India is expected to become an important player in global energy markets, following a distinct growth path marked by lower energy intensity, a diverse energy mix and expanding commodity imports, according to Wood Mackenzie's latest Horizons report.

Titled Eye on the Tiger: How Higher Indian Economic Growth Could Impact Global Energy Markets, the report talks about how India's expansion differs from China's energy-intensive boom in the early 2000s. Instead, India is seen to be pursuing a more balanced approach, focusing on high-value manufacturing and renewable energy.

Yanting Zhou, principal economist at Wood Mackenzie, said in the report that India's growth story shares similarities with China's rapid expansion; however, there are crucial differences. "While energy demand will surge, India's industrial sector is less energy-intensive, and the country is better positioned to adopt efficient, low-carbon technologies compared to China in the 2000s,” Zhou stated.

India has set a target of 500 GW production from non-fossil sources by the end of this decade. As of end-January 2025, India’s total non-fossil fuel-based energy capacity has reached 217.62 GW, according to government data. 

Wood Mackenzie's high-growth scenario for India by 2033

• The economy is expected to reach just under $9 trillion.

• The coal demand is estimated to nearly double to 2.2bn tonnes.

• The country’s oil demand is forecast to expand from 5.6mn barrels per day (bpd) to 8.2mn bpd.

• Power demand is set to surge to almost 4,000 TWh, with significant growth in both coal and renewable energy generation.

• Steel demand is likely to grow by 9% per annum, reaching 317mn tonnes.

Key factors shaping India's energy transition

The Wood Mackenzie report delves into various factors that are shaping India’s energy transition. These are:

Different industrial structure: India's growth revolves around high-value-added manufacturing, including renewables and advanced batteries, supported by government subsidies and technological advancements.

Lower energy intensity: Indian industries at present use less energy per unit of GDP than China did in the early 2000s. A greater reliance on renewables and increased adoption of electric vehicles will further reduce energy intensity, according to Wood Mackenzie.

Limited impact on global energy prices: While India's rising demand will increase competition for commodities, it is not expected to trigger price increases akin to China's boom in the 2000s. The spare capacity that OPEC+ holds is expected to be sufficient for India's growing oil needs, with Brent prices projected to rise by only $1 to $3 per barrel.

LNG and coal markets: India’s incremental demand for 10mn tonnes per annum (mtpa) of LNG will coincide with a likely drop in global gas prices, as more than 200 mtpa of new LNG supply—roughly 50% of current supply—enters the market.

Thermal coal output in the country could reach 1,800mn tonnes by 2033, driven by energy security concerns, though India will still need to import around 200mn tonnes. As a result, the current seaborne thermal coal cost of approximately $107 per tonne could rise to $110 per tonne by 2033.

Emissions outlook: While India's CO2 emissions will initially increase due to coal expansion, its high-growth scenario could accelerate the development of low-carbon supply chains, paving the way for faster decarbonisation post-2030.

Roshna Nazar, research analyst for energy transition at Wood Mackenzie, said that if India is able to replicate China's post-2010 strategy of investing in low-carbon supply chains for solar, wind, electric vehicles and critical minerals, the increased emissions expected in the early 2030s will be a short-term phenomenon.

Opportunities for global producers, challenges for domestic policy

Rising energy demand presents opportunities for resource producers, particularly in Russia, the Middle East, Australia, Indonesia and South Africa. However, investors will need to capitalise on the first-mover advantage before domestic companies scale up, Wood Mackenzie noted.

India will most likely require $600bn in power sector investment over the next decade. This will generate opportunities in power generation, grid expansion and supply chain development.

Wood Mackenzie believes that the government is in a strong position to implement policies that balance energy security, emissions reduction and economic growth while ensuring affordable energy access. By streamlining approvals, offering incentives for renewable projects and fostering public-private partnerships, India could sharply cut its reliance on commodity imports after 2035, it said. This shift could strengthen its balance of payments, lower public debt and boost foreign reserves.

Zhou said that in addition to increasing imports, managing higher growth will need major investment in domestic energy production, oil refining, steelmaking and low-carbon supply chains. “Just like in China during the 2000s, there are many opportunities to explore,” he said.