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Maritime Chokepoints: India's Energy and Trade Vulnerabilities and Strategic Responses

In the post-liberalisation era, these vulnerabilities have deepened structurally, transforming maritime chokepoints from peripheral strategic concerns into central determinants of India’s macroeconomic stability.

Srishti Gupta

Roshan Soni

maritime chokepoints india s energy and trade vulnerabilities and strategic responses

The Strait of Hormuz as seen from space. Photo: NASA/Public domain.

“Maritime diplomacy is anchored in the SAGAR doctrine – Security and Growth for All in the Region – which frames India’s approach to the Indian Ocean as cooperative rather than coercive.”
– Ministry of External Affairs, 2015

Despite rapid naval modernisation and increasingly active maritime diplomacy, India’s exposure to maritime chokepoints – narrow sea routes through which a very large share of the world’s trade and energy supplies move – remains deep and largely unavoidable. Geography has not changed. India continues to import the bulk of its energy by sea and conducts a large share of its trade through a small number of narrow maritime corridors.

Although they are often discussed in military or strategic terms, their importance goes much further. Research shows that when these routes are disrupted, the effects are felt quickly in everyday economic outcomes such as fuel prices, inflation and government finances, especially in countries that depend heavily on imported energy.

Non-state actors further amplify this vulnerability. Piracy, maritime crime, and militant activity do not need to close a strait completely to cause damage. Even limited attacks or credible threats can increase insurance premia, delay shipments and divert vessels to longer routes, raising costs across global supply chains (ReCAAP Information Sharing Centre (ISC), 2023; International Maritime Organization (IMO), 2023).

For India, whose growth relies strongly on global trade and seaborne oil and gas imports, these chokepoints are vital economic lifelines that connect global geopolitical tensions directly to domestic prices, growth and economic stability (Stopford 2009, United Nations Trade and Development (UNCTAD), 2023, International Energy Agency (IEA), 2024).

A historical perspective shows that India’s vulnerability to maritime chokepoints has increased sharply over time.

In the decades following independence, the Indian economy remained relatively inward-looking, with limited trade integration and modest energy imports. During the 1970s and 1980s, India’s trade openness remained below 20% of GDP, and crude oil import dependence was around 30-35%. As a result, while maritime security was strategically relevant, it did not occupy a central place in macroeconomic policymaking.

This situation changed decisively after economic liberalisation in the early 1990s. As trade expanded and industrialisation accelerated, India’s trade-to-GDP ratio rose to over 45-50%, while crude oil import dependence increased to more than 85% by the early 2020s. Liquefied natural gas (LNG) now accounts for roughly half of domestic gas consumption, with over 90% of oil and gas imports transported by sea.

Earlier external shocks, including the oil crises of the 1970s, when India’s oil import bill tripled and inflation surged above 25%, and the 1990-91 Gulf War, which reduced foreign exchange reserves to barely two weeks of imports, had already highlighted the link between energy supply disruptions and domestic economic instability.

In the post-liberalisation era, however, this vulnerability has deepened structurally, transforming maritime chokepoints from peripheral strategic concerns into central determinants of India’s macroeconomic stability (Panagariya 2008, Reserve Bank of India (RBI), 2023, UNCTAD, 2023).

Over the past two decades, this growing dependence on maritime trade and energy flows has reshaped India’s strategic outlook. The idea of the “Indo-Pacific” has emerged not merely as a geopolitical label, but as an economic and security framework that reflects the deep interdependence of the Indian and Pacific Oceans. Today, the Indo-Pacific accounts for nearly two-thirds of global GDP, around 60% of global maritime trade and close to 70% of seaborne energy flows, making stability in these waters central to global and Indian economic performance (Chawla 2024, UNCTAD, 2023, IEA, 2024).

The world’s most critical bottlenecks

Every day, around 19 million barrels of oil pass through the Strait of Hormuz – a narrow stretch of water at the mouth of the Persian Gulf – which is more than through any other maritime chokepoint in the world. For oil exporters in the Gulf, there are few meaningful alternatives. As a result, even a brief slowdown in traffic here can send shockwaves through global oil markets, pushing up prices almost immediately.

Given the ongoing intense US attacks on Iran's navy, Iran has in effect closed the Strait of Hormuz to oil and gas exports, with a mixture of drone strikes and fear halting commercial maritime traffic. Some 138-147 container ships, totalling around 470,000 twenty-foot equivalent units are trapped in the west of the Strait, prompting the Houthis to once again threaten commercial shipping in and around the Bab el-Mandeb.

