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).
  • Strait of Hormuz: Conveys about 60‑65% of India’s oil and LNG cargoes.
  • Strategic Petroleum Reserves (SPR): 5.33 million tonnes – only a few days of consumption cover (global benchmark ~90 days).
  • LPG: India is the 2nd largest consumer; ~60% of demand is imported, mainly via the Hormuz route. Underground storage ≈1.4 lakh tonnes (≈2 days).
  • Natural Gas: 195 MMSCMD consumption; ~50% imported.
  • Fertiliser imports: Reliance on Oman, Saudi Arabia, Qatar (ammonia, sulphur, phosphoric acid).
  • Food exports to West Asia: USD 11.8 billion (≈21 % of total agri‑exports).
  • Rupee: Record lows; RBI used USD 15‑20 billion of its USD 730 billion reserves to stabilise the currency.

Background & Context

  • The escalation between the US‑Israel bloc and Iran has led to naval threats and occasional blockades in the Strait of Hormuz, a chokepoint for global energy trade.
  • India’s energy basket is heavily weighted towards the Gulf, making it vulnerable to any disruption in this corridor.
  • Simultaneously, fertilizer feed‑stocks and several industrial raw materials (limestone, gypsum, copper wire, diamonds) are sourced from the same region.

Significance for India / Governance / Policy

  • Macroeconomic stability: Spike in crude prices (+15%) fuels imported inflation, widens the current‑account deficit and pressures the rupee.
  • Energy security: Limited SPR and low domestic gas production reduce shock‑absorption capacity.
  • Food security: Potential fertilizer shortages could affect agricultural output; export disruptions hurt farmers and trade balance.
  • 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 such as LPG, natural gas and fertilizers during emergencies.
  • Foreign Exchange Management Act (FEMA): Enables RBI interventions in the forex market to curb excessive rupee depreciation.

Policy Measures & Recommendations

  • Diversify energy imports: Expand long‑term contracts with Latin America, West Africa and the United States; increase share of non‑Gulf crude.
  • Expand SPR: Target 90‑day import cover; develop additional underground storage.
  • Accelerate green transition: Scale up the National Green Hydrogen Mission and renewable capacity to cut fossil fuel demand.
  • Boost domestic gas production: Fast‑track HELP (Hydrocarbon Exploration and Licensing Policy) and incentivise offshore exploration.
  • Promote alternative fertilizers: Encourage nano‑urea, nano‑DAP, bio‑fertilisers and organic farming through PM‑PRANAM.
  • Force Majeure declaration: Officially recognise the conflict as a force‑majeure event to protect exporters.
  • War‑Risk Insurance Pool: Set up an ECGC‑backed scheme to subsidise marine insurance premiums.
  • Eastern Maritime Corridor (EMC): Operationalise the Chennai‑Vladivostok route to bypass the Hormuz choke‑point for Russian crude, coal and fertilizers.

Conclusion

India must shift from a ‘just‑in‑time’ to a ‘just‑in‑case’ supply‑chain paradigm, building strategic buffers in energy, agriculture and logistics to withstand geopolitical shocks.

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