Prime Minister Narendra Modi highlighted severe trade disruptions from the West Asia conflict, noting that the Hormuz Strait vital for 60% of India’s LPG imports, crude oil, gas, and fertilizers faces shipping challenges that threaten the nation’s $200B+ annual energy import bill. Addressing Lok Sabha during the Budget session, Modi emphasized India’s deep trade ties with Gulf nations, where nearly 1 crore Indians work alongside high Indian crew on commercial ships, making unified parliamentary support essential for protecting export-import flows.
India imports over 85% of its crude oil and 50%+ of gas needs via this route, with Gulf countries supplying 5.22 million barrels per day as of early 2026. The conflict has choked this key corridor handling 20% of global oil trade sparking freight rate surges of 300%+ and insurance “war premiums,” directly hitting India’s trade balance. Modi noted government efforts to maintain petrol, diesel, and gas supplies despite blockades, prioritizing domestic LPG consumers while ramping local production.
Strategic reserves buffer trade shock
Over the past decade, India built strategic petroleum reserves (SPR) exceeding 53 lakh metric tonnes (5.33 million tonnes), expandable to 65 lakh MT, providing 90+ days of import coverage excluding company stocks equivalent to 250 million barrels total buffer. Refining capacity has surged, supporting trade resilience amid Hormuz risks. Ethanol blending jumped from 1% to nearly 20%, slashing oil imports by 4.5 crore barrels last year alone, a timely shield as summer power demand looms with adequate coal stocks.
Export disruptions hit agri, rice flows
West Asia conflict endangers $11.8B in Indian agricultural exports, with Gulf nations absorbing 29% of rice, fruits, vegetables, and spices—Saudi Arabia, UAE, Iraq, and Iran lead basmati demand, especially during Ramadan. Over 3,000 rice containers idle at Kandla/Mundra ports due to payment delays, demurrage charges, and shipping halts, while broader goods face air/sea rerouting via Dubai hubs now at risk. Modi stressed daily inter-ministerial meetings to tackle these logistics crises, ensuring essential imports continue.
Balancing diaspora and trade security
With 1 crore Indians in Gulf nations key trade partners like UAE/Saudi/Qatar ($100B+ bilateral) Modi confirmed aid via missions, helplines, and leader calls assuring safety, indirectly stabilizing remittance-trade links. He underscored strategic autonomy, reduced foreign dependency, and diplomacy for resolution, positioning India to minimize global ripple effects on its $776B exports.
Commerce Minister Piyush Goyal has echoed this resilience, crediting diversified markets amid disruptions. As conflict persists beyond three weeks, Modi’s measures stockpiles, blending, daily coordination aim to prevent inflation spikes and growth derailment, with FX reserves as a forex shield.
This South-South focus aligns with Brazil trade gains, but Gulf volatility tests India’s $1.2T imports. Stakeholders urge FTAs and alternate routes to fortify supply chains long-term.