India has raised concerns about increasing shipping vulnerabilities in the Strait of Hormuz, a crucial artery for global energy, where 20% of the world’s oil passes daily. Given that over 60% of India’s crude imports navigate this chokepoint, the Commerce Ministry has convened stakeholders to strengthen supply chains in light of geopolitical tensions. Recent escalations, notably Iran-US frictions, have caused freight rates to rise by 150%, with many vessels rerouted, extending voyages and increasing costs significantly.
To address these challenges, the Indian government has built up Strategic Petroleum Reserves capable of covering 90 days’ demand and diversified crude sourcing from 42 countries. Maritime logistics have been shaped by enhanced naval escorts for vessels and infrastructural upgrades at key ports, facilitating faster logistics and reducing wait times.
Industry advocates are pushing for resilience measures, such as extending incentives for local container manufacturing and increasing rail transport’s share. While rising costs threaten sectors like fertilizers and edible oils, India’s recent Russian oil deals have yielded considerable savings, bolstering its strategic reserves. With rising geopolitical tensions, the focus now shifts to diversifying supply chains and improving logistical infrastructure.
