India’s growing role as a regional energy provider is becoming increasingly visible across South Asia, with neighbouring countries depending heavily on Indian petroleum supplies to maintain their economic stability.
A recent example came when Bangladesh formally requested 50,000 metric tonnes of additional diesel from India over the next four months to prevent fuel shortages triggered by global supply disruptions linked to tensions involving the Iran, the Israel, and the United States.
According to reports, an initial shipment of 5,000 tonnes of diesel arrived in Bangladesh on March 10, providing immediate relief amid concerns about dwindling fuel reserves.
The development highlights India’s expanding role as a stabilising force in the region’s energy ecosystem, where it supplies petrol, diesel and aviation turbine fuel to several neighbouring nations through companies such as Indian Oil Corporation.
Neighbourhood First
India’s growing energy engagement with neighbouring countries forms a crucial component of the Neighbourhood First Policy, a diplomatic initiative introduced by Prime Minister Narendra Modi after he assumed office in 2014.
The policy aims to prioritise relations with India’s immediate neighbours in order to promote regional stability, economic integration and connectivity.
Officials say the strategy is guided by a ‘5S’ framework, which includes:
- Samman (Respect): Treating neighbouring nations as equal partners
- Samvad (Dialogue): Continuous diplomatic engagement
- Shanti (Peace): Ensuring regional stability and security
- Samriddhi (Prosperity): Encouraging mutually beneficial economic growth
- Sanskriti (Culture): Strengthening ties through shared civilisational and cultural connections
Through this approach, India has steadily positioned itself as both an economic partner and a crisis responder for its neighbours.
India as a regional energy hub
Reports say India’s role in providing refined petroleum products has become a cornerstone for the economies of many South Asian countries.
By supplying fuel through cross-border pipelines, rail transport and road networks, India helps these nations ensure stable energy availability even during global supply shocks.
The availability of Indian fuel supplies supports multiple sectors including:
1. Transportation systems
2. Agricultural irrigation
3. Power generation
4. Industrial operations
In many cases, India has also helped neighbouring countries reduce fuel transportation costs and logistical challenges through dedicated infrastructure projects.
Bangladesh: The Friendship Pipeline
Energy cooperation between India and Bangladesh has deepened significantly in recent years.
One of the most notable projects is the India-Bangladesh Friendship Pipeline, which was inaugurated in 2023.
The pipeline transports High-Speed Diesel (HSD) from India to northern Bangladesh and is considered a landmark project in regional energy cooperation.
It connects facilities of Numaligarh Refinery Limited to the Parbatipur depot in Bangladesh.
The pipeline has dramatically reduced transportation costs by replacing a 512-kilometre railway route with a 131.5-kilometre pipeline, making diesel supply faster, cheaper and more environmentally efficient.
Bangladesh imports approximately 180,000 tonnes of diesel annually through this route, which plays a critical role during the Boro irrigation season, a key agricultural period that supports the country’s food security.
Sri Lanka: India’s support during economic crisis
India’s role as a regional energy provider became particularly visible during the economic crisis in Sri Lanka in 2022.
As the island nation faced severe fuel shortages that threatened to paralyse its economy, India stepped in with emergency financial assistance and fuel shipments.
New Delhi extended over $3 billion in support, including fuel consignments and credit facilities to ensure continued supply of petroleum products.
A $500 million credit line, later expanded by an additional $200 million, was arranged through Indian Oil Corporation to stabilise fuel availability in the country.
India also plays a strategic role in Sri Lanka’s energy infrastructure through the Trincomalee oil tank farm project, which is being jointly developed to strengthen the island nation’s fuel storage capacity.
Another important player is Lanka IOC, which operates fuel retail outlets across the country and contributes significantly to Sri Lanka’s energy supply network.
In addition to fuel support, India announced a $450 million reconstruction and assistance package to help Sri Lanka recover from damage caused by Cyclone Ditwah, reaffirming its commitment to regional stability.
Nepal: A complete energy partnership
India’s energy partnership with Nepal is even more extensive.
Nepal relies almost entirely on India for its petroleum requirements, including petrol, diesel and aviation turbine fuel.
The supply is managed through a long-standing partnership between Indian Oil Corporation and the Nepal Oil Corporation.
A major milestone in this cooperation was the construction of the Motihari-Amlekhgunj Pipeline, the first cross-border petroleum pipeline in South Asia.
The pipeline significantly reduced fuel transportation costs and eliminated the need for thousands of fuel tanker trucks that previously carried petroleum across the border.
Fuel exports now account for around 28 percent of India’s total exports to Nepal, powering a transport sector that relies almost entirely on road-based mobility.
India and Nepal are also working on expanding the energy infrastructure network, including pipeline extensions to Chitwan and a new pipeline project connecting Siliguri to Jhapa.
These initiatives are aimed at ensuring uninterrupted fuel supply even during natural disasters or logistical disruptions.
Bhutan: Seamless cross-border energy supply
Like Nepal, the Himalayan kingdom of Bhutan is almost entirely dependent on India for its petroleum needs.
Fuel supplies are transported through well-established cross-border networks, ensuring seamless availability for transportation and essential services.
The cooperation forms part of a broader regional integration framework that includes electricity trade and infrastructure connectivity.
Energy cooperation is only one dimension of India’s broader strategy to strengthen ties with its neighbours.
Several connectivity projects have been launched to facilitate trade, travel and economic integration.
Among them is the BBIN Motor Vehicle Agreement, which aims to enhance road transport connectivity between Bangladesh, Bhutan, India and Nepal.
Another major project is the India–Myanmar–Thailand Trilateral Highway, designed to improve connectivity between South Asia and Southeast Asia.
India has also extended Lines of Credit worth approximately $14.7 billion for infrastructure and development projects in neighbouring countries.
In addition, India secured rail transit and seaport access to Mongla Port in Bangladesh in 2024, significantly reducing transportation costs for India’s northeastern states.
Towards a regional energy grid
Energy cooperation in South Asia is gradually moving towards a more integrated system.
A tripartite power trade agreement now allows Nepal to export 40 megawatts of electricity to Bangladesh via Indian transmission networks, demonstrating the potential for a regional electricity market.
Officials believe that such arrangements could eventually lead to the creation of an integrated South Asian energy grid, linking power generation and energy distribution across national boundaries.
Reports say India’s expanding role in supplying fuel and supporting energy infrastructure has made it a stabilising force in South Asia.
During global crises, whether caused by geopolitical tensions, economic instability, or natural disasters, India has repeatedly stepped in to ensure that neighbouring economies continue functioning.
By combining fuel diplomacy, infrastructure investments, and emergency assistance, India is increasingly shaping the region’s energy security architecture.
For many South Asian nations, India has become more than just a supplier, it has emerged as a reliable partner and a crucial energy lifeline for their economic growth and stability.
