Dragoman Digest

India’s renewables build-out stops at the factory gate

High tariffs and grid bottlenecks have kept industry tethered to fossil fuel imports now in short supply

India added a record 44.5GW of renewables capacity in the year to November, and Prime Minister Narendra Modi has pitched the expansion as central to energy self-reliance. Yet the country remains among Asia’s most import-dependent energy markets. Government welfare schemes have also more than doubled the number of homes using liquefied petroleum gas (LPG) over the past decade by encouraging a switch from firewood, with around 60 percent of supply sourced abroad. Missing has been any major corresponding effort to boost domestic production or diversify sourcing. The Iran war has thrown these dependencies into relief. The Strait of Hormuz, a chokepoint for roughly half of India’s crude imports and 89 percent of its LPG supply in 2025, remains effectively closed, disrupting operations across steel, aluminium, and fertiliser sectors.

Structural barriers have actively discouraged industrial electrification. India’s electricity tariffs for businesses are among the world’s highest, as industry cross-subsidises power for households and agriculture. In Coimbatore, after the Tamil Nadu state government hiked tariffs by 430 percent in 2022, roughly half of foundry and aluminium businesses using electric equipment switched to cheaper LPG. Those firms are now stranded: converting back requires capital outlays of up to two million rupees (US$21,600) per facility for industries like powder coating. More broadly, natural gas consumption among small industries rose 135 percent between April 2019 and March 2024.

For heavier industries, the obstacles are technical. Steel, cement, and ammonia producers meet nearly 90 percent of their energy requirements through fossil-fuel thermal processes. Technologies such as electric boilers and electrified kilns are not expected to reach industrial facilities until 2040. Even where renewables have been deployed at scale, the grid has not kept pace. Over 50GW of capacity was stranded nationwide as of June 2025 due to transmission constraints. As a stopgap measure, the government has permitted greater use of more polluting fuels, including kerosene and fuel oil. Without greater investment in transmission, India’s renewables fleet will continue to expand alongside, rather than reduce, its reliance on imported fuels vulnerable to supply shocks.

Congo cements China mining ties as US minerals deal awaits delivery

Deeply embedded commercial presence constrains Kinshasa’s leverage over competing suitors

The Democratic Republic of the Congo (DRC) has signed a new mining cooperation agreement with China, reinforcing Beijing’s dominant position in the world’s most important cobalt-producing nation. The deal covers geological data sharing, investment protection, and the promotion of local processing, and comes just months after Kinshasa signed a strategic minerals partnership with the US. Chinese firms CMOC, Zijin Mining, and Huayou Cobalt, three of the largest players in global battery metals, already control major mining assets across the DRC, and Beijing is the country’s largest bilateral creditor. The new agreement provides priority Chinese support for a flagship iron ore project in the northeast known as MIFOR. Congolese exports will gain duty-free access to the Chinese market from 1 May under an initiative covering 53 African countries.

The US partnership, by contrast, remains largely conceptual. Broader in scope and formally binding, it trades American security backing in eastern Congo – where Kinshasa has fought a years-long conflict with rebels backed by Rwanda – for preferential mining access. A rare concrete deal came in late March, when US-registered Virtus Minerals acquired Chemaf, a copper-and-cobalt producer accounting for around five percent of global cobalt output, with all future production pledged to American or “US-aligned” buyers. Washington has expanded its footprint through firms such as Freeport-McMoRan, the world’s largest publicly traded copper producer, and KoBold Metals, a minerals exploration company backed by Bill Gates and Jeff Bezos. The DRC has shared a list of priority mining assets with the US, but has cautioned it will seek other partners if further deals fail to deliver.

