What Happened
- The government constituted an 'Inter-Ministerial Group (IMG) for Supply Chain Resilience' to monitor the escalating West Asia conflict and its impact on India's trade and logistics
- The IMG comprises members from the Department of Financial Services, Ministry of External Affairs, Ministry of Shipping Ports & Waterways, Ministry of Petroleum & Natural Gas, and Central Board of Indirect Taxes & Customs
- The group is mandated to assess sector-wise export and critical import vulnerabilities and recommend mitigation measures in real time
- An internal coordination mechanism was established within the Directorate General of Foreign Trade (DGFT) for real-time tracking of challenges arising from the crisis
- Commerce Minister Piyush Goyal announced the formation of the group, emphasising procedural flexibility in export authorisations and smooth customs clearance
- Approximately 3,000 containers destined for West Asia are stuck at Mundra and Jawaharlal Nehru Port, highlighting the immediate trade bottleneck
- India imports close to 85% of its crude oil, with roughly 51% of that crude passing through the Strait of Hormuz; the closure of the strait has triggered supply concerns
Static Topic Bridges
India's Trade Exposure to West Asia
India's economic relationship with West Asia is one of the most consequential bilateral corridors, encompassing crude oil imports, remittances, merchandise exports, and strategic investments. The region accounts for a large share of India's energy security calculus — approximately 51% of crude oil and 56% of LNG imports are sourced via routes linked to the Strait of Hormuz. A $1 increase in crude oil prices increases India's import bill by an estimated $2 billion, which directly affects the Current Account Deficit and fiscal planning.
- India imports close to 85% of its crude oil requirements; a significant portion originates from West Asia
- 83% of India's LPG supply, 56% of LNG, and 51% of crude oil imports use Hormuz-linked routes
- India maintains strategic petroleum reserves to buffer against short-term supply shocks, covering roughly 25 days of crude consumption
- India has 6–8 weeks of oil stock coverage factoring in commercial and strategic reserves
- Remittances from Indian workers in Gulf Cooperation Council (GCC) countries are the largest single source of foreign remittances to India, exceeding $30 billion annually
Connection to this news: The IMG was operationalised specifically because the Strait of Hormuz closure threatens to sever the principal supply corridor for Indian energy imports, making multi-ministry coordination urgent.
Supply Chain Resilience and the Role of DGFT
The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce, functions as the nodal body for implementing India's foreign trade policy. During geopolitical disruptions, the DGFT plays a crisis-management role by issuing procedural relaxations, coordinating with Customs, and enabling exporters to seek alternative routing or insurance coverage. Real-time coordination mechanisms within DGFT help prevent export orders from lapsing when routine shipping routes are disrupted.
- DGFT operates under the Foreign Trade (Development & Regulation) Act, 1992
- It issues advance authorisations, export obligation discharge certificates, and emergency relaxations during force majeure events
- Port authorities coordinate with DGFT and Customs for cargo clearance and alternative berth allocation
- The IMG structure mirrors previous coordination panels formed during the COVID-19 supply chain disruptions and the 2021 Suez Canal blockage
Connection to this news: Exporters flagged a looming crisis as cargo piled up at domestic ports; the DGFT internal desk was activated to provide granular, real-time redressal — a direct institutional response to supply chain fragility.
Geopolitical Risk and India's Strategic Autonomy
India's foreign policy doctrine of strategic autonomy requires it to maintain beneficial trade and energy relationships across geopolitically opposed blocs. When conflicts erupt in regions that serve as India's energy lifeline, the government must simultaneously protect national economic interests, avoid taking sides in ways that jeopardise trade relationships, and leverage diplomatic channels to protect Indian nationals and assets. The formation of an inter-ministerial group reflects a whole-of-government approach to managing these competing imperatives.
- India has trade and diplomatic ties with both Israel and Iran; it condemned attacks on civilian infrastructure while maintaining open channels with all parties
- India's principle of "strategic autonomy" was articulated in the context of both the Russia-Ukraine war and the West Asia conflict
- India has repeatedly called for dialogue and diplomatic resolution while protecting its citizens and economic interests
- Indian refiners have begun sourcing alternate crude from the US, Russia, West Africa, and Latin America as contingency
Connection to this news: The IMG represents India's institutional response to translating strategic autonomy into concrete economic resilience — coordinating multiple ministries to prevent geopolitical events from causing domestic economic disruption.
Key Facts & Data
- IMG composition: Department of Financial Services, MEA, Ministry of Shipping, Ministry of Petroleum, CBIC
- India's oil import exposure: ~85% imported, ~51% via Strait of Hormuz
- Crude stock coverage: approximately 25 days in strategic reserves; 40–45 days including commercial stocks
- LNG reserves: 2–3 weeks as of early March 2026
- LPG: 83% of supply linked to Hormuz routes
- Impact of $1 crude price rise: approximately $2 billion additional annual import bill
- Port backlog: ~3,000 containers stranded at Mundra and JNPT ports
- The Strait of Hormuz is only 33 km wide at its narrowest point; around 21 million barrels of oil per day transited it pre-crisis
- India has contingency plans to divert to US, Russian, West African, and Latin American crude sources