India, the world’s third-largest energy consumer, wants to better shield itself from oil price volatility Today, we explain more.
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Macro
The US lowering tariffs should bring down interest rates and boost earnings, but will not attract foreign flows. The rupee should be less volatile and face less selling pressure which lets the central bank sell more rupees to lower rates. Of course, companies will also benefit but until more deals are signed (or fleshed out) seeing foreign flows return is difficult.
Lending rates on outstanding floating loans are sticky even with 125 basis points of cuts.Homeowners have only seen 67 percent percent of the reduction priced into their loan along with other retail loans. Banks are likely offering risk-proportioned rates where safer customers benefit first.
Equities
Reliance has bought its first Venezuelan cargos since mid-2025. They bought one VLCC with 2 million barrels. Though this is a small amount, India has historically accounted for 25 percent of Venezuelan exports. Vitol and Trafigura have offered $5-8 (₹455-728) discounts compared to international Brent standards.
India's antitrust agency is checking if IndiGo abused its dominant market share by withholding mass flights in December.Such conduct can be seen as ‘restricting the provision of services’. Though IndiGo cited technical and software failures, passengers on cancelled flights were offered new seats at exorbitantly higher rates.
Alts
India will continue offering tax waivers on imports on nuclear equipment until 2035. There is no discrimination on project size. The goal is to boost India’s ability to manufacture solar modules (which share some components) and reach 100 GW of nuclear capacity.
India's Special Economic Zones could see levies lowered for industries selling domestically.Export-oriented companies, in particular oil refiners based in the SEZs, would benefit since they could focus on the domestic market. Companies like Reliance have seen overseas shipments fall 14 percent y-o-y in January but they would be more incentivized to focus on India’s own market.
Policy
India will continue to share 41 percent of federal taxes with states. This includes $15.2 billion (₹1.4 trillion) in federal commission grants given to the states. States had sought a higher share citing higher spending on roads, ports, defense spending, and other infrastructure projects to continue boosting regional growth.
Capex will stay at 3.3 percent of GDP while states' fiscal deficit will be 3 percent of GDP.Both are continuations of past policies. While those figures stay the same, debt will come down to 50 percent of GDP by carrying out more privatization at the federal and state level.
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India is Finally Prepared to Increase Energy Consumption
Among the world’s largest energy consumers, India (as noted previously in Samosa Capital) has long stood out for its sensitivity to fuel prices and its readiness to sound the alarm when costs rise. Yet the prevailing mood in the government’s upper echelons has shifted markedly. Officials and industry executives increasingly view global markets for oil, gas, and coal as tilting toward buyers, supported by a sharp retreat in prices from the peaks that followed Russia’s invasion of Ukraine. Crude near $65 (₹5,915) a barrel, along with significantly cheaper coal and natural gas, has reinforced a sense that energy may remain relatively abundant, easing a historic source of macroeconomic anxiety for the country.
India is already the third-largest energy consumer globally, but its per-capita usage remains low, underscoring vast room for demand growth as urbanization and industrialization accelerate. In fact, while the GDP has grown around 7-8 percent for the last decade, energy consumption has followed that path or even been lower, something dissimilar to other developing countries. Over the coming quarter century, the country is expected to account for a substantial share of the increase in global energy consumption, raising its weight in world demand and deepening the importance of stable supply. Energy analysts predict consumption growth to rise by 11 percent per annum compared to 7 percent right now. Against that backdrop, the belief among policymakers that global production will keep markets well supplied has fostered unusual confidence in India’s energy outlook.
Officials acknowledge that fossil-fuel prices will remain volatile and continue to monitor geopolitical flashpoints, particularly in the Middle East and LatAm. They broadly assume that sharp price spikes at $85 (₹7,735) or above would trigger new drilling and prove short-lived, while sustained collapses to $55 (₹5,005) would curb supply. Even at today’s lower levels, some fuels such as LNG — which have fallen 80 percent since 2022 peaks — remain costly for price-conscious Indian buyers, limiting how quickly consumption can expand despite favorable trends.
At the same time, structural shifts are beginning to reshape the domestic energy mix. Renewables, hydropower, and nuclear capacity are gradually supplementing fossil fuels, with solar generation already reducing coal-fired output during parts of the year. Chinese electric demand for fossil fuels is predicted to slow while supply of oil, LNG, and alt sources should rise. Still, coal remains central to electricity supply, highlighting the slow and uneven nature of transition in a rapidly growing economy.
The central question is whether India is witnessing a durable era of plentiful energy or merely a cyclical lull. History cautions against assuming today’s buyer-friendly conditions will persist. Yet the mere fact that a country once defined by fears of scarcity now speaks of abundance marks a significant psychological and strategic shift.
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Written by Yash Tibrewal. Edited by Shreyas Sinha.
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Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.