India's Import Vulnerabilities

India's economy is highly sensitive to global commodity prices, importing about 85-91% of its crude oil. Historically, the West Asia region supplied a large portion, with up to 50% of India's oil imports passing through the Strait of Hormuz. The current conflict in West Asia has worsened this vulnerability, pushing crude oil prices up. The Indian basket hit between $113.5 and $126 per barrel in March-April 2026. Each $10 per barrel rise in crude costs adds $13-14 billion to India's annual import bill, affecting inflation, the current account deficit, and the rupee. West Asian oil's share in India's imports has fallen significantly, reaching just 26.3% in March 2026. This has forced a major shift in India's energy sources, with Russia becoming a key supplier, alongside renewed imports from Venezuela and Iran, though this means higher logistical costs and longer transit times.

Diversifying Energy and Fertilizer Sources

To manage these pressures, India is aggressively diversifying its energy and agricultural input sourcing. For oil, the country has expanded its supplier base to over 40 nations, actively seeking alternatives beyond traditional West Asian sources. This strategy aims to reduce risks from chokepoints like the Strait of Hormuz, which has faced what some describe as the largest energy supply disruption ever.

For fertilizers, stock levels for the upcoming Kharif 2026 season are strong, exceeding 51% of assessed needs, well above the usual 33% benchmark. This is thanks to domestic production and imports. However, urea, India's main fertilizer, relies heavily on Liquefied Natural Gas (LNG) for production. Around 86% of the LNG used by Indian fertilizer plants comes from West Asia. The conflict's impact on LNG supplies has therefore threatened domestic urea production, which already has a roughly 25% deficit filled by imports. To counter this, India is broadening its fertilizer sourcing to over 20 countries, including Russia, Morocco, and Belarus, to build resilience against potential disruptions from West Asian suppliers.

Persistent Risks Remain

Despite government assurances and ample buffer stocks, significant risks persist. Ongoing geopolitical volatility in West Asia poses a constant threat of further supply disruptions and price surges, prolonging economic strain on India. The nation's heavy reliance on imports for crude oil and key fertilizer feedstocks like LNG means persistent vulnerabilities. While diversification is underway, the growing reliance on Russia for oil, while currently practical, introduces its own geopolitical considerations. Furthermore, Indian refineries are largely designed for specific medium-to-heavy crude oils typically sourced from West Asia. Processing a wider variety of crude types could present technical challenges and affect efficiency. Increased reliance on longer shipping routes also means higher logistical costs, potentially reducing the benefits of diversification.

Government's Path Forward

The government remains committed to ensuring energy security and agricultural stability as a core part of its economic policy. Initiatives focus on further diversifying import sources for both oil and fertilizers, boosting domestic production where possible, and maintaining strategic reserves. The goal is to build a more resilient supply chain that can withstand prolonged geopolitical uncertainties, while keeping domestic prices for essential commodities manageable for consumers and farmers. The ongoing focus on optimizing imports and forging strategic partnerships will continue to guide India's approach to securing its critical resource needs.