Key Facts & Data Points

  • Oil & LNG imports: Over 85% of India's crude oil and a large share of LNG come from Gulf states (Saudi Arabia, Iraq, UAE, Qatar).
  • Strait of Hormuz: Carries about 60‑65% of India's oil and LNG imports; any blockage directly curtails supply.
  • Strategic Petroleum Reserves (SPR): Currently 5.33 million metric tonnes, covering only a few days of consumption (global benchmark ~90 days).
  • LPG: India is the 2nd largest consumer globally; ≈60% of demand is imported, mainly via the Hormuz route. Underground storage ≈ 1.4 lakh tonnes (≈2 days).
  • Natural Gas: India consumes 195 MMSCMD; nearly 50% is imported, making it vulnerable to LNG disruptions.
  • 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 agri exports) at risk.
  • Rupee pressure: Record lows; RBI intervened with USD 15‑20 bn from reserves.
  • Diaspora: ~1 crore Indians in GCC, remitting USD 51 bn annually.

Background & Context

  • The escalation between the US‑Israel coalition and Iran has led to naval threats and occasional closures of the Strait of Hormuz, a chokepoint for global energy trade.
  • Simultaneous supply‑chain disruptions affect LPG, compressed natural gas (CNG), and fertiliser imports, amplifying imported inflation.
  • India’s policy of strategic autonomy is tested as it balances ties with the US, Israel and Iran while safeguarding domestic interests.

Significance for India / Governance / Policy

  • Energy security: Rising crude prices (+15%) and limited SPR erode the “Goldilocks” growth‑inflation equilibrium, widening the Current Account Deficit.
  • Food security: Disruption of fertilizer imports could affect agricultural output; the government may need to divert gas to fertiliser plants.
  • Trade & maritime strategy: Blocked containers and higher freight costs threaten exporters; a Force Majeure declaration and a War‑Risk Insurance Pool are proposed.
  • Domestic production push: Accelerate HELP‑driven gas exploration, National Green Hydrogen Mission, and promote nano‑urea/DAP to cut import dependence.
  • Strategic petroleum reserves: Expanding to 90‑day coverage aligns with global best practices and provides a buffer against geopolitical shocks.
  • Alternative routes: Operationalising the Eastern Maritime Corridor (Chennai‑Vladivostok) reduces reliance on Middle‑East chokepoints.

Related Constitutional / Legal Provisions

  • Essential Commodities Act, 1955: Enables the government to regulate production, supply and distribution of essential commodities like LPG, natural gas and fertilizers during emergencies.
  • Foreign Exchange Management Act (FEMA), 1999: Governs RBI interventions in the foreign‑exchange market to stabilise the rupee.
  • Export Promotion Capital Goods (EPCG) Scheme and Export Credit Guarantee Corporation (ECGC) provisions can be leveraged for war‑risk insurance.

Policy Recommendations

  1. Diversify crude and LNG basket – increase long‑term contracts with Latin America, West Africa and the US.
  2. Scale up SPR – target 90‑day import cover; develop additional underground storage.
  3. Fast‑track green transition – expand renewable capacity, remove regulatory bottlenecks, and boost the National Green Hydrogen Mission.
  4. Boost domestic gas production – expedite HELP licences and incentivise upstream investment.
  5. Promote alternative fertilisers – nano‑urea, nano‑DAP, bio‑fertilisers under PM‑PRANAM.
  6. Declare Force Majeure for West‑Asia trade disruptions.
  7. Create a sovereign‑backed war‑risk insurance pool via ECGC.
  8. Operationalise the Eastern Maritime Corridor to bypass Hormuz.

Conclusion

India must shift from a just‑in‑time import model to a just‑in‑case strategic buffer, leveraging maritime independence, domestic production and renewable transition to mitigate geopolitical vulnerabilities.