Key Facts & Data Points

  • Oil & LNG imports: >85% of India’s crude oil and a large share of LNG come from Gulf states (Saudi Arabia, Iraq, UAE, Qatar). 60‑65% of these imports transit the Strait of Hormuz.
  • Strategic Petroleum Reserves (SPR): 5.33 million mt, enough for only a few days of consumption (≈2‑3 days). China holds 110‑140 days of cover.
  • LPG: India is the 2nd largest LPG consumer; ~60% of demand is imported, mainly from UAE, Qatar, Saudi Arabia, Kuwait. Underground storage ≈1.4 lakh tonnes → <2 days of supply.
  • Natural Gas: 195 MMSCMD consumption; ~50% imported via LNG.
  • Fertiliser imports: Reliance on Oman, Saudi Arabia, Qatar for ammonia, sulphur, phosphoric acid; domestic urea stock‑pile ~5.5 Mt (Feb 2026).
  • Food‑export exposure: USD 11.8 bn of agri‑exports to West Asia (≈21% of total) at risk.
  • Rupee pressure: Record lows; RBI deployed $15‑20 bn from FX reserves.

Background & Context

  • The US‑Israel‑Iran confrontation has led to naval threats and blockades in the Strait of Hormuz and the Red Sea, choking the flow of oil, LNG and bulk commodities.
  • India’s growth model (7%+ GDP) hinges on a “Goldilocks” mix of high growth and low inflation, which is jeopardised by imported inflation and a widening Current Account Deficit (CAD).
  • The crisis also tests India’s strategic autonomy, as it balances ties with the US, Israel and Iran while safeguarding its large diaspora in the GCC.

Significance for India / Governance / Policy

  • Energy security: Limited SPR and heavy import dependence make India vulnerable to price spikes and supply shocks.
  • Food security: Fertiliser shortages could affect agricultural output; export disruptions hurt farmer incomes.
  • Macroeconomic stability: Higher crude prices raise inflation, erode real wages, and widen CAD, threatening fiscal targets.
  • Trade & maritime routes: Congestion in traditional chokepoints pushes the need for alternative corridors like the Eastern Maritime Corridor (Chennai‑Vladivostok).
  • Domestic industry: Cement, steel (DRI), copper, and diamond processing rely on Gulf imports; disruptions raise input costs.

Legal & Constitutional Provisions

  • Essential Commodities Act, 1955: Allows the government to regulate production, supply, and distribution of essential commodities (LPG, natural gas, fertilizers) during emergencies.
  • Force Majeure provisions in export contracts can be invoked to protect exporters from penalties due to port blockages.

Policy Recommendations

  1. Expand SPR to at least 90 days of import cover.
  2. Diversify import basket – increase long‑term contracts with Latin America, West Africa, and the US.
  3. Accelerate green transition – scale the National Green Hydrogen Mission and renewable capacity to cut fossil‑fuel demand.
  4. Boost domestic gas production under the Hydrocarbon Exploration and Licensing Policy (HELP).
  5. Promote alternative fertilizers – nano‑urea, nano‑DAP, bio‑fertilisers.
  6. Create a war‑risk insurance pool via ECGC to lower marine insurance premiums.
  7. Operationalise the Eastern Maritime Corridor to bypass volatile Middle‑East chokepoints.

Related Constitutional / Legal References

  • Article 246 – Union‑State distribution of powers; energy and foreign trade are Union subjects.
  • Foreign Exchange Management Act (FEMA) – governs rupee‑denominated trade and FX interventions.

Drishti Mains Question: "The escalating geopolitical tensions in West Asia expose India's structural vulnerabilities across both energy and agricultural supply chains." Discuss.