What Happened
- Three weeks into the West Asia war (US-Israel strikes on Iran, beginning February 28, 2026), all of India's immediate neighbours — Maldives, Sri Lanka, Nepal, Bangladesh, and Pakistan — have implemented some form of energy rationing.
- Bangladesh ordered the closure of all public and private universities and advanced Eid holidays to conserve electricity and fuel as LNG supplies fell sharply.
- Nepal imposed rationing of cooking gas cylinders; Sri Lanka and Bangladesh introduced electricity tariff measures to reduce consumption.
- The Maldives faces a 20% drop in tourist arrivals — a severe blow just weeks before a $500 million loan repayment deadline.
- Pakistan raised gasoline prices by nearly 20% to curb demand and introduced a temporary electricity tariff to shift industries from captive power to the national grid.
- Bangladesh, Sri Lanka, and the Maldives formally approached India for emergency energy supplies; India's MEA stated that India's "own requirements would be factored in" before committing to supply.
- India faces a dual challenge: managing its own energy security under the Hormuz crisis while responding to neighbourhood diplomacy requests.
Static Topic Bridges
India's Neighbourhood First Policy and Energy Diplomacy
India's "Neighbourhood First" policy, articulated at PM Modi's first swearing-in ceremony in May 2014, prioritises relations with SAARC (South Asian Association for Regional Cooperation) neighbours as the cornerstone of India's foreign policy. It was symbolised by inviting all SAARC leaders to Modi's inauguration. The policy encompasses physical connectivity (roads, rails, pipelines), economic integration, energy cooperation, and people-to-people ties. India has built several energy connectivity projects in the region: the India-Bangladesh Friendship Pipeline (Siliguri to Parbatipur, commissioned 2023), hydropower imports from Nepal and Bhutan, and the proposed India-Sri Lanka power grid interconnection. The West Asia war energy shock has become a concrete test of whether India can serve as the "first responder" for its neighbourhood's energy needs — the stated ambition of Neighbourhood First.
- SAARC member states: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka (8 members; suspended summits since 2016 due to India-Pakistan tensions).
- India-Bangladesh Friendship Pipeline: Operationalised June 2023; capacity ~1 million metric tonnes per annum (MMTPA) of diesel.
- India-Nepal power trade: India imports hydropower from Nepal under bilateral agreements; Nepal imports petroleum products from India.
- India-Bhutan power cooperation: Oldest example of South Asian energy trade; Bhutan exports ~1,500–2,000 MW of hydropower to India.
- MEA's response (March 2026): "India's own requirements will be factored in" — signalling limits to India's supply capacity amid its own energy stress.
Connection to this news: The crisis has compressed India's neighbourhood energy diplomacy into a real-time test. India's ability to supply diesel to Bangladesh via the Friendship Pipeline while managing its own refinery shortfalls directly determines whether Neighbourhood First remains a credible foreign policy commitment or a declaratory posture.
South Asian Energy Import Dependence and Structural Vulnerability
South Asian nations are among the world's most vulnerable to energy price shocks. India, Pakistan, Bangladesh, Sri Lanka, and Nepal import between 70–90% of their energy requirements (primarily oil and LNG). Their vulnerability is structural: low domestic production, heavy reliance on Gulf oil, and limited strategic reserves. Pakistan and Bangladesh are significant LNG importers — both depend heavily on Qatar (affected by Iranian strikes on Qatari gas facilities in week 2 of the war) and on spot LNG markets. The region's lack of regional energy grids and cross-border pipelines means that disruptions cannot be easily absorbed. Low foreign exchange reserves in several countries (Maldives, Pakistan, Sri Lanka — the last having just emerged from a 2022–23 default crisis) amplify the fiscal impact.
- Regional oil import dependence: India (~88.5%), Pakistan (~80%), Bangladesh (~85%), Sri Lanka (~95%), Nepal (~100%) — all heavily dependent on fossil fuel imports.
