Media365
For decades, governments viewed strategic stockpiles as a form of national insurance, reserved largely for crude oil. They built underground caverns to protect their economies against wars, embargoes and supply disruptions, ensuring fuel continued to flow even when global markets seized up.
Today, that definition is rapidly expanding.
As geopolitical rivalries intensify and supply chains become increasingly weaponised, countries are no longer preparing only for oil shocks. They are securing everything from critical minerals and liquefied petroleum gas (LPG) to fertilisers, medicines and advanced semiconductor supply chains.
India’s latest push to expand its strategic petroleum reserves (SPRs), alongside fresh plans to create larger buffers of LPG and natural gas, reflects a broader shift in policymaking. Increasingly, India is treating economic resilience as an essential pillar of national security rather than merely an economic objective.
The change mirrors a wider global trend in which governments are reassessing what commodities are too critical to leave entirely to market forces.
A bigger oil cushion
India’s immediate priority remains energy security.
The government is accelerating the expansion of its strategic petroleum reserve network with five proposed projects at Chandikhol in Odisha, Bina in Madhya Pradesh, Bikaner in Rajasthan, and Mangaluru and Padur in Karnataka. Once completed, these facilities could increase India’s strategic crude storage cover to as much as 40 days of consumption from roughly nine-and-a-half days at present, depending on demand levels, according to a Business Standard report.
Separately, the Centre has asked state-owned Oil and Natural Gas Corporation (ONGC) to construct an additional 1.75 million metric tonne strategic crude storage cavern at Mangaluru. The project, estimated to cost nearly Rs 15,000 crore, marks the first time a state-owned producer has been tasked with developing a national strategic petroleum reserve using its own balance sheet.
The urgency stems from India’s overwhelming dependence on imported crude.
The country imports nearly 90 per cent of its oil requirements, leaving it highly exposed to geopolitical tensions in major producing regions and disruptions along key shipping routes, particularly the Strait of Hormuz. Although India has diversified purchases in recent years, policymakers recognise that supply disruptions — even temporary ones — can rapidly translate into higher fuel prices, inflation, pressure on the rupee and a wider current account deficit.
Recent instability in West Asia has reinforced those concerns.
Analysts at S&P Global Commodity Insights say India needs to move away from an ad hoc crisis response towards a long-term sovereign stockpiling strategy, arguing that strategic reserves should become a permanent macroeconomic safeguard rather than merely emergency storage.
Strategic reserves are no longer just about oil
But India’s thinking is evolving beyond crude.
The Ministry of Petroleum and Natural Gas has constituted a task force to assess the country’s strategic reserves of crude oil, LPG and natural gas while recommending ways to expand storage capacity through public-private partnerships, leasing models and other financing mechanisms, according to Moneycontrol. The panel is expected to submit its recommendations within weeks.
At the same time, state-run oil marketing companies have been instructed to work towards maintaining at least 30 days of LPG reserves, with Bharat Petroleum Corporation planning a major expansion of its storage infrastructure. Other public-sector refiners are also evaluating larger LPG storage capacities.
The shift reflects a recognition that energy security extends beyond crude oil.
LPG has become an essential household fuel, while natural gas is increasingly important for industry, fertiliser production and power generation. Disruptions in either market could have significant economic and political consequences.
Beyond fuel: Fertilisers, medicines and rare earths
India’s strategic thinking is expanding even further.
A recent EY India report argued that the country should maintain substantially larger strategic reserves of crude oil, LPG, fertilisers, processed and unprocessed rare earth materials, basic medicines and critical medical equipment.
The rationale is straightforward.
Global crises over the past six years have demonstrated that supply disruptions are no longer confined to energy.
The COVID-19 pandemic exposed vulnerabilities in pharmaceutical ingredients and medical equipment.
Russia’s invasion of Ukraine sent fertiliser and food prices soaring across global markets.
The latest tensions in West Asia highlighted the risks associated with oil and LPG shipments passing through the Strait of Hormuz.
Each crisis has reinforced the same message: countries that depend heavily on imports need stronger buffers against external shocks.
For India, which imports large quantities of energy, fertilisers and critical industrial inputs, strategic reserves are increasingly viewed as economic insurance.
The AI chip era changes the equation
Perhaps the most important shift lies outside traditional commodities altogether.
Artificial intelligence has transformed advanced semiconductors into one of the world’s most strategic assets.
The United States has tightened export controls on cutting-edge AI chips destined for China, while Beijing has responded by strengthening domestic semiconductor manufacturing and restricting exports of several critical minerals used in chipmaking.
Meanwhile, Europe, Japan, South Korea and Taiwan are investing billions of dollars to secure semiconductor supply chains and reduce dependence on a limited number of overseas suppliers.
Unlike crude oil, semiconductor shortages cannot be solved simply by buying additional supplies during a crisis if export controls or geopolitical tensions restrict access.
That reality is forcing governments to think differently about strategic reserves.
Instead of merely stockpiling finished products, countries are increasingly investing in domestic manufacturing capacity, long-term supply agreements and critical mineral partnerships that function as strategic reserves in all but name.
India’s own semiconductor ambitions, backed by production-linked incentives and new fabrication projects, fit into this broader effort to reduce strategic dependence on external suppliers.
A world abandoning ‘just in time’
The broader shift represents a fundamental change in economic thinking.
For decades, companies optimised global supply chains around efficiency through “just-in-time” inventory management, minimising warehousing costs and relying on seamless international trade.
Governments are now embracing a different philosophy.
Resilience increasingly outweighs efficiency.
Strategic stockpiles, diversified sourcing, domestic manufacturing and supply chain redundancy are becoming central features of economic policy.
Countries are accepting the higher costs associated with maintaining reserves because the economic damage caused by prolonged supply disruptions can be far greater.
The question is no longer whether governments can afford to build strategic reserves.
It is whether they can afford not to.
India still has catching up to do
Despite the renewed momentum, experts caution that India remains behind many major economies.
Current strategic petroleum reserves provide only about 9.5 days of net oil imports, while total national stocks — including inventories held by oil companies — cover roughly 74 days. That remains below the 90-day benchmark maintained by members of the International Energy Agency.
Analysts argue that expanding physical storage alone will not guarantee energy security.
An effective reserve system also requires flexible procurement policies, diversified suppliers, commercial partnerships and clearly defined mechanisms governing when emergency stocks should be released.
The same principle applies to newer strategic assets such as critical minerals, semiconductors and medicines.
Storage capacity is only one element of resilience.
Economic security becomes national security
The expansion of India’s strategic reserves therefore represents more than an energy policy initiative.
It reflects a broader recognition that the nature of global risk has fundamentally changed.
Wars, sanctions, export controls, pandemics and climate-related disruptions are increasingly capable of interrupting supplies of commodities that modern economies cannot function without.
In response, governments are redefining what it means to be strategically prepared.
For India, that means moving beyond crude oil towards a wider ecosystem of strategic reserves spanning energy, industrial inputs, healthcare and advanced technology.
As the global economy enters an era of heightened geopolitical uncertainty, the countries best positioned to weather the next crisis may not be those with the largest economies, but those with the strongest buffers against an increasingly unpredictable world.
