India's oil vulnerability has a two-wheeler answer

This article is authored by Tushar Gandhi, founder, Gateway Consulting.

With the West Asia crisis and oil prices spiking, India needs to look much more at alternative fuels, including electric mobility. The government has accelerated procurement of electric buses, citing explicitly the risk of supply disruptions from the ongoing conflict. This is not a future risk.

Two wheeler

India has been here before. In 2008, in 2013, and in 2022, Brent crude crossed $100 to $147 per barrel, triggering inflation, rupee depreciation, and widening fiscal and current account deficits. Each time, the response included excise adjustments, monetary tightening, and fiscal consolidation. These measures absorbed each shock without removing the underlying vulnerability. The pattern is well established. What is different today is that the conditions in technology, economics, and policy momentum now exist for India to make a structural choice and move decisively towards energy security.

India imports more than 85% of its crude oil, with a significant share sourced from or transiting through West Asia. India spent $137 billion importing crude oil in FY2024-25, according to data published by the Petroleum Planning and Analysis Cell, ministry of petroleum and natural gas. That figure, equivalent to approximately ₹11.5 lakh crore, represents the annual cost of an energy dependence.

A barrel of crude priced at $80 cost India approximately ₹6,720 when the rupee stood at ₹84 to the dollar. At today's rate of ₹94, the same barrel costs ₹7,520 — an increase of approximately 12% from currency movement alone, before any change in the global oil price. India imports approximately 4.8 million barrels per day, or 1.75 billion barrels over a full year. At ₹800 more per barrel, currency depreciation is already adding approximately ₹1.40 lakh crore to India's annual oil import bill.

The transport sector consumes approximately 70% of India's petroleum products. Within that, two-wheelers account for an estimated 30–35% of India's total petrol demand — the single largest driver of fuel consumption in the country. According to the ministry of road transport and highways Annual Report 2023-24, there are approximately 260 million registered two-wheelers on India's roads, growing by roughly 20 million units every year. Each one is a 10–15 year oil import commitment.

The scale becomes clear when you look at individual vehicles. On average, a petrol two-wheeler consumes roughly 2,500 litres over its operational life — approximately ₹2.5 lakh in fuel costs alone at today's prices, often two to three times the original purchase price of the vehicle. Every litre burned is a dollar of imported crude. Petrol has not got cheaper over any sustained period in India's history, and the structural forces of rupee depreciation, global demand growth, and supply volatility consistently point in one direction. An electric two-wheeler carries none of this compounding exposure.

No other vehicle segment offers the combination of scale, feasibility, and speed. An electric scooter requires a 2–4 kWh battery, compared with 40–70 kWh for an electric passenger car. The economics already work for urban commuters, charging is done at home overnight on a standard socket.

Three-wheelers deserve equal strategic attention. Auto-rickshaws and cargo three-wheelers are the backbone of last-mile connectivity across India — in cities, in district towns, and in rural areas. They operate long hours, cover high daily distances, and consume fuel disproportionate to their numbers. India sells over 700,000 three-wheelers annually, and operators are acutely price-sensitive, making them naturally motivated to switch when the economics are right. Electric three-wheelers are commercially available, proven, and increasingly cost-competitive. The segment requires financing access and policy continuity, not new technology.

Two concerns are frequently raised about the pace of electrification. The first is that Electric Vehicles (EV) shift dependency from oil to coal. India added more renewable energy capacity last year than in any previous year, and the SHANTI Act, passed by Parliament in December 2025, targets 100 gigawatts of nuclear capacity by 2047. An EV charged on India's grid today already produces fewer lifecycle emissions than the same vehicle would have five years ago — because the grid itself is cleaner. That improvement is structural and ongoing.

The second concern — that EVs replace oil dependency with dependency on imported battery cells and rare earth magnets — does not hold up to scrutiny. Oil dependency is recurring and permanent. India imports crude every single day for the entire operational life of every petrol vehicle, with no prospect of a domestic alternative. Cell and magnet dependency is a one-time input per vehicle, and the critical materials in EV batteries can be recovered and recycled at efficiencies of 90–99%, meaning the same materials serve multiple vehicle lives. Globally, Japan, Australia, France, the United States, and Brazil are actively building non-China rare earth supply chains. The dependency is real but transitional.

India's own policy trajectory reflects the direction of travel. Clean technology passenger vehicles grew at more than double the pace of the overall automobile industry in FY2026, with their share of total sales rising to 29%, up from 9% five years earlier, according to SIAM data. The government's decision to accelerate electric bus procurement in response to the West Asia crisis demonstrates that the connection between EV adoption and energy security is understood at the policy level. The data on two and three-wheelers makes an equally compelling case. Delhi's draft EV Policy 2026, released on April 11, makes the same argument. It proposes banning new ICE two-wheeler registrations from April 2028 and three-wheelers from January 2027 — citing that two-wheelers alone constitute 67% of the capital's vehicle stock. What Delhi is proposing as a city-level air quality measure is, at the national scale, an energy security imperative.

India has absorbed oil price shocks before — in 2008, in 2013, in 2022. Each time the response was calibrated to manage the impact. Each time the structural exposure remained. The current moment is not categorically different in origin, but it is different in the options available. The technology exists, the economics are compelling, and the scale of the opportunity in two and three-wheelers is unmatched by any other intervention available to policymakers today.

(The views expressed are personal)

This article is authored by Tushar Gandhi, founder, Gateway Consulting.