In Dire Straits: A Balancing Act At A Moment Of Crisis

At any cost, energy imports and investments in the region cannot be overlooked either. 

While the diaspora makes a stupendous contribution to the Indian economy through remittances, a significant volume of India’s crude and natural gas is sourced from the Gulf region and Iraq. 

Strait Of Hormuz Crisis

And the closure of the Strait of Hormuz has made it clear that India must not only diversify sources of crude and natural gas, but also secure existing sources through political goodwill and a nuanced approach. While a partnership with Israel will prepare India for the future, ties with the Gulf, Iraq, and Iran are imperative to meet the household demand and keep inflation under control. 

The closure of the Strait of Hormuz has not only impacted crude oil supplies but also sulphur and fertilizers. LPG supply has also come under scrutiny (India imports roughly 60% of its LPG consumption, and about 90% of these shipments typically pass through the Strait of Hormuz). Saudi Arabia, the UAE, and Qatar together account for more than 90% of India’s imported LPG supplies.

On the other hand, Iranian oil has been out of bounds for India since 2017, increasing dependence on the Gulf and Iraq. Saudi Arabia remains the second-largest supplier of crude oil to India, shipping about 1.01 million barrels per day. Iraq exports around 0.98 million barrels per day. The UAE, also, supplies significantly (roughly 0.55 million barrels per day of crude oil).

As for LNG, Qatar, historically, has been India’s dominant supplier, accounting for roughly half of India’s LNG imports under long-term contracts. 

Need For Balanced Approach

In this context, taking sides, therefore, in a conflict- ridden zone is not a prudent and pragmatic strategy. Engaging all partners and giving each of them confidence can do wonders.

A special envoy for West Asia could be appointed to handle the high-stakes diplomatic issues unfolding in the region. 

The Prime Minister has spoken to leaders of several Gulf and West Asian countries, including the UAE, Qatar, Saudi Arabia, Oman, Bahrain, Kuwait, Jordan, and Israel. The External Affairs Minister has also been in regular contact with his counterparts in these countries as well as with Iran. 

But it is not just diaspora and energy that bind India with West Asia.

Growing Investments 

The Gulf states are emerging as long-term investors in India, and any impact on their finances could affect their investments in India. Saudi investments in India, including those of PIF, other Saudi companies and the Saudi-backed Vision Fund, have been about US$10 billion. Apart from PIF, major investment groups from the Kingdom include SABIC, AlFanar, ZAMIL, Abdul Latif Jameel, Al Jomaih, and Petromin. 

From April 2000 to March 2025, the cumulative FDI from the UAE into India amounted to US$22.84 billion, making the UAE the seventh-largest overseas investor in India. UAE’s investments are well-diversified, with a focus on sectors such as real estate, infrastructure, energy, private equity, and financial services. UAE’s Sovereign Wealth Funds (SWF) have a strong presence in India. Qatar has also started betting big on India.

Qatar is significantly boosting its investment in India by committing US$10 billion in new funds to supplement its existing US$1.5 billion investment in the country. Key sectors for this investment include infrastructure, renewable energy, technology, manufacturing, logistics, and hospitality.

Lasting Friendships

Meanwhile, the time-tested friendship with Russia built over decades has come to India’s rescue. As India and the US agreed to finalise the trade deal, the narrative was that India had given up on its sovereign choices. While reality may be far from the TV room debates and social media posts, the Indo-Russian special and strategic partnership is yet again on display when New Delhi faces a crisis. 

Russia currently occupies the position of India’s largest crude supplier. India's purchase of Russian crude oil has surged 50% in March as New Delhi tapped alternative sources to make up for the shortfall arising from the disruption in West Asia amid a widening military conflict.

Russian crude had, in fact, gained prominence in India’s import basket after Western sanctions reshaped global energy trade flows. India-Russia partnership has been the only constant factor in geopolitics since World War II, and while new friends seek attention, Moscow continues to be an anchor for New Delhi. 

(The writer is a commentator on geopolitics. Views are personal.)