India’s energy ecosystem is witnessing early signs of stress amid ongoing geopolitical disruptions in West Asia, even as the government maintains that the country remains well-prepared to manage the situation. The ongoing conflict in the region has significantly impacted global supply chains, particularly energy flows through critical routes such as the Strait of Hormuz, which carries a large share of India’s crude oil, gas, and fertiliser imports. Addressing the Parliament on March 23, Hon’ble Prime Minister Shri Narendra Modi described the situation as “concerning” and acknowledged its adverse impact on the global economy and daily life, while assuring that India is taking proactive steps to safeguard energy security.
Industrial clusters across India are already experiencing localized stress, with shortages and disruptions in CNG and LPG supply pushing businesses to explore alternative fuels, including coal. India imports nearly 45–50% of its natural gas requirement as LNG, making industrial gas consumers highly sensitive to global supply disruptions and shipping route uncertainties. This shift is further reinforced by constrained LNG supplies and rising global uncertainties. At the same time, the government has highlighted that India has significantly strengthened its energy resilience over the past decade through diversification of import sources, expansion of strategic reserves, and improved supply chain preparedness.
Gas-based power capacity in India remains underutilised at below 25% PLF, as coal and renewables continue to dominate the generation mix. While the power sector remains relatively insulated, owing to its strong reliance on coal and renewables, the industrial sector continues to feel the pressure of gas shortages. In this context, coal has emerged as a critical fallback option, reinforcing its role as the backbone of India’s energy security.
India’s overall coal demand has been rising steadily, with annual consumption crossing 1.25 billion tonnes, driven primarily by the power sector, cement, sponge iron, and captive industrial users. Early signals from coal markets indicate tightening demand–supply dynamics. Coal India’s e-auction premiums have risen to around 35% over notified prices in February 2026, reflecting increased urgency among buyers to secure supply. This marks a shift from softer demand trends earlier in the fiscal year. The demand uptick is being driven by multiple factors, including substitution from gas amid LNG disruptions, seasonal ramp-up in power demand, and reduced imports leading to greater reliance on domestic coal. However, coal’s substitution potential remains largely limited to the power sector in the short-to-medium term. Structural and technological constraints continue to restrict its widespread adoption in industrial applications such as fertilisers and chemicals.
Commenting on the evolving scenario, Mr. Vinaya Varma, MD & CEO, mjunction services limited stated, “What we are witnessing is an early but clear behavioural shift in fuel consumption patterns. As LNG availability tightens and CNG/LPG supplies face disruption in several industrial clusters, buyers are increasingly turning to coal to secure operational continuity. The rise in e-auction premiums and improved offtake reflects this urgency. Coal will continue to play a critical role in ensuring India’s energy security, especially in times of global uncertainty. While we are witnessing localized tightening in demand and firming of prices, the overall market remains balanced due to strong domestic availability and adequate stock levels.”
Importantly, the situation remains measured rather than overheated. Only about 47% of auction volumes have been sold so far this year, and current premiums remain below historical peaks, indicating controlled but firming demand. Current coal stock levels at power plants remain comfortable at 18–20 days of consumption, preventing panic buying despite tightening spot demand signals in auction markets. Overall, while India is not facing an immediate energy crisis, evolving global disruptions are beginning to test the system.
