New Delhi: As the US-Israel and Iran war crosses the two-week mark, engulfing the Middle East, it has “threatened the supply of the liquefied petroleum gas that powers India’s homes, restaurants and industries”, reports The New York Times.
Pragati K.B. and Alex Travelli write on the “anxiety” about cooking gas in India.
“In kitchens across India, the familiar blue flame of a gas stove symbolizes both modern convenience and successful policymaking. This week, that flame flickered,” they write.
“India is the world’s second-largest importer of LPG or cooking gas after China, consuming about 31 million tonnes annually. Around 60 percent is imported, mostly through the Strait of Hormuz, the narrow route linking the Persian Gulf to the open sea. The remainder is produced domestically, largely as a byproduct of crude oil refining,” the report adds.
Since Iran choked the narrow pathway, essentially halting energy supplies from reaching India, among many countries, panic is visible.
“In the following days, rumors of a shortage of liquefied petroleum gas ricocheted across India’s cities, setting off hoarding and a brisk black market in the metal cylinders used to transport the gas.”
And while officials in the oil ministry reassured that supply remains normal, “customers in cities like Kolkata and Hyderabad waited hours to buy gas cylinders, some clutching their receipts and hoping for delivery trucks that never came”.
As the Indian government prioritised domestic consumption, the restaurant segment is suffering.
“The scarcity of commercial cylinders has prompted warnings from restaurant associations that operations could slow or even halt.”
The report also notes that the programme introduced by Prime Minister Narendra Modi in 2016, referring to Pradhan Mantri Ujjwala Yojana, helped transition millions of poor households to clean cooking fuel, it also made 330 million LPG users now vulnerable to “geopolitical shocks”.
Data from Kpler, a maritime intelligence firm, however, suggests that concerns about India’s broader fuel supplies may be overstated, Soutik Biswas reports in the BBC.
India imports about 90 percent of its oil, with roughly half of its crude shipments, around 2.5 to 2.7 million barrels a day, passing through the strait, mainly from Iraq, Saudi Arabia, UAE and Kuwait.
“Even if crude flows through the Strait of Hormuz are disrupted, the gap could be partly offset by higher imports of discounted Russian crude, according to Sumit Ritolia, a refinery and oil markets analyst at Kpler,” says the report.
“Around 25-30 million Russian oil barrels are currently floating on ships in the Indian Ocean and, with only India and China as major buyers, those barrels remain a ready fallback,” Ritola told the BBC.
However, the primary problem area remains LPG.
India consumes roughly one million barrels a day, but produces only 40-45 percent domestically, the report underlines. “Refineries can tweak operations to squeeze out a bit more LPG, but even a 10-20% boost would only lift domestic supply to about 47-50% of demand, leaving the country heavily reliant on imports,” it adds.
This week, India announced the lowering of barriers to Chinese investment. But, writes Veena Venugopal in Financial Times newsletter, “the fine print suggests that the door is barely ajar”.
The rules laid out specify that companies with up to a 10 percent stake held by entities in China and other countries that share a land border with India will receive automatic investment approval. Firms with higher stakes would still need government clearance, though New Delhi has said approval durations for key sectors such as electronics, silicon wafers and solar cells will be capped at 60 days, suggesting “a certain degree of wariness on New Delhi’s part”.
“Still, the decision is a big departure from the government’s previous stance. In 2020, it announced that all investments from countries sharing a land border with India, including China, would need prior approval,” Venugopal writes.
According to the report, the easing of curbs highlights the “difficult balance” India must strike between geopolitics and economic needs. While the changes mainly benefit foreign portfolio investors with Chinese backing, India also requires access to critical inputs across several sectors.
“The opposition has expressed its criticism about this turnaround, but, economically, it does make cynical sense to seek warmer ties with Beijing. Yet New Delhi seems to be doing so only in fits and starts,” it adds.
(Edited by Nida Fatima Siddiqui)
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