- LNG dependence: Bangladesh and Pakistan are major LNG importers via spot markets; Qatar is a primary supplier.
- Qatar's North Dome/South Pars gas field: The world's largest natural gas field, shared between Qatar and Iran — Iranian strikes on Qatari LNG facilities directly reduced regional LNG supply.
- Sri Lanka foreign exchange crisis (2022–23): Defaulted on external debt; recovered partially by 2024–25.
- Maldives: $500 million debt repayment due; 20% tourist drop in March 2026 reduces forex earnings precisely when import costs surge.
- Strategic Petroleum Reserves (SPR): India has ~9.5 million tonnes of strategic reserves (Visakhapatnam, Mangaluru, Padur); most neighbours have minimal reserves.
Connection to this news: The energy rationing across India's neighbourhood is not merely a short-term disruption — it risks triggering political instability (Bangladesh, Maldives), economic defaults (Pakistan, Maldives), and refugee or migration pressures that directly affect India's security calculus. This elevates the West Asia war from a distant geopolitical event to a proximate national security concern.
SAARC Energy Cooperation and Regional Integration Challenges
Despite decades of discussion, South Asian regional energy integration remains limited. SAARC's energy cooperation frameworks include the SAARC Framework Agreement on Energy Cooperation (Electricity), signed in 2014, which provides a legal basis for cross-border electricity trade. The South Asian Energy Market is constrained by India-Pakistan relations (blocking a Central Asia-South Asia [CASA-1000] power project), different regulatory regimes, and lack of trust-based institutional mechanisms. Contrast this with ASEAN, which has the ASEAN Power Grid initiative, or the EU's integrated energy market. India's bilateral energy trade with Bhutan and Nepal is the most developed example in the region. The 2026 West Asia shock has exposed the absence of a collective regional energy security mechanism — there is no SAARC Strategic Reserve or coordinated emergency response protocol.
- SAARC Framework Agreement on Energy Cooperation (Electricity): Signed November 2014 at the 18th SAARC Summit in Kathmandu.
- CASA-1000: Central Asia-South Asia Electricity Transmission and Trade Project — connects Kyrgyzstan and Tajikistan hydropower to Pakistan and Afghanistan; India not a direct participant.
- BBIN (Bangladesh, Bhutan, India, Nepal) Motor Vehicles Agreement and connectivity frameworks: More functional than SAARC as a sub-regional grouping.
- India's cross-border electricity trade: ~2,000 MW with Nepal, ~1,500 MW with Bhutan; small amounts with Bangladesh.
- No SAARC-level strategic energy reserve exists; emergency energy sharing is done bilaterally.
Connection to this news: The crisis has exposed the institutional vacuum in South Asian energy security. India's neighbourhood approach — bilateral, case-by-case — works in normal times but is inadequate for a systemic shock of this magnitude. The episode may revive discussions about a South Asian energy security architecture, which UPSC has tested as a policy question in GS2.
Key Facts & Data
- West Asia war start: February 28, 2026 (US-Israel Operation Epic Fury on Iran).
- All five immediate South Asian neighbours of India (Bangladesh, Sri Lanka, Nepal, Maldives, Pakistan) implemented energy rationing by the third week of the war.
- Bangladesh: Closed all universities; advanced Eid holidays; severe LNG shortfall.
- Maldives: 20% tourist footfall drop; $500 million loan repayment deadline imminent.
- Pakistan: Gasoline prices raised ~20%; electricity tariff restructured to shift captive industry to national grid.
- India-Bangladesh Friendship Pipeline: Operational since June 2023; diesel supply via rail and pipeline to Bangladesh.
- Regional oil import dependence: 70–90% across South Asian nations.
- India's own oil import dependence: ~88.5%; Middle East share: ~46% of crude imports.
- India's Strategic Petroleum Reserves: ~9.5 million tonnes (Visakhapatnam, Mangaluru, Padur).
- SAARC Energy Framework Agreement: Signed 2014; limited implementation.