360° UPSC Mains Analysis

Strait of Hormuz

The targeted offshore basins are located in the Bay of Bengal and Andaman Sea, regions prone to tropical cyclones and monsoonal disruptions. Geologically, these basins consist of thick Mesozoic to Cenozoic sedimentary sequences, while the Andaman Sea is a tectonically active back-arc basin with high seismic risk.

India's energy security is deeply tied to the Indian Ocean Region (IOR) and the Persian Gulf, with key maritime choke points like the Strait of Hormuz acting as vital conduits. Domestically, India's eastern coast features major sedimentary basins (Krishna-Godavari, Mahanadi, Cauvery) extending into the Bay of Bengal, which hold significant deepwater hydrocarbon potential.

The Strait of Hormuz facilitates nearly half of India's crude oil imports and two-thirds of its LNG imports. Domestically, unlocking the deepwater hydrocarbon reserves in the eastern offshore basins through the Samudra Manthan scheme (approved July 31, 2026) is projected to add over 600 MMTOE of reserves, reducing India's heavy import dependence.

Under the Seventh Schedule of the Constitution, the regulation and development of oilfields, mineral oil resources, petroleum, and petroleum products fall exclusively under the Union List (Entry 53), while the regulation of mines and mineral development is governed by Entry 54 of the Union List to the extent declared by Parliament. Conversely, Entry 25 of the State List ('Gas and gas-works') is restricted to manufactured gas, meaning the Central Government retains exclusive legislative and executive jurisdiction over natural gas, LNG, and offshore hydrocarbon exploration.

India's high trade vulnerability is highlighted by its import of nearly 90% of crude oil ($137 billion in FY25) and 50% of natural gas. Geopolitical tensions have forced India to diversify its trade basket, expanding crude imports to 41 countries and LNG to 15 countries to bypass the volatile Strait of Hormuz. Successful domestic exploration under the Samudra Manthan scheme aims to substitute imports, improving the balance of trade and reducing vulnerability to unilateral resource weaponisation.

Disruptions in the Strait of Hormuz, which handles ~20% of global LNG and ~25% of global seaborne oil, threaten India's macroeconomic stability by inflating the import bill (crude imports were $137 billion in FY25). This directly widens the Current Account Deficit (CAD), depreciates the Indian Rupee (INR), and fuels imported inflation (CPI/WPI) due to India's 90% crude import dependence. Conversely, the newly approved ₹84,084-crore Samudra Manthan scheme aims to mitigate these risks by targeting 600 MMTOE in domestic reserve accretion by FY31.

The primary sector (oil and gas extraction) will see a massive capital infusion through the ₹84,084-crore Samudra Manthan scheme, which funds up to 50% of deepwater drilling costs (capped at ₹675 crore per well). The secondary sector (petrochemicals, fertilizers, and energy-intensive manufacturing) will benefit from reduced input cost volatility and improved supply chain resilience. The tertiary sector, particularly maritime logistics and shipping, faces increased insurance premiums and freight costs due to geopolitical conflicts in the Strait of Hormuz.

Elevated global energy prices directly translate to higher retail prices for petrol, diesel, and piped natural gas (PNG), squeezing household disposable incomes and increasing the cost of living. Supply chain disruptions in critical sea routes threaten employment in energy-dependent industries and logistics. However, domestic exploration under the Samudra Manthan scheme is projected to generate large-scale employment in offshore engineering, manufacturing, and allied services.

Historically, India's post-independence energy sector was dominated by foreign oil majors like Burmah Shell, Stanvac, and Caltex, which controlled refining and distribution. The Industrial Policy Resolution of 1956 placed mineral oil under Schedule A (state control), leading to the creation of the Oil and Natural Gas Commission (ONGC) in 1956 to reduce colonial-era dependence. This established the early state-led paradigm of energy security and resource sovereignty.

Following the nationalization of foreign oil companies in the mid-1970s under the Esso (Acquisition of Undertakings in India) Act, 1974 and the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, India shifted toward complete state control of its hydrocarbon sector. To attract private and foreign capital, the government launched the New Exploration Licensing Policy (NELP) in 1997, which was later replaced by the Hydrocarbon Exploration and Licensing Policy (HELP) in 2016 featuring a revenue-sharing model. The approval of the ₹84,084-crore Samudra Manthan National Offshore Exploration Scheme in July 2026 marks a transition to a heavily subsidized, de-risked public-private partnership model for deepwater exploration.

The current disruption in the Strait of Hormuz mirrors the 1990 Gulf War crisis, where a sudden spike in oil prices and supply disruptions severely strained India's foreign exchange reserves, triggering the 1991 balance of payments crisis. Similarly, the 1973 OPEC oil embargo forced India to establish the Oil Industry Development Board (OIDB) under the Oil Industry (Development) Act, 1974, to fund self-reliance in the hydrocarbon sector.

The push for energy self-reliance (Atmanirbhar Bharat) is deeply rooted in the Swadeshi Movement of 1905, which advocated for economic self-sufficiency and the boycott of foreign goods to resist colonial exploitation and secure national sovereignty.

The ₹84,084-crore Samudra Manthan National Offshore Exploration Scheme, targeting deepwater basins like Krishna-Godavari and Andaman, poses severe risks to marine ecology. Under the Environment (Protection) Act, 1986 and EIA Notification, 2006, offshore drilling requires rigorous environmental clearance due to risks of catastrophic oil spills, habitat destruction, and heavy metal contamination in fragile marine ecosystems.

The exploration utilizes reflection seismology, where high-energy acoustic airguns generate sound waves to map geological strata beneath the seabed, causing significant underwater noise. Deepwater drilling requires advanced subsea engineering, including dynamic positioning systems and high-pressure blowout preventers (BOPs) to prevent deep-sea oil blowouts.

While India's solar capacity expansion to 160 GW supports its Paris Agreement NDC of achieving 50% non-fossil electric capacity by 2030, the push to unlock 600 MMTOE of offshore hydrocarbons under Samudra Manthan presents a policy trade-off. This fossil fuel expansion could lock in long-term carbon emissions, complicating India's target of reaching net-zero emissions by 2070.

The scheme highlights the trade-off between SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action) by expanding fossil fuel extraction to ensure national energy security. It also directly impacts SDG 14 (Life Below Water), requiring strict regulatory frameworks to prevent the degradation of marine and coastal ecosystems from deep-sea industrial activities.

Fluctuations in global energy prices directly translate to higher transport and food inflation, eroding the purchasing power and daily savings of low-income families. Conversely, the expansion of piped natural gas and solar energy improves household health by reducing respiratory illnesses and ensures reliable electricity for education and domestic productivity.

The transition to clean and secure energy aligns with Article 21 of the Constitution (Right to Life), which includes the right to a clean environment and health. It also advances Directive Principles of State Policy under Article 39(b), directing the State to secure that the ownership and control of material resources subserve the common good, and Article 48A, which mandates the protection and improvement of the environment.

A District Magistrate would face the ethical conflict of 'Development vs. Livelihood Rights,' balancing the national imperative of deepwater energy exploration under schemes like Samudra Manthan against the immediate ecological and livelihood disruption of local fishing communities. There is also an equity dilemma in prioritizing capital-intensive long-term energy infrastructure over immediate budgetary allocations for local social welfare and poverty alleviation.

Energy price volatility and supply disruptions disproportionately impact Economically Weaker Sections (EWS) through inflationary pressures on essential commodities. Women in rural and semi-urban households are highly vulnerable to clean energy deficits, as high costs or shortages of cooking gas can force a return to traditional solid biomass, worsening indoor air pollution and health outcomes.