India's Reliance On Strait Of Hormuz Exceeds Global Average

'The West Asia or the Gulf crisis has shown that what we develop as national infrastructure when things are not as bad as they could be, we forget to plan for adversities.'

India's Hormuz Energy Dependence

India's dependence on imports for crude oil, natural gas and liquefied petroleum gas (LPG) through the Strait of Hormuz remains higher than the global average, underscoring the need for better preparedness in building resilient energy infrastructure, Neeraj Mittal, secretary at the ministry of petroleum and natural gas (MoPNG), said on Thursday.

"The West Asia or the Gulf crisis has shown that what we develop as national infrastructure when things are not as bad as they could be, we forget to plan for adversities," Mittal pointed out.

"The world's energy dependence on Strait of Hormuz is roughly 20 per cent but ours is more than that in all three, crude oil, natural gas, and LPG. IIn LPG, our import dependence comes roughly to about 90 per cent on Strait of Hormuz," said Mittal at an industry event.

Amid the West Asia crisis, India is facing a sharper shortage of LPG compared with crude oil and liquefied natural gas (LNG), due to its higher dependence on imports of the cooking fuel from the region.

India has taken steps to diversify its sourcing over the past decade, the official said.

Crude oil imports now come from 41 countries, up from 27 earlier, while LNG is sourced from 30 nations compared with six previously.

LPG sourcing has also expanded to 15 countries from 10.

Mittal also highlighted the importance of adoption of natural gas for India to ensure energy security, in line with the government's target of increasing the share of natural gas to 15 per cent by 2030.

"Energy security is not just about having enough gas or molecules, it is also about if we can secure our environment. Can we get it at proper cost? Will it be sustainable? Do we have enough sources to buy in such an eventuality? And that's where natural gas fits in," Mittal said.

Meanwhile, city gas distribution (CGD) companies need to improve customer service and infrastructure speed to meet expansion goals, he added.

Commenting on the blending of compressed biogas (CBG) with piped natural gas (PNG), Mittal said the initiative needs to be consolidated under a single framework rather than being handled by five different government ministries.

Hardeep Puri In Qatar

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri arrived in Doha on Thursday for a two-day official visit, amid disruptions in liquefied natural gas (LNG) supplies from the country's largest supplier, QatarEnergy.

The minister's visit to Qatar comes a day after the US and Iran announced a two-week ceasefire and agreed to reopen the Strait of Hormuz, raising hopes of a resumption in energy supplies from the region.

QatarEnergy had halted LNG production amid attacks on its facilities during the escalating tensions in West Asia, hitting India's energy supplies.

Qatar is India's largest LNG supplier, providing around 40 per cent of the country's gas requirements.

The West Asian country also supplies liquefied petroleum gas (LPG) to India.

External Affairs Minister S Jaishankar is also scheduled to visit the United Arab Emirates from April 11 to 12, to review bilateral cooperation and further strengthen the partnership between the countries, said Randhir Jaiswal, official spokesperson of MEA.

The ministers' discussions with officials in West Asia would include talks around energy supplies, a source said.

Meanwhile, the government said India is not paying any toll to Iran for the passage of its vessels through the Strait of Hormuz.

For gas supply, the government said, priority sectors continue to receive protected supplies, including 100 per cent supply to domestic PNG and CNG transport.

Based on available inventory and scheduled LNG cargo arrivals, the overall gas allocation to fertiliser plants is being further enhanced by 5 per cent to reach approximately 95 per cent of their six-month average consumption.

'India came into the crisis from a very strong position'

Prolonged periods of elevated oil prices can significantly impact the Indian economy, even though there were ample buffers to cushion shocks due to prevailing geopolitical uncertainties, World Bank economists said on Thursday.

Speaking at an event hosted by the National Council of Applied Economic Research (NCAER), Aurelien Kruse, World Bank lead economist for India, highlighted how the turmoil, marked by energy market disruptions and financial volatility, has already dented growth momentum, entering the fiscal year from a position of strength built on prior robust performance.

