Overview
In early 2026 heightened tension in West Asia threatened the Strait of Hormuz. A vessel of an Indian shipping firm faced navigation delays and security concerns. The Indian government’s swift diplomatic and maritime actions ensured safe passage for Indian‑flagged ships and protected Indian seafarers.
Key Developments
- Continuous engagement with shipping companies, maritime authorities and foreign partners to clear Indian vessels.
- Prime Minister‑led, whole‑of‑government coordination involving ministries, state governments and public oil companies.
- Targeted support to exporters facing higher freight, insurance and logistics costs.
- RBI measures to keep liquidity ample and foreign exchange stable.
Important Facts
India imports nearly 90% of its crude oil. Despite global price spikes, inflation stayed within the RBI target band, and the economy grew faster than other major economies. The government used a mix of supply diversification, diplomatic outreach and inventory management to keep fuel prices stable.
In the gas sector, the CGD network grew from 55 geographical areas in 2014 to more than 300 in 2026, allowing flexible use of piped natural gas where pipelines exist.
Strategic petroleum reserves were bolstered, and refining capacity was expanded, reducing reliance on any single source. Exporters recorded a 16% growth in merchandise exports (April‑May FY27) thanks to liquidity support, simplified customs and logistics facilitation.
The RBI complemented these steps with forex‑swap facilities, a scheme to raise foreign‑currency deposits from NRIs, and rationalisation of taxes on FPI holdings, thereby strengthening the external sector.
Exam Relevance
Understanding India’s response illustrates several core UPSC themes: the role of the Prime Minister in crisis management, the importance of energy security, the functioning of the RBI in maintaining macro‑stability, and the impact of geopolitical risks on trade and inflation. Candidates should link these to GS‑III topics such as external sector resilience, strategic reserves, and public‑private coordination.
Way Forward
- Continue expanding the CGD network to reduce dependence on oil imports.
- Further diversify crude sourcing and increase strategic petroleum reserves to cushion future supply shocks.
- Strengthen institutional mechanisms for rapid diplomatic engagement during maritime crises.
- Maintain RBI’s proactive stance on liquidity and foreign exchange to safeguard the external sector.
These steps will help India preserve growth momentum while navigating future geopolitical uncertainties.