Strengthening India’s Trade Resilience: Lessons from the Hormuz Disruption

Chokepoints are increasingly being used as instruments of economic coercion, with disruptions in narrow maritime corridors transmitting across energy, agriculture, and industrial supply chains. The ongoing Strait of Hormuz crisis provides a critical lens through which to examine these risks. While a temporary ceasefire has been announced, trade through the Strait remains severely constrained at the time of writing, with shipping activity still limited and subject to significant operational and security restrictions. As India remains deeply integrated into global trade and reliant on maritime imports for critical inputs, a systematic assessment of these strategic flows is necessary. Yet the implications extend beyond any single corridor or commodity, pointing instead to the need for a trade preparedness framework anchored in a diversified institutional architecture that anticipates disruption and distributes risk.

The Evolving Anatomy of Chokepoint Coercion

Across prolonged, geopolitically driven crises, a clear pattern emerges: each successive event has affected a broader range of commodities while offering fewer viable detour options. Table 1 maps four major sustained disruptions since 1956. 

Table 1: The Evolving Structure of Chokepoint Crises (1956-2026)

Source: Author’s own, compiled from multiple sources  

The 2026 crisis sits at the end of this trajectory, with the economic profile of disruption becoming broader and more layered. In the present case, oil, LNG, LPG, refined products, as well as petrochemical- and fertiliser-linked inputs are being affected simultaneously. For oil, alternative pipeline routes — notably Saudi Arabia’s Petroline and the UAE’s Habshan-Fujairah route — provide only partial relief, covering a small fraction of total flows relative to the roughly 20 million barrels per day that transit the Strait. For LNG, fertilisers, and sulphur, the concentration is even starker, with Asian buyers especially exposed. 

The strategic question, therefore, is not only whether India can keep tankers moving, but whether it can prevent a transport shock from cascading into industrial and agricultural disruptions.

The ongoing crisis can therefore be understood as a multi-layered disruption, in which different commodities move along distinct timelines. Oil typically offers the longest buffer, as countries and firms hold inventories. On the other hand, LPG shortages transmit more quickly when imports are delayed, and domestic substitution options are limited. Fertiliser-linked stress is even more time-sensitive, as missed agricultural windows cannot be fully recovered later. The strategic question, therefore, is not only whether India can keep tankers moving, but whether it can prevent a transport shock from cascading into industrial and agricultural disruptions.

India’s Uneven Buffer Across Critical Commodities

India’s preparedness, however, remains uneven across commodities. The asymmetry becomes clear across three tiers. 

First, crude oil, where India is relatively better placed than it was a few years ago. India has diversified its import base across more than 40 countries, reducing dependence on any single region. At the same time, combined strategic and commercial reserves provide roughly 70–75 days of cover. Additionally, as a net exporter of petroleum products, India remains more resilient in petrol and diesel than in gas-based fuels. 

Second, LPG, where exposure is structurally higher. India imports about 60 percent of its LPG consumption, and roughly 90 percent of those imports transit through Hormuz. This does not mean that every cargo is exposed in the same way, but it does leave India highly vulnerable to disruption. Unlike crude oil, India does not maintain large-scale strategic LPG reserves; its supply system is designed around continuous flows rather than stockpiling, limiting storage capacity. The effects are already visible in supply disruptions, rising prices, and black-market activity. At the system level, supply has been prioritised for households, with industrial users facing tighter constraints.

Third, the vulnerability is not limited to a direct shipping constraint but operates as a transmission channel through gas and fertilisers. India’s gas-based urea plants rely significantly on imported LNG, particularly from West Asia. Following disruptions to Qatar’s LNG supplies, gas availability to the fertiliser sector reportedly declined to around 70 percent of requirements, prompting some producers, including IFFCO, to shut plants or advance maintenance schedules. Even after feedstock supply resumes, delays in restoring fertiliser output can intersect with the Kharif sowing cycle, where timing is critical. This exposure is reinforced by source concentration and dependence on sulphur imports routed through the Strait of Hormuz, with limited short-term flexibility in adjusting fertiliser production. Taken together, the result is a system that appears resilient at the point of entry but becomes increasingly vulnerable along the chain of transmission.

From Contingency to Capability

India’s response so far to the ongoing crisis reflects a distinctive model of crisis management, blending naval capability with diplomatic access. Through escorted tanker movements and sustained engagement with Iran, India has been able to secure passage for its vessels under conditions of selective restriction. However, this model remains an ad hoc substitute for structural resilience. Its effectiveness is contingent, selective, and ultimately revocable.

Through escorted tanker movements and sustained engagement with Iran, India has been able to secure passage for its vessels under conditions of selective restriction.

There is a need to complement this flexibility and diversification with a stronger domestic architecture. First, India’s reserve framework remains narrowly focused on crude oil. Here, India could draw on elements of China’s approach, where stockpiling is treated as a continuous, opportunity-driven process, with inventories expanded during periods of lower global prices. China’s use of strategic reserves for key inputs such as sulphur further reinforces supply stability for downstream sectors. Extending this logic, a Strategic Fertiliser Reserve (SFR), covering urea, sulphur, and phosphates, remains a missing institutional layer in India’s framework. 

Beyond reserves, gas vulnerabilities, which are among the most binding in the current crisis, require differentiated responses. LPG exposure is driven by high import dependence and minimal storage, necessitating investments in cavern storage, floating reserves, and gradual substitution through PNG and electrification. LNG, by contrast, is constrained by regasification capacity, pipeline connectivity, and contract rigidity, requiring expansion of terminals, stronger grid integration, and greater fuel-switching flexibility. 

Over the longer term, resilience will depend on moving beyond capacity addition toward demand-side transitions by building a robust renewable energy architecture. In fertilisers, the priority is to scale hydrogen-based green ammonia, supported by long-term energy supply and pricing frameworks under the National Green Hydrogen Mission. In cooking energy, reducing LPG exposure will require accelerating electrification in urban and peri-urban areas, alongside expanding piped gas networks where viable, to diversify household energy sources. More broadly, renewable deployment must be integrated with industrial demand through improved grid reliability and storage expansion, enabling round-the-clock renewable supply. Progress across these dimensions remains uneven, limiting substitution at scale.

Governing Dependence

There is a shift from disruptions that can be buffered through reserves to systems where vulnerabilities are embedded across supply chains. India’s experience reflects this asymmetry: relative resilience at the crude oil level, but exposure in LPG and fertiliser-linked inputs. The implication is not to eliminate dependence, but to manage it more effectively. In a system where import reliance is structural, the objective is to build layered cushions around it—through diversified sourcing, dynamic stockpiling, flexible infrastructure, and institutionalised access mechanisms. Dependence, in this sense, is not a weakness to be erased, but a condition to be governed. Trade preparedness must therefore evolve from episodically buffering shocks to systematically absorbing them.

Kumkum Mohata is a Research Assistant with ORF’s Centre for New Economic Diplomacy. 

• International Affairs
• Energy
• Energy Security
• West Asia
• global energy crisis
• iran gas
• lng crisis
• middle east crisis
• Strait of Hormuz
• strait of hormuz crisis
• us iran war 2026

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