India to prioritise domestic demand before fuel exports to South Asia amid supply disruptions

India has said it will prioritise meeting its domestic fuel demand before considering additional exports to Bangladesh and other South Asian countries, as global energy markets face disruptions due to the ongoing war in West Asia.

Speaking at a media briefing in New Delhi, Sujata Sharma, joint secretary at India's Ministry of Petroleum and Natural Gas, stressed that ensuring adequate supply within the country remains the government's top priority.

"Nation first," she said, adding that any decision on fuel exports would only be taken if there is a surplus after meeting domestic demand.

The remarks come as countries including Bangladesh, Sri Lanka, and Maldives have sought additional fuel supplies from India to address shortages triggered by the conflict in West Asia.

Bangladesh has requested diesel beyond the 5,000 tonnes it currently receives through an existing cross-border pipeline arrangement. Sri Lanka and the Maldives have also made similar requests, while Nepal has reportedly asked for an additional 3,000 tonnes of LPG per month. India already supplies fuel products including petrol, diesel and LPG to Nepal and Bhutan.

Despite having surplus refining capacity and producing more fuel than it consumes annually, India's export flexibility has been affected by supply chain disruptions linked to the war.

India relies heavily on imports, sourcing about 88% of its crude oil, 50% of natural gas, and 60% of LPG from abroad. Before the conflict, a significant portion of these imports came from Middle Eastern countries such as Saudi Arabia, Iraq, and the United Arab Emirates, with shipments passing through the strategically vital Strait of Hormuz.

With the route now disrupted, India has turned to alternative suppliers including Russia, West African nations, the United States, and countries in Latin America.

However, sourcing fuel from outside the Middle East has become more expensive due to higher freight and insurance costs, adding further pressure to the energy supply situation.