Gulf Region and India’s Energy Security

Context

The Gulf region has played a crucial role in ensuring India’s energy security, which is vital for the country’s industrial growth, power, and transportation sectors.

Energy Production and Consumption in India

• Global Standing: India is the world’s third-largest energy consumer after China and the United States.
• Energy Consumption: According to the Statistical Review of World Energy 2024, India’s total primary energy consumption was 39.02 exajoules in 2023, making up 6.3% of global energy consumption.
• Energy Production: In the 2022-23 period, India produced 19.55 exajoules of primary energy while consuming 35.16 exajoules (Energy Statistics India, 2024).
• Domestic Production: Only about 68% of India’s energy demands were met through domestic production.

Coal

• Primary Energy Source: Coal is India’s largest primary energy source, accounting for 58.12% of the total in 2023.
• Production and Consumption: Despite significant domestic coal production at 16.75 exajoules in 2023, India needed to import coal to meet its total consumption of 21.98 exajoules.

Oil and Gas

• Second Largest Energy Source: Oil and gas comprised 35.44% of India’s primary energy supply in 2023 (NITI Aayog).
• Oil Consumption and Production: India consumed 5.44 million barrels of oil per day in 2023, while its production was only 0.73 million barrels per day (Statistical Review of World Energy, 2024).
• Natural Gas: India consumed 62.6 billion cubic metres of natural gas, but production was just 31.6 billion cubic metres.
• Import Dependency: The significant gap between consumption and production underscores India’s dependence on imports for oil and gas.

Importance of Gulf Countries in India’s Energy Security

• Primary Suppliers: Historically, the Persian Gulf states, including the six Gulf Cooperation Council (GCC) countries, Iran, and Iraq, have been India’s main suppliers of oil and gas, contributing nearly 55-60% of total imports.
• Dependable Suppliers: The Gulf countries have been consistent petroleum suppliers since the 1980s, despite international market fluctuations.
• Diversification Efforts: Recently, India has sought to diversify its energy sources, with countries like Russia, the United States, Australia, and Nigeria becoming important suppliers.
• Geographical and Strategic Advantage: The Gulf region remains critical due to its proximity to India and established buyer-seller networks. The ability of Gulf states like Saudi Arabia, the UAE, and Qatar to supply oil and gas at special prices enhances their strategic importance.

Economic Relations Between India and the Gulf Region

• Market Stability: For Gulf suppliers, India represents a stable and large market for crude oil and natural gas, being one of the world’s largest consumers.
• Gulf Investments: This has attracted significant Gulf investments in India’s energy sector, with major corporations like Saudi Aramco and Emirati ADNOC committing long-term investments.
• Trade Statistics: In 2023-24, trade with the Gulf and West Asia region amounted to $208.48 billion, representing 18.17% of India’s foreign trade.
• FDI Contributions: According to DPIIT, the total FDI from GCC countries into India between 2000-2024 was $24.09 billion, with the UAE, Saudi Arabia, and Qatar being among the top 25 sources of FDI.
• Indian Investments: Indian companies such as Larsen & Toubro, Shapoorji-Pallonji, and Tata have increased their presence in the GCC market. Indian businesses like the Lulu hypermarket chain have also established a strong presence in the region.

Indian Diaspora in the Gulf Region

• Expatriate Community: Nearly 8.5-9 million Indians live and work in the six GCC countries, forming the region’s largest expatriate community.
• Remittances: The diaspora has significantly contributed to making India the largest remittance recipient country, accounting for 40-50% of total remittances over the years. In 2023, India received $125 billion in remittances.

Bilateral Ties

• Strengthening Relationships: Bilateral political and strategic ties have strengthened, particularly with the UAE, Saudi Arabia, and Qatar, making the Gulf a reliable partner.
• Navigating Challenges: These relationships have helped India navigate challenges such as sanctions on major global oil and gas suppliers, regional conflicts, and the global COVID-19 pandemic.