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Strategic Resilience and India’s Energy Security Amidst West Asia Volatility

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In Short:

  • Heavy reliance on Middle Eastern hydrocarbons via the Strait of Hormuz exposes India to severe supply chain disruptions. 
  • Energy bottlenecks are escalating fertiliser subsidy burdens and forcing a tactical return to coal-based power generation.
  • Immediate shortfalls have been stabilised through aggressive diplomatic outreach, domestic resource reallocation, and targeted duty cuts.
  • Ensuring future resilience necessitates the rapid establishment of dedicated strategic reserves for LPG and LNG.
  • Accelerating the clean energy transition must be prioritised as a critical national security imperative to reduce import reliance.

The resurgence of geopolitical conflict in the Middle East, punctuated by disruptions in the Strait of Hormuz, has exposed the structural vulnerabilities inherent in India’s energy supply chains. With significant volumes of crude oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG) delayed or stranded, the crisis has swiftly transmitted into domestic economic pressures, affecting sectors ranging from household fuel access to fertiliser production and grid stability. While immediate diplomatic and logistical interventions have prevented acute shortages, this brief analyses the ongoing sectoral impacts and outlines strategic imperatives to transition from reactive crisis management to long-term energy resilience.

I. The Architecture of India’s Structural Vulnerability 

Based on recent International Energy Agency (IEA) and Petroleum Planning & Analysis Cell (PPAC) data, India’s exposure to Middle Eastern volatility is dictated by its position as the world’s third-largest importer of crude oil, the fourth-largest importer of LNG, and the second-largest consumer of LPG. This demand is heavily concentrated regionally. According to the Ministry of Petroleum and Natural Gas (MoPNG), approximately 45 per cent of India’s crude oil, 60 per cent of its natural gas, and over 90 per cent of its LPG imports originate from the Middle East.

The Strait of Hormuz acts as the primary chokepoint for these supplies. The immediate consequence of recent maritime risk is quantified by the volume of stranded assets: industry tracking indicates that as of mid-March 2026, over 1.6 million tonnes of crude oil, 320,000 tonnes of LPG, and 200,000 tonnes of LNG were stalled aboard Indian-flagged vessels awaiting passage. The reliance on politically selective passage for these vessels highlights a precarious dependency on regional diplomatic goodwill rather than secured supply lines.

II. Sectoral Impacts and Domestic Transmission 

The disruption of energy flows extends beyond localised fuel shortages, transmitting inflationary pressures across critical macroeconomic sectors.

  • Agriculture and Fiscal Burden: Natural gas is the primary feedstock for ammonia and urea production, with 30 out of India’s 32 urea plants reliant on gas, predominantly imported from Qatar. Roughly 40 per cent of India’s finished fertiliser imports also originate from the Middle East, according to the Ministry of Chemicals and Fertilisers. Supply constraints threaten to inflate input costs, exacerbating an already substantial fiscal burden. The urea subsidy outlay, budgeted at approximately USD 12.7 billion for the current fiscal year, may require an additional 480 billion rupees (USD 2 billion) to offset rising global prices, according to estimates from the Ministry of Finance.
  • Power Generation and Industrial Output: The supply constraints coincide with a period of elevated electricity demand, expected to exceed 270 gigawatts due to rising cooling needs. The reduced availability of LNG constrains the flexibility of gas-based power plants, necessitating a tactical shift toward higher-emission coal-based generation to ensure grid stability. Simultaneously, according to recent PPAC reports, industrial and commercial users linked to city gas distribution (CGD) networks face supply curtailments of 70 to 80 per cent, threatening manufacturing output.

III. Immediate Policy Interventions

In response to the tightening supply environment, the government has deployed a coordinated strategy combining diplomatic outreach, domestic resource reallocation, and fiscal adjustments.

  1. Diplomatic Engagement: High-level diplomatic efforts have been prioritised to secure alternative and long-term supplies. As reported by the Millennium Post, External Affairs Minister S. Jaishankar’s visit to the United Arab Emirates and Minister of Petroleum and Natural Gas Hardeep Singh Puri’s mission to Qatar are focused on securing stable energy contracts and reviewing bilateral strategic partnerships. Additionally, agreements are being finalised to supply oil and gas to Mauritius to reinforce regional maritime stability.
  2. Domestic Resource Reallocation: Authorities have invoked the Essential Commodities Act of 1955 to regulate natural gas distribution. The Ministry of Petroleum and Natural Gas (MoPNG) has restructured allocations to prioritise household consumption, LPG production, and fertiliser manufacturing over non-essential industrial use.
  3. Production and Fiscal Adjustments: Refineries have been directed to divert hydrocarbon streams to maximise domestic LPG output, yielding a reported 40 per cent increase in production. Concurrently, as noted by the Millennium Post, customs duties on 40 types of petrochemical products have been reduced to nil to stabilise the pharmaceutical industry, which faced shortages of active pharmaceutical ingredients.

IV. Strategic Policy Recommendations

While immediate interventions have stabilised supply, ensuring long-term strategic autonomy requires comprehensive structural reforms.

  • Establish Dedicated Strategic Reserves for LPG and LNG: Current strategic reserves are heavily weighted toward crude oil. Given that over 330 million households rely on LPG, as per PPAC data for 2025–26, the establishment of robust, dedicated storage infrastructure for both LPG and LNG is essential to provide a buffer against maritime disruptions, a structural gap frequently highlighted by energy analysts.
  • Accelerate Sourcing Diversification: While the Middle East remains central to India’s energy mix, expanding alternative sourcing bases is critical. The acceleration of agreements to import 2.2 million tonnes of LPG annually from the United States provides a blueprint for mitigating regional concentration risk.
  • Integrate the Clean Energy Transition with National Security Strategy: The transition to renewable energy must be framed as a core component of national security. With India’s non-fossil power installed capacity reaching 262.74 GW, representing 51.5 per cent of total capacity, accelerating this transition directly reduces exposure to imported volatile fuels. Policy frameworks must prioritise investments in grid modernisation, battery storage supported by production-linked incentives, and hybrid energy systems to accommodate the target of 500 GW of non-fossil energy capacity by 2030.

The recurrent nature of geopolitical shocks in the Middle East redefines energy security as a foundational component of macroeconomic stability. The necessity of deploying emergency diplomatic capital to secure selective vessel passage highlights the structural limits of the current import-dependent architecture. India’s long-term strategic autonomy depends on its capacity to structurally insulate its domestic economy from global fossil fuel supply chain fragilities, and that insulation can only be built through deliberate policy, not reactive improvisation.

Amrendra Pratap Singh is a research intern at the Centre for Public Policy Research, Kochi.

Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research.

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