Energy Dependence Turns Strategic Risk: Toyota’s Vikram Gulati Calls for Accelerated Multi-Path Reset

As geopolitical tensions in West Asia expose fresh vulnerabilities in global energy and supply chains, Vikram Gulati, Country Head & Executive Vice President, Toyota Kirloskar Motor has called for India to urgently recalibrate its strategy around energy security, decarbonisation and industrial resilience, warning that the current crisis is a “wake-up call” rather than a one-off disruption.

India’s exposure is significant. The country imports nearly 85% of its crude oil requirements and over half of its gas consumption, resulting in an annual energy import bill of about $160–165 billion. With transport accounting for nearly a fifth of total energy use and demand set to rise sharply, the risks are no longer cyclical but structural. “We are not insulated. The new normal is volatile and uncertain, and disruptions will continue,” Gulati said. 

The scale of India’s dependence is stark. Of the total energy import bill, crude oil alone accounts for roughly $137 billion, with gas and coal adding another $30–35 billion. Transport consumption translates into an estimated $30–35 billion exposure annually, a number that is expected to grow with rising vehicle ownership and freight movement.

Global estimates suggest India’s passenger vehicle energy demand could multiply three to four times by 2040, intensifying the pressure on imports. This creates a fundamental imbalance—an economy expanding on the back of mobility demand but reliant on external energy sources to sustain it. “The wake-up call is that we have to become energy independent as fast as possible,” Gulati said. 

Despite the policy push towards electrification, EV penetration in India remains in the low single digits, with overall adoption across segments still around 4–5%. This, Gulati argues, underscores the limitations of a single-path approach. Instead, he advocates a diversified strategy that brings together electrification with ethanol blending, flex-fuel vehicles, compressed biogas, hydrogen and cleaner internal combustion technologies. “The real enemy is carbon and fossil fuel. It is not about one technology versus another,” he said. For India, where affordability constraints and a large legacy fleet shape market realities, such a multi-path approach is as much about pragmatism as it is about sustainability.

Among the most immediate opportunities, Gulati highlighted energy efficiency. Unlike Europe, where carbon-linked taxation influences consumer behaviour, India lacks strong fiscal mechanisms to differentiate between efficient and inefficient technologies. This has resulted in a policy gap where consumers are not adequately incentivised to adopt higher-efficiency vehicles or appliances. Even incremental improvements—such as a 10–15% gain in fleet efficiency—could translate into billions of dollars in reduced fuel imports. “We have to encourage energy efficiency like nobody’s business. It is the lowest hanging fruit,” he said. 

India’s GST simplification has reduced tax complexity but also compressed the ability to create nuanced incentives. With limited slabs, cleaner technologies such as hybrids and flex-fuel vehicles often do not receive proportionate benefits despite delivering measurable efficiency gains. “What is needed is a scientific, proportionate approach linked to the actual benefit each technology delivers,” Gulati said. 

India’s ethanol programme offers a glimpse of what targeted policy can achieve. The country has scaled up blending rapidly to E20 levels, delivering estimated foreign exchange savings of over ₹1.4 lakh crore while supporting farm incomes. Yet, significant capacity remains underutilised, with 500–600 crore litres of ethanol potential untapped. Gulati suggests that flex-fuel vehicles could unlock this capacity more effectively than rigid blending mandates, especially given the constraints of the existing vehicle parc. Compressed biogas, too, presents an opportunity, particularly in leveraging agricultural waste.  

The West Asia crisis has also brought into focus the fragility of global supply chains. Beyond crude oil, disruptions can extend to inputs such as sulphur, carbon black and fertilisers—materials critical to sectors ranging from automotive to agriculture. India’s manufacturing ecosystem, deeply integrated into global trade, is exposed to these cascading risks. 

“The world is so integrated that you are now dealing with second- and third-order risks,” Gulati said. While companies have strengthened risk management frameworks since the pandemic, full diversification of sourcing remains a work in progress. Globally, energy transition strategies are being recalibrated. Gulati argues that India must resist the temptation to replicate global models without adapting them to local realities. Instead, it should build on its own strengths, including its agricultural base, cost competitiveness and emerging technological capabilities. “You cannot copy others. You have to look at your own strengths and vulnerabilities,” he said.