Kruse emphasised India's buffers, noting the economy's exposure through net energy imports is notable but middling compared to peers like Korea or Thailand.

"India has the luxury, in a way, to even not let prices pass through to retail fuel, which is very significant," he said, underscoring policy space to cushion the blow.

However, prolonged shocks could amplify vulnerabilities -- from trade dependencies to capital outflows -- driven by foreign investor risk aversion, rather than domestic fundamentals, he cautioned.

India Buffers Cushion Growth Risks

Franziska Ohnsorge, World Bank chief economist for South Asia, echoed this.

The current situation is a slowdown "largely because of headwinds in the global energy market dislocation", according to her.

She framed the West Asia crisis as a temporary energy disruption layered atop shifting financial expectations, like stalled US Fed rate cuts.

The energy markets will "sort of normalise", she said.

"This global financial environment is what's really changed, and it may last a little longer than the energy market disruption," she observed, pointing to heightened forecast uncertainty as markets price in stability over easing.

"India came into the crisis from a very strong position and buffers... Despite the global headwinds, we do see India and the region, continuing to be a very strong, gross performing region compared to other emerging markets across the world," said World Bank Regional Practice Director, Prosperity, for South Asia, Sebastian Eckardt at a separate press conference.

The South Asia Economic Update upped India's 2026-2027 (FY27) gross domestic product (GDP) forecast by 30 basis points to 6.6 per cent on Wednesday.

The Bank, however, said that updated growth projection would mark a deceleration from the 7.6 per cent uptick expected in FY26, reflecting headwinds from the West Asia conflict.

GDP Growth Outlook Revised

Separately, Kruse said that the authorities had struck the right balance between taking measures to manage supply without doing massive rationing, or restrictions, and maintaining retail prices of oil relatively constant.

"Having said that, the risks are obviously massive. They're tilted to the downside," he said.

The economists downplayed major inflation risks from energy shocks.

Ohnsorge noted South Asia's energy share in consumer price baskets aligns with emerging market averages, giving governments leeway to act.

Kruse added that despite US tariffs and global headwinds, India's current account narrowed resiliently, buoyed by services, remittances, and unexpectedly sturdy goods exports.

Remittances from Gulf migrants, often low-skilled, have proven "remarkably resilient," he said, as senders scrape funds amid shocks.

Inflation, Current Account Outlook

On household impact, Ohnsorge highlighted India's EU and UK trade pacts, which double its preferential access to global GDP shares and favour rural households consuming imported goods.

Terming them "pro-household reforms", she said that the FTAs will boost real income, especially for rural and poorer households consuming tariff-affected goods like processed foods.

Ohnsorge also highlighted how artificial intelligence's (AI) disruptive shadow loomed large over jobs.

She detailed how information and communication technology (ICT) services -- 25 per cent of regional exports -- thrive in output, but shed hiring post-ChatGPT, with AI-exposed firms cutting 1 per cent more than others.

"AI adoption is eroding job prospects in some of the best-paid jobs, especially in AI-exposed jobs.

"And that compounds the long-standing subnational labour market divergence that holds back certain regions in almost every country in the region," she emphasised.

AI Impact on Jobs Warning

NITI Aayog Vice Chairman Suman Bery questioned India's manufacturing push, asking if policymakers are clear "what we want manufacturing for" and "the cost of each formal job," noting it as a key policy pillar.

He highlighted regional challenges in monetising semi-skilled labour compared to eastern neighbors, calling these issues "not idiosyncratic" to India, but tied to South Asia's unique hurdles in climbing the manufacturing ladder.

Kruse flagged the backcasting phase of the base year revision of GDP to 2024 as particularly noteworthy, stressing an overlooked impact: rebasing doesn't just revise national figures, it reestimates subnational GDPs.

These shifts carry "very significant impact on states' borrowing ability and subnational fiscal rules".

The Bank would watch closely for the back series data, he added.

Photographs curated by Anant Salvi/Rediff
Feature Presentation: Ashish Narsale/Rediff