Why in the News?
US–Israeli strikes on Iran have escalated into wider regional confrontation with direct implications for global energy markets calling for Energy Security imperative in India's Foreign Policy.
Recent Developments Mandating Energy Security for India
- Military Offensive creating Instability in Middle East: Iranian retaliation targeting US assets and Gulf infrastructure, alongside threats to commercial vessels has risked disruption of flows through Strait of Hormuz.
- Rising Oil Inflation: Global oil prices surged more than 40-50% amid fears of supply disruptions in West Asia in recent times.
- Shift from Geopolitics to Geo-Economics: Due to several factors like trade war, bilateral dispute, political turmoil, and territorial dispute.
- E.g. Russia-Ukraine War; USA's unilateral imposition of tariffs, etc.
Need for realigning India's Foreign Policy towards Energy Security
- Geographically-Concentrated Import Dependency: India imports over 85% of its crude oil, around 50% of natural gas, and nearly 25% of its coal.
- This import dependence remains geographically concentrated, with large share of supplies sourced from Gulf producers.
- Supply Chain Disruption due to choke points: E.g., roughly half of India's crude oil imports and over 60% of its LNG and LPG shipments transit the Strait of Hormuz.
- Vulnerability of Gas-linked systems: Unlike crude oil where India diversified suppliers and built strategic petroleum reserves, gas-linked systems operate with less cushioning and limited buffers.
- LNG depends on specialised cryogenic infrastructure and is generally held only in small operational volumes.
- Intertwined Nature of Energy: LPG disruptions translate into fiscal and political tensions feeding directly into fertilizer prices and indirectly increasing food inflation impacting household consumption and food systems.
- Energy accessibility: Rural areas with more than 65% of population often face challenges in accessing reliable electricity and clean cooking fuel creating equity, inclusion, and public health concerns.
- Rising energy Demand: India's primary energy consumption is expected to increase from about 775 million tonnes of oil equivalent (Mtoe) in 2013 to about 1250 Mtoe (estimated by International Energy Agency) in 2030 driven by industrialization, urbanization, and a growing middle class.
India's foreign policy initiatives for Energy Security
- Leadership at Global Forums: Through India-led initiatives like Biofuel Alliance at the G20 summit and the International Solar Alliance (ISA); One Sun One World One Grid, etc.
- Diversification of suppliers: India increased its crude oil suppliers from 27 countries in 2006-07 to around 40 countries currently.
- Efforts towards Strategic Autonomy: India continues a "national interest first" policy, balancing its energy imports between Russia, the Middle East, and the USA.
- E.g., in recent years India navigated complex sanctions by increasing U.S. oil imports by while maintaining significant trade with Russia.
- Long-term investment partnerships: E.g., HPCL's 10-year LNG agreement with ADNOC (UAE) ensures a stable gas supply despite regional volatility.
- Increasing Exploration & Production footprint: Indian PSUs (ONGC Videsh Ltd (OVL), Indian Oil Corporation Ltd (IOCL), Oil India Ltd (OIL), etc. have 48 assets in 22 countries.
- South Asian Power Grid: India is nearshoring energy supplies along with pursuing Neighbourhood First Policy by building energy infrastructure in South Asia in countries like Bangladesh, Bhutan, Nepal, Sri Lanka, etc.
- Maritime safety: India has taken several steps to enhance maritime awareness and safety of Indian ships at chokepoints like round-the-clock monitoring through Mercantile Marine Domain Awareness Centre (MMDAC), real-time incident tracking and close coordination with the Indian Navy and other agencies.
- Other steps:
- Alternate energy sources: Through initiatives like National Green Hydrogen Mission, National Bioenergy Programme, etc. India aims to enhance its renewable energy capacity.
- Strategic Petroleum Reserves (SPR): Phase II of the SPR program is fast-tracking underground facilities at Chandikhol (Odisha) and Padur (Karnataka).
Conclusion
India's foreign policy is guided by strategic autonomy, balanced partnerships, and cautious neutrality. It focuses on diversifying energy ties and strengthening regional connectivity to reduce risks. This approach helps India protect its economic and strategic interests in an uncertain global environment.
