Key Facts and Data Points

  • Oil & LNG imports: India imports >85% of its crude oil and a large share of LNG, mainly from Saudi Arabia, Iraq, UAE and Qatar.
  • Strait of Hormuz: Around 60‑65% of India's oil and LNG imports transit this chokepoint.
  • Strategic Petroleum Reserves (SPR): Current capacity 5.33 million tonnes – only a few days of consumption cover, versus China’s 110‑140 days.
  • LPG: India is the 2nd largest LPG consumer; ~60% of demand is imported, with underground storage of ~1.4 lakh tonnes (≈2 days).
  • Natural Gas: India consumes ~19.5 MMSCMD; about half is imported, largely as LNG.
  • Fertiliser imports: Reliance on Oman, Saudi Arabia, Qatar for ammonia, sulphur and phosphoric acid; domestic urea stock ~5.5 Mt (Feb 2026).
  • Food exports: $11.8 bn worth of agri‑food exports to West Asia (≈21% of total agri exports) at risk.
  • Industrial inputs: 68.5% of imported limestone & 62.1% of gypsum from Gulf states; >50% of copper wire imports from the region.
  • Rupee: Record lows; RBI deployed $15‑20 bn from $730 bn FX reserves.
  • Diaspora: ~1 crore Indians in GCC, remittances $51 bn annually.

Background and Context

  • The escalation between the US‑Israel bloc and Iran has led to naval confrontations, blockades and heightened insurance premiums in the Red Sea and Strait of Hormuz.
  • Global oil prices have surged ~15%, feeding imported inflation and widening India's current‑account deficit.
  • India’s “Goldilocks” growth scenario (high growth, low inflation) is under strain.

Significance for India / Governance / Policy

  • Energy security: Limited SPR and high import dependence make India vulnerable to supply shocks.
  • Food security: Fertiliser shortages could affect agricultural output; export disruptions hurt farmer incomes.
  • Macroeconomic stability: Imported inflation, CAD widening, and rupee depreciation threaten fiscal targets.
  • Strategic autonomy: Balancing ties with the US, Israel and Iran while safeguarding national interests.

Related Constitutional / Legal Provisions

  • Essential Commodities Act, 1955: Allows the government to regulate production, supply and distribution of essential commodities (LPG, natural gas, fertilizers) during emergencies.
  • Foreign Exchange Management Act (FEMA): Governs RBI interventions in the foreign‑exchange market.
  • Export Promotion Schemes: Force Majeure provisions under the Foreign Trade (Development and Regulation) Act, 1992.

Recommended Measures

  • Diversify crude & LNG basket: Long‑term contracts with Latin America, West Africa, USA.
  • Expand SPR: Target 90‑day import cover (≈70‑75 Mt) to match global benchmarks.
  • Accelerate green transition: Scale National Green Hydrogen Mission, boost renewable capacity, remove grid bottlenecks.
  • Boost domestic gas production: Implement HELP aggressively, incentivise exploration.
  • Promote alternative fertilisers: Nano‑Urea, Nano‑DAP, bio‑fertilisers; leverage PM‑PRANAM.
  • Force Majeure declaration: Protect exporters from penalties.
  • War‑risk insurance pool: ECGC‑backed scheme to subsidise marine insurance.
  • Eastern Maritime Corridor (EMC): Operationalise Chennai‑Vladivostok route to bypass Middle‑East chokepoints.

Constitutional / Policy Linkages

  • Energy Security is a core component of the National Security Strategy (NSP) and aligns with the Sustainable Development Goals (SDGs).
  • Food Security ties to the National Food Security Act, 2013.
  • Strategic Reserves are governed by the Petroleum and Natural Gas Regulatory Board (PNGRB) guidelines.

Conclusion

India must shift from a ‘just‑in‑time’ import‑dependent model to a ‘just‑in‑case’ resilient framework, building strategic buffers, diversifying supply routes and accelerating the renewable transition to safeguard its economic growth and strategic autonomy.

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