New Delhi, June 4 (IANS) With the conflict still raging in the Middle East, India is among the most exposed major economies with a heavy dependence on Persian Gulf oil and gas supplies as well as fertilisers.
Approximately 50 per cent of the country’s crude oil imports (2.5–2.7 million barrels/day), 68 per cent of LNG (Liquefied Natural Gas), and over 85 per cent of LPG (Liquefied Petroleum Gas) usually transit the Strait of Hormuz.
Any disruption significantly impacts India’s economic growth, particularly in areas such as fertiliser production, power generation, and household and commercial fuel availability, according to an article published by the Centre for Peace Studies (CPS).
The article states that India has pursued the diplomatic path very vigorously to safeguard its interests amid disruptions due to the Iran war.
India has secured a notable concession as Iran initially allowed several Indian-flagged tankers, Shivalik Nanda and Devi, safe passage through the Hormuz Strait after several one-on-one engagements by External Affairs Minister S. Jaishankar with his Iranian counterpart, Abbas Araghchi. Since then, several other Indian-flagged vessels, including Piramal and Pushpak, have safely transited the waterway. This reflects New Delhi’s seriousness in keeping all its channels of communication open.
It further points out that the Trump Administration’s waiver to India to buy Russian oil may be a short-term solution as well. This is because New Delhi’s emergency crude oil under its Strategic Petroleum Reserve is likely to sustain for about 10 days and may last up to 74 days by using total national storage capacities, including commercial ones stored in Visakhapatnam, Mangaluru, and Padur.
In addition, Iran is a crucial linchpin of India’s outreach to Central Asia, which includes its heavy investment in Chabahar port, shared security interests in ensuring regional stability and in nourishing the historical, cultural and civilizational linkages. Iran’s North-South Transport Corridor is also of interest to India as it will provide a strategic balance via-a-vis China’s BRI (Belt and Road Initiative), the article states.
It also highlights that with the benchmark Brent crude price surpassing $100 a barrel, its impact is likely to be reflected in transport and manufacturing costs. Higher import bills may widen the trade deficit, with corporate margins in manufacturing, supply chains, delivery, logistics, and exports already under pressure.
Remittances from the Indian diaspora and migrants residing in Gulf countries (over nine million workers) could see a sharp decline if regional economies shrink. In the civil aviation sector operated by Indian carriers, some long-haul airline routes affected by airspace restrictions and fuel costs may also be severely impacted. Overall, India, which is poised for strong growth with projected GDP growth of 7.4 per cent to 7.6 per cent in the 2025-26 fiscal year, might suffer a setback in expanding its economy to over $5 trillion by 2027 and be the third-largest economy by 2030, the article states.
The Iranian crisis in general and the uncertainty over the safe passage of naval vessels in the Strait of Hormuz are unlikely to resolve quickly in the absence of a final deal arrived at through sustained diplomacy and through the proactive involvement of a credible multilateral body such as the United Nations. The longer the Iranian crisis lasts, there is potential for other countries and stakeholders jumping into the bandwagon and hence further muddling the geopolitical, geoeconomic and geostrategic challenges, the article observed.
–IANS
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