E-Paper
From crisis response to structural resilience
This article is authored by Siddharth Jain, managing partner, Kearney India and Vivek Dua, senior partner and head, Oil and Gas, Asia Pacific, Kearney.
India's management of the 2026 Hormuz disruption has been examined for what it achieved: supply continuity, contained prices, no rationing. Less examined is what the response itself revealed, not about India's vulnerabilities, which were already known, but about the specific structural gaps that real-time decisions filled and that policy must now close permanently.
Six factors defined India's response. Each worked. Taken together, they form a precise diagnostic of what India's energy security architecture must now permanently contain, so that a response which was exceptional, becomes structural.
The first was the sourcing pivot. Within 90 days, India rewired its energy supply chains. The US replaced the Gulf as India's dominant LPG supplier, LNG sourcing shifted from Qatar to Africa and the Americas, crude deepened into Russia and Latin America. This was a remarkable feat of procurement and diplomacy executed under pressure. The structural lesson is that diversification of this scale should be contractual and permanent, not assembled in the middle of a crisis. Long-term supply agreements across multiple sourcing regions, with no single region holding a dominant share of any fuel, would convert a crisis-era achievement into a standing strategic position.
The second was the domestic production surge. A control order diverted all C3/C4 refinery streams to LPG production, lifting output from 35 to 53 TMT a day within days. That operational flexibility existed because India had built 24 refineries and over 54,000 km of hydrocarbon pipelines over the prior decade. The structural lesson is upstream. India's offshore basins remain underexplored relative to their geological potential, and its mature producing fields are declining faster than new discoveries replace them. The Samudra Manthan mission must be executed with the urgency the moment demands, alongside a concerted push on enhanced oil recovery from existing fields and the expansion of overseas equity positions in producing regions. Together, these create a credible pathway to meaningfully reduce hydrocarbon import dependence over the coming decade.
The third was demand substitution already in motion. Ethanol blending at 20% meant that a meaningful share of India's petrol pool was already insulated from the crude price shock before the crisis began. That cushion was not built for this crisis. It existed because of a structural programme pursued over years. The structural lesson is to extend the same logic deliberately and at pace: biodiesel blending, sustainable aviation fuel and compressed biogas each substitute a fossil import with a domestic alternative. The crisis did not create the case for accelerating these programmes. It simply made the case impossible to ignore.
The fourth was the allocation order. When gas supply tightened, a tiered framework placed household consumers first, agricultural inputs second and industrial users last. It worked. But it was issued nine days after the crisis began, designed in real time, without a pre-existing playbook. The structural lesson is a pre-approved Crisis Response Framework, with defined escalation triggers, pre-assigned roles across CPSEs and private players, and intervention playbooks by fuel type and severity level. India's response was effective precisely because of the decisions its institutions were able to take under pressure. A formal framework would make those decisions faster, cheaper and less dependent on real-time judgment.
The fifth was fiscal absorption. PSU OMCs absorbed losses of ₹1 to ₹1.2 lakh crore in a single quarter to shield consumers from a 65% crude price spike. Excise duties were cut, an ATF Price Stabilisation Fund deployed, export levies introduced. These were the right decisions. They were also assembled in real time, instrument by instrument, as the crisis unfolded. They were also a demonstration of the fiscal cost of managing a supply shock without adequate strategic storage or supply buffers. The structural lesson is that India's only standing price-smoothing mechanism is the LPG pool account. Petrol, diesel, ATF and CNG have none. A price stabilisation approach designed in advance, with clear triggers and rules of engagement, would convert pass-through management into a known, repeatable process rather than a fresh negotiation every time a shock arrives.
The sixth was strategic storage. India entered the crisis with strategic petroleum reserves providing limited cover and no strategic LPG or LNG reserves at all. The response held because the disruption lasted months rather than years, and because supply diversification compensated for what storage could not provide. That is not a resilience architecture. It is a fortunate outcome. The structural lesson is unambiguous: strategic reserves across all three fuels, sized to India's actual import exposure and governed separately from commercial stocks, are the first line of defence against any future disruption. India's storage programme must move from feasibility to construction. And beyond storage, the crisis makes the case for examining structural measures that reduce seaborne dependence altogether. Cross-border pipeline connectivity with major exporting neighbours would provide supply routes entirely insulated from maritime chokepoints. That evaluation must now begin in earnest.
Taken together, these six structural commitments, contractual diversification, domestic E&P scale-up, accelerated alternative fuels, a pre-built crisis framework, deeper investment in storage and supply buffers, and a strategic storage architecture across all three fuels, represent the difference between a country that manages disruptions well and a country that absorbs them without disruption.
The costs of building this architecture are large but bounded. Strategic energy security is not a contingency plan. It is an investment made in the years before it is needed, priced at a fraction of the cost of the crisis it prevents.
(The views expressed are personal)
This article is authored by Siddharth Jain, managing partner, Kearney India and Vivek Dua, senior partner and head, Oil and Gas, Asia Pacific, Kearney.
