The economic case for regional energy integration is strong. Power trading between India, Nepal, Bhutan, and Bangladesh has demonstrated how cross-border cooperation can improve reliability and reduce costs. Nepal’s hydropower exports and Indian power supplies to Bangladesh show what is possible. The barrier, however, is political rather than technical. Despite its population size, South Asia’s share of global trade remains small, reflecting persistent political volatility and regional tensions. Competition between major powers, particularly the United States and China, further complicates alignment. As a result, while the logic of integration is clear, the political foundation remains weak, limiting prospects for deeper regional coordination in the near term.
India’s sweet spot: diversified supply and refining strength
Within this complex landscape, India stands out as a relative winner. Oil prices near $60 per barrel have eased fiscal pressures that once dominated policymaking. India has diversified its supply base, drawing heavily from Russia while maintaining flexibility across Middle Eastern and other producers. While geopolitical pressures have caused short-term fluctuations in Russian imports, the strategic relationship remains intact, underpinned by defence ties and broader geopolitical balancing.
At the same time, India’s refining sector is expanding, driven by strong domestic demand for diesel, gasoline, and aviation fuel, alongside growing petrochemical integration. Fuel exports, particularly to Europe, have become a significant revenue stream, even as sanctions periodically disrupt flows. With renewables expanding but fuels still dominant, India’s energy strategy reflects pragmatism: diversify supply, expand refining, and manage geopolitics rather than be constrained by it.