Context
Amid continuing tensions in West Asia, Prime Minister Narendra Modi met Iranian President Masoud Pezeshkian on the sidelines of the SCO Summit in Bishkek. India emphasised dialogue, diplomacy, regional stability and the protection of civilians and civilian infrastructure, including commercial shipping and seafarers. PM Modi also stressed the need to safeguard freedom of navigation and commerce through the Strait of Hormuz.
The meeting is significant for India because instability around the Strait directly affects energy security, maritime trade, inflation and India’s broader strategic interests.
Why is the Strait of Hormuz important?
The Strait of Hormuz is a narrow maritime chokepoint connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.
It is one of the world’s most strategically important waterways because a substantial share of global oil and gas flows through it. Before the recent disruption, the Strait carried roughly one-fifth of global oil and LNG flows.
For India, its importance is even greater because of the country’s dependence on imported energy.
Implications for India
1. Energy Security: Any prolonged disruption can affect India’s crude oil, LNG and LPG supplies. Recent assessments indicate that before the 2026 disruption, around 45% of India’s crude oil imports, half of its LNG imports and about 90% of LPG imports passed through the Strait.
2. Inflationary Pressure: Higher global oil prices can increase:
Crude prices → Transportation costs → Production costs → Inflation
It can therefore complicate India’s monetary and fiscal management.
3. Current Account & Rupee: A rise in the oil import bill can increase India’s trade deficit and current account pressures, while also putting pressure on the rupee.
4. Maritime Security: The safety of Indian-flagged vessels, commercial shipping and Indian seafarers becomes a major concern during conflict.
5. Global Supply Chains: A disruption in the Strait affects not just oil but also shipping costs, insurance premiums and the movement of goods across Asia and Europe.
Why Iran Matters to India
Iran is not merely an energy partner for India. It occupies an important position in India’s West Asia and Central Asia strategy.
1. Chabahar Port: India’s involvement in Chabahar Port provides an important connectivity route towards Afghanistan and Central Asia, reducing India’s dependence on routes passing through Pakistan. It can also contribute to diversification of India’s trade and supply chains.
2. International North-South Transport Corridor (INSTC): Iran is an important link in the INSTC, which seeks to connect India with Iran, Central Asia, Russia and Europe through multimodal transport networks.
3. Energy Interests: Although India’s direct imports of Iranian oil have been constrained by sanctions, Iran’s geographical location and large hydrocarbon resources continue to give it strategic significance for India’s long-term energy planning.
4. Indian Diaspora and Economic Interests: The wider Gulf region hosts a large Indian diaspora and remains important for India’s trade, remittances and employment.
India’s Diplomatic Balancing Act
The situation presents a difficult diplomatic challenge for New Delhi. India has important relationships with:
🇮🇷 Iran → Chabahar, connectivity, regional interests
🇺🇸 USA → trade, technology, defence and strategic partnership
🇮🇱 Israel → defence and technology cooperation
🇸🇦 Gulf countries → energy, trade and diaspora
🇷🇺 Russia → defence, energy and Eurasian connectivity
Therefore, India cannot afford to view West Asian geopolitics through a simple “for or against” framework.
Instead, India’s approach is increasingly based on:
Strategic Autonomy + Multi-alignment + Dialogue + De-escalation
The Modi–Pezeshkian meeting reflects this approach. India simultaneously wants to maintain its relationship with Iran, protect its economic interests and advocate a peaceful resolution of regional conflicts.
Challenges for India
1. US–Iran tensions: India has to maintain its strategic partnership with the US while protecting its legitimate interests in Iran.
2. Sanctions: US sanctions can complicate India’s economic engagement with Iran, particularly in areas such as Chabahar and financial transactions.
3. Energy dependence: Heavy dependence on imported hydrocarbons leaves India vulnerable to geopolitical shocks.
4. Maritime chokepoint vulnerability: The Strait of Hormuz is not under India’s control, making diversification of routes and energy sources essential.
5. Wider regional instability: Conflict involving Iran, Israel, the US and Gulf states can have cascading consequences for India’s economy.
Way Forward for India
India should pursue a 5-pronged strategy:
1. Diversify energy sources: Expand crude, LNG and LPG sourcing from different regions.
2. Strengthen Strategic Petroleum Reserves: Build greater buffers against temporary supply disruptions.
3. Invest in alternative connectivity: Strengthen Chabahar, INSTC and other multimodal corridors.
4. Reduce maritime vulnerability: Enhance naval surveillance, maritime domain awareness and protection of Indian commercial vessels.
5. Accelerate clean-energy transition: Renewables, EVs, green hydrogen and energy efficiency can gradually reduce India’s exposure to imported fossil fuels.
Spread the Word