERS/Stringer (REUTERS)

The episode brought into focus a question India could no longer defer. Import diversification had proved its value. But the deeper strategic gain lay in reducing the need for imported molecules altogether. Two Cabinet decisions, six days apart, move squarely in that direction.

On July 31, the Cabinet approved Samudra Manthan, the National Offshore Exploration Scheme, at ₹84,084 crore through FY2030-31. On August 6, it cleared GOBARdhan, the National Circular Bioenergy Scheme, at ₹23,731 crore over a decade. One reaches into India's deepwater basins; the other into its farmlands, mandis and municipal waste streams. Read together, they are the same idea applied at opposite ends of the barrel, and the same insight about what unlocks private capital.

That insight is this: investors do not need encouragement; they need a risk they can price. Both schemes deliver exactly that.

Samudra Manthan commits ₹43,200 crore to sharing the cost of deepwater and ultra-deepwater drilling, up to half of eligible well cost across 60 wells. Frontier exploration is the one place where even the strongest balance sheet cannot diversify away geology, and where dry-hole risk has historically kept

one of India’s most promising acreage areas largely untested. By stepping in precisely there, the government has converted a barrier into a value proposition. Add the ₹2,000 crore for offshore manufacturing and services zones, and the scheme is not just funding wells; it is seeding the domestic supply chain, including rigs, subsea systems, vessels and fabrication, that may make every subsequent well cheaper. The goal of taking output from around 62 to 80 MMTOE a year has weight because the scheme addresses the bottleneck at the heart of frontier exploration.

GOBARdhan is the mirror image on the demand side. It turns compressed biogas blending from an aspiration into a notified trajectory: three per cent in FY2026-27, four the year after, five from FY2028-29, backed by an administered price of ₹2,110 per MMBTU held for at least ten years. For a sector financed at merchant risk, this is a decisive re-rating. It gives a lender a price, a volume and a buyer, the three things a term sheet needs. And it does so while converting agricultural residue and cattle waste into rural income, cleaner air and organic manure, which is why its returns extend well beyond the energy ledger.

Momentum of this kind should now be consolidated. Offshore, the cost-share will be effective if it is tightly integrated with India’s existing National Data Repository, fresh high-resolution seismic in frontier basins, affordable interpreted datasets and ORDA’s promise of fiscal stability. The next frontier is not policy intent, but execution certainty: time-bound approvals, coordinated offshore clearances and a single-window process that lets capital move as quickly as geology allows. On Compressed bio-gas (CBG), the next constraint is the feedstock chain rather than the plant. Baling equipment, storage yards, residue mapping and FPO-led aggregation should be treated as financeable infrastructure, so plants run closer to design capacity. Fermented organic manure needs to become a real market, supported by quality standards, fertiliser-channel integration and cooperative-led distribution. A tradeable CBG compliance instrument and a single published metric for import displacement, measured in MMTOE and dollars, would let markets, states and citizens track progress on a common scoreboard.

None of this diminishes what has been done. It reflects that the hardest part, moving risk off the private balance sheet has been done at scale. There is a wider signal here. Across South Asia, import dependence has long been treated as a fact of geography. India is demonstrating that it is a variable, responsive to policy design as much as to endowment. These two schemes may be measured in wells drilled and tonnes blended, but their real contribution may be the template: identify the risk that blocks capital, price it, share it, and let the market do the rest.

This article is authored by Vivek Rahi, partner and national head, Oil and Gas, KPMG, India.