The DRC holds vast reserves of copper and lithium, essential to EV manufacturing and the energy transition, giving Kinshasa significant theoretical leverage as Washington and Beijing compete for supply chain access. Yet China’s depth of involvement, from mine operations to sovereign lending, means Kinshasa’s engagement with Washington is aimed more at building competitive tension than displacing an entrenched partner. The DRC’s calculus is to play both suitors off against each other in service of domestic processing ambitions – a goal Beijing has pragmatically accommodated while Washington has so far resisted, further tilting the balance toward Beijing. A growing number of African mineral-rich nations are pushing for similar value capture from their resource base.

Gulf states consider replicating Saudi Arabia’s East-West pipeline

Iran’s blockade of the Strait of Hormuz is compelling Gulf states to dust off proposals for costly overland pipelines

Iran’s attempt to institute a tolling system and exert functional control over the Strait of Hormuz represents a major and ongoing risk for Gulf economies. There has naturally been renewed interest in pipelines bypassing the Strait, such as Saudi Arabia’s 1,200km East-West pipeline. Built in response to Iran’s attempt to blockade the Strait during the Iran-Iraq war in the 1980s, the pipeline has been pivotal to KSA’s success in restoring oil exports to pre-war levels of around seven million bpd via the Red Sea port of Yanbu. The Kingdom is actively exploring how to export more of its 10.2 million bpd production capacity by pipeline, whether by expanding the East-West pipeline or building new routes. The UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP) and the Turkish-Iraqi Kirkuk-Ceyhan Pipeline are also likely to consider expanding capacity. These three pipelines’ cumulative capacity of nine million bpd is still well below the 20 million bpd that previously transited the Strait.

Despite a clear need, serious questions remain about the feasibility of any novel projects and proposed expansions. New pipelines will be expensive, politically fraught, geographically complex, and likely take years to complete. For instance, longstanding proposals for a series of pipelines transiting Iraq, Turkey, Jordan, and Syria would cost around US$20 billion and require extensive regional cooperation. Armed groups along parts of the proposed route also present a formidable challenge. Another illustrative example is the India-Middle East-Europe Economic Corridor (IMEC) terminating in the Israeli port of Haifa which was pitched by the Biden Administration in 2023. IMEC looks to be a complete non-starter given regional outrage at Israeli militarism. Current Iranian ambitions to control regional energy flows are equally likely to incentivise further attacks aimed at disrupting future projects.

India’s solar exports stutter despite growing competitiveness

India’s solar industry faces structural headwinds despite narrowing cost differential with China

India’s push to rival Chinese solar dominance has made significant progress in reducing cost disparities. With greater economies of scale as India’s own solar market has increased in size, Indian manufacturers have managed to bring down fixed costs, as well as gradually reducing dependence on Chinese supply chains. Since early 2024, the price premium on Indian modules has nearly halved to just 5.4 cents per watt over Chinese panels. As Chinese export rebates for the sector expire, the margin is expected to reduce further to 4.6 cents. Europe remains a key target market for Indian exporters intent on leveraging a sustained push to reduce overreliance on China. Current Indian excess capacity in the sector would be enough to cater to Europe’s entire annual demand of 70GW.

Hard-won gains in competitiveness are accompanied by growing challenges. One major near-term challenge is US tariffs. In late February, the US hit Indian exporters with a 126 percent anti-dumping duty. The US (which is virtually inaccessible for Chinese exporters) has been India’s largest solar export market by some margin and has provided a reprieve given growing overcapacity domestically. When competing with China outside the US, Indian manufacturers face higher costs of electricity, financing, and raw materials. Despite progress in reducing reliance on Chinese upstream components, significant work remains to be done to achieve vertically integrated solar supply chains which will give Indian manufacturers greater control over costs. On some estimates, it will take three years to build up sufficient Indian capacity in manufacturing solar cells and wafers. To remain competitive as the industry evolves, India will need to increase R&D spending. Chinese companies typically outspend Indian peers in R&D on a four-to-one ratio. Although India may never be competitive with China in the most price sensitive markets, the country’s solar industry has made genuine strides in offering an alternative for customers willing to pay a non-China premium.