The technology sector is also facing threats. Samsung and SK Hynix together control about 67% of global dynamic random access memory and nearly 80% of high-bandwidth memory revenue, a key component for AI chips. The global AI boom therefore relies heavily on South Korea’s semiconductor factories, which in turn depend on large energy supplies. South Korea imports about 97% of its energy, much of its oil and LNG comes from West Asia via the Strait of Hormuz.

Many other vessels are unable to access ports within the Gulf region, and are stationary in safe areas (Hand 2026).

Further east lies the Strait of Malacca, through which roughly 16 million barrels of oil per day are transported. This strait connects the Indian Ocean to East and Southeast Asia and sits astride the main route linking energy producers in West Asia with consumers across Asia. At its narrowest point, it is only a few kilometres wide; yet it carries a remarkable share of global maritime trade. Its importance lies not just in volume, but in the fact that it serves as a single funnel for energy flows, manufactured goods and intermediate inputs moving across some of the world’s most dynamic economies.

To the west, the Bab el-Mandeb and the Suez Canal together form the primary maritime gateway between Asia and Europe. Each handles close to five million barrels of oil per day, alongside a dense flow of container traffic. These routes are critical not only for energy shipments but also for the movement of manufactured goods, food and industrial inputs. When disruptions occur – whether due to conflict or heightened security risks – ships are forced to bypass this corridor entirely.

That alternative route appears on the map as the long arc around the Cape of Good Hope. While oil and goods can still reach their destinations this way, the costs are substantial. Voyages become longer, fuel consumption rises, insurance premia increase and delivery times can be extended by weeks. The table above makes it clear that this route is not a true substitute for Suez, but a costly fallback that quickly feeds into higher trade and energy costs.

Other chokepoints, such as the Dardanelles and Danish Straits, appear smaller but play a similarly critical role for Europe, funnelling oil into the Black Sea and the Baltic. Even the Panama Canal, despite carrying relatively little oil, underlines a broader reality: global trade repeatedly depends on narrow, congested passages where physical geography leaves little room for flexibility.

What the latest data tell us about the world’s most critical bottlenecks

Comparing the 2016 snapshot with the latest data from 2018-2023 shows that the basic structure of global oil transport has barely changed. The Strait of Malacca and the Strait of Hormuz remain the two dominant arteries of the global energy system, each carrying around 20-24 million barrels of oil per day. Despite repeated geopolitical tensions and recent disruptions, these routes have not been meaningfully bypassed.

What has shifted is the growing importance of connecting corridors. Oil flows through the Suez Canal–Bab el-Mandeb system has risen since 2021, reflecting both the recovery of global trade and the rerouting of ships during periods of stress. The continued use of the Cape of Good Hope as a fallback route reinforces a simple reality: alternatives exist, but they are slower and more expensive.

For economies like India that rely heavily on imported energy and maritime trade, the message is clear. Global oil flows remain concentrated in a few narrow sea lanes, and recent shocks have not reduced this dependence. Instead, they have underlined how quickly disruptions in distant waters can translate into higher costs and macroeconomic pressures at home.

This concentration reflects the geographic alignment of global production and consumption: hydrocarbons move out of the Persian Gulf, manufactured goods flow from East and Southeast Asia, and intermediate inputs circulate across regions.

For India, over 90% of trade by volume and more than 85% of crude oil imports move by sea. India’s exposure is particularly acute across four maritime corridors: the Strait of Hormuz, the Red Sea-Suez Canal system, the Strait of Malacca and the Bab el-Mandeb. Among these, the Strait of Hormuz represents the single most critical node in India’s energy supply chain, with around 80-85% of India’s crude oil imports transiting this narrow passage.

Trade vulnerabilities for India extend well beyond energy dependence. Approximately 30-35% of India’s total merchandise exports are shipped through the Red Sea-Suez Canal corridor, particularly those destined for Europe (around 16-18% of India’s exports), North America’s eastern seaboard (about 7-9%), and markets in North Africa and West Asia (roughly 6-8%), making this route a critical artery of the country’s outward-oriented manufacturing economy.

The corridor is especially important for export-intensive manufacturing sectors, with estimates suggesting that around 35-40% of textile and apparel exports, 30-35% of pharmaceutical exports, 28-32% of engineering goods and 25-30% of processed food and agri-products rely on the Red Sea-Suez route. These sectors are typically high-volume, time-sensitive and cost-competitive, and are dominated by small and medium enterprises operating on thin margins, rendering them particularly vulnerable to logistics disruptions.

Disruptions along this corridor, arising from conflict, piracy or congestion raises freight rates, increase insurance premia and delay deliveries, directly eroding exporter competitiveness. Recent episodes of vessel rerouting around the Cape of Good Hope illustrate the magnitude of these effects: transit times increased by approximately 30%, freight costs rose by 40-60%, insurance premia by 15-20% and delivery delays extended by up to 20 days in some cases. (UNCTAD, 2023, World Trade Organization, 2024, Organisation for Economic Co-operation and Development, 2023, Ministry of Commerce and Industry, Government of India, 2024).

To the east, the Strait of Malacca forms the backbone of India’s trade with East and Southeast Asia regions that have become increasingly important for its long-term growth prospects. Roughly 30% of global trade passes through this narrow strait, including energy flows from West Asia to East Asia and manufactured goods moving in the opposite direction.

While India’s direct oil dependence on Malacca is lower than that of East Asian economies, a significant share of India’s east-bound trade and energy supplies for its eastern seaboard refineries rely on this corridor (UNCTAD, 2024).

Taken together, maritime chokepoints operate as powerful transmission channels through which geopolitical tensions and shipping disruptions are converted into domestic economic shocks.

Policy recommendations

The Indian Maritime Security Strategy of 2015 explicitly notes that maritime chokepoints assume heightened importance during crises because they sustain national trade flows and enable military mobility. This marked a shift in policy thinking, from viewing sea lanes as passive conduits for commerce to recognising them as strategic assets requiring continuous monitoring and active management (Ministry of Defence, Government of India, 2015).

Thus, India has invested in naval modernisation, expanded its operational reach through mission-based deployments, strengthening of submarine capabilities and greater investment in long-range maritime patrol aircraft, drones, and satellite-based surveillance. This strengthened its presence in strategically vital locations such as the Andaman and Nicobar Islands, which overlook sea lanes used by tens of thousands of vessels annually on their approach to the Strait of Malacca (Chaturvedi, 2025, International Institute for Strategic Studies (IISS), 2024).

Investments in Iran’s Chabahar port were intended to create an alternative trade and transit corridor linking India to Afghanistan and Central Asia while bypassing Pakistan. Similarly, overland pipeline proposals such as the Iran-Pakistan-India pipeline were conceived as substitutes for vulnerable maritime routes.

The expansion of strategic petroleum reserves – stored in underground caverns along the coast – provides a measure of protection against short-term supply disruptions. While these reserves cannot replace sustained imports, they buy time, allowing policymakers to respond to crises without immediate panic in markets.

Diplomatically, India has deepened maritime cooperation with Southeast Asian partners to strengthen preventive security. Information-sharing agreements and white-shipping arrangements with countries such as Indonesia, Thailand and Singapore enhance maritime domain awareness around Malacca, improving early warning against piracy, accidents and non-traditional security threats.

India also remains an active participant in regional forums such as the ASEAN Regional Forum and the Indian Ocean Naval Symposium, where confidence-building measures and coordinated responses to maritime risks are regularly discussed (Indian Council of World Affairs 2021, ReCAAP ISC, 2023).

Several lesser-known straits quietly support global shipping and therefore matter for India’s economic security. The Lombok and Sunda Straits in Indonesia serve as alternatives to the Strait of Malacca. They are deeper and can accommodate larger vessels, including submarines and very large tankers, but involve longer routes and higher commercial costs.

The Mozambique Channel, which runs between Madagascar and mainland Africa, becomes particularly important when the Red Sea-Suez route is disrupted. During the 2023-24 Red Sea crisis, many vessels bound for Europe were rerouted through this channel, underscoring its role as a fallback corridor.

In addition, smaller passages around Sri Lanka, Lakshadweep, the Maldives and the Seychelles funnel traffic toward larger chokepoints and are vital for regional trade, energy shipments and supply-chain continuity.

While none of these routes match Malacca or Suez in terms of volume or efficiency, in times of disruption they function less as backups and more as economic lifelines (UNCTAD, 2023, IMO, 2023).

In sum, maritime chokepoints sit at the intersection of geography, economics and strategy in India’s external engagement. They explain why India’s energy security and trade resilience cannot be separated from its maritime posture. As India’s economy continues to integrate with global markets, the importance of these narrow sea lanes will only grow, making their security a central concern for policymakers seeking to balance growth, stability and strategic autonomy (UNCTAD, 2023, RBI, 2023, IEA, 2024).

Srishti Gupta is with the Institute of Economic Growth and Roshan Soni is with the Delhi School of Economics.

This article has been republished from Ideas for India. Read the original article here.

The world’s most critical bottlenecks

What the latest data tell us about the world’s most critical bottlenecks

Policy recommendations

Further reading