By Ramachandran Rajeev Kumar — 2026-03-17
Beyond neutrality: Can India turn the Gulf crisis into a strategic opportunity?
By Ramachandran Rajeev Kumar
There is a number that should be keeping every Indian policymaker awake at night: $106. That was the price of a barrel of Brent crude on March 15, 2026 -- up from $72 barely two weeks earlier. The 40 per cent spike, triggered by Iran's escalating attacks on Gulf shipping and infrastructure after the US-Israeli strikes of February 28, is not a market fluctuation. It is a structural rupture in the energy order that India has depended on for decades.
India imports roughly 85 per cent of its crude oil. Nearly half of that transits the Strait of Hormuz, now under effective blockade. Every ten-dollar rise in crude costs India approximately $15 billion annually in additional import bills. At current prices, the Iran crisis is bleeding the Indian economy of roughly $50 billion a year more than it was paying eight weeks ago.
The standard Indian response to Middle Eastern crises has been studied neutrality -- a diplomatic inheritance from the non-aligned era, refined through decades of carefully maintaining ties with both sides of any Gulf divide. That posture served India well when the conflicts were someone else's problem. This one is India's problem, denominated in every litre of petrol, every fertiliser subsidy, and every point on the current account deficit.
The question confronting Delhi is no longer whether to act. It is what kind of action serves India's interests without creating new enemies.
The case for India as peace broker
India occupies a rare position in this conflict. It maintains working diplomatic relationships with Iran, the United States, Israel, Saudi Arabia, and the UAE. Very few countries can make that claim in March 2026.
This is not accidental. India buys Iranian oil. It operates the Chabahar port on Iran's southeastern coast -- the only significant infrastructure project a non-allied nation has maintained in Iran through years of sanctions. India's Parsi community, one of the most accomplished diaspora groups in Indian history, traces its origins to Persia. The cultural thread is older than most modern states.
Simultaneously, India is a strategic partner of Washington, a Quad member, a defence customer of Israel, and an increasingly close economic ally of Gulf states. Prime Minister Modi has visited the UAE seven times. Indian workers constitute the single largest expatriate community across the Gulf. Annual remittances from the region to India exceed $50 billion.
No other major power holds cards on both sides of this table.
The argument for Indian mediation is straightforward: the war has no military end point that serves anyone's interests. Iran cannot defeat the US-Israeli coalition. The coalition cannot occupy Iran. The Gulf states are absorbing damage they did not invite and cannot prevent indefinitely. Someone needs to offer an off-ramp, and India has both the relationships and the self-interest to be credible in that role.
The Indian government's assessment of this situation will be far more nuanced than anything visible from outside. Delhi has access to intelligence, back-channel communications, and diplomatic context that external observers do not. The observations here are offered as analysis, not prescription.
But the diplomatic arithmetic is visible enough. India has mediation credentials -- it has attempted shuttle diplomacy on Ukraine, maintained channels with Russia while deepening ties with the West, and cultivated what some analysts call "strategic multi-alignment." The Gulf crisis is where that approach faces its most consequential test.
The question Gulf partners are actually asking
While peace talks are desirable, Gulf states are dealing with a more immediate reality. Drones are hitting Dubai's airport. Missiles are being intercepted over Saudi oil fields. Kuwait's airport has been targeted. The UAE alone has reported intercepting over 1,500 drones and nearly 300 ballistic and cruise missiles since the war began.
In this context, Gulf partners -- and the UAE in particular -- are not asking abstract questions about India's foreign policy alignment. They are asking a concrete one: when missiles are flying, who shows up?
India has defence cooperation agreements with every major Gulf state. It conducts joint naval exercises in the Arabian Sea. It has sold BrahMos cruise missiles to the Philippines and is in discussions with Vietnam, Indonesia, and several other nations. But the Gulf -- where India has its deepest economic ties, its largest diaspora, and its most critical energy dependency -- has not been a priority market for Indian defence exports.
This is a gap that circumstances are now forcing into the open.
The nature of the threat facing Gulf states plays to India's strengths. They need missile defence systems, drone countermeasures, maritime surveillance, and radar networks -- precisely the categories where India's defence-industrial base has matured. The Akash missile system, the MRSAM (developed jointly with Israel's IAI), the Pinaka multi-barrel rocket launcher, naval surveillance systems, and the BrahMos cruise missile are all proven platforms with direct applicability to the threats Gulf nations face today.
The defence-energy offset
There is an economic logic here that extends beyond defence policy. India's oil import bill is surging toward $200 billion annually at current prices. Even a modest increase in defence sales to Gulf partners creates a partial offset -- not just in trade balance terms, but in the structure of the relationship itself.
A country that only buys oil is a customer. A country that sells security becomes a partner. The difference matters when crises arrive and governments must choose whom to prioritise for supply, evacuation coordination, and strategic communication.
India's defence exports crossed Rs 23,622 crore in 2024-25, reaching over 100 countries. That figure is growing but remains a fraction of what competitors like France, the United States, and Russia export to the Gulf annually. The commercial opportunity is significant. More importantly, defence relationships create institutional ties -- training programmes, maintenance contracts, joint exercises, intelligence sharing -- that outlast any single crisis.
The cost escalation in energy prices can be partially offset by the revenue from defence partnerships. This is not speculative arithmetic. France's defence relationship with the UAE generates billions in annual revenue while reinforcing a security partnership that gives Paris strategic weight in the region far beyond what its oil consumption alone would justify.
The tightrope over Tehran
The obvious objection to an Indian defence partnership with Gulf states is that it risks antagonising Iran. This concern is legitimate but manageable, for three reasons.
First, there is a categorical difference between offensive and defensive capability. Selling missile defence systems, drone countermeasures, and maritime surveillance to Gulf partners protects civilian infrastructure and populations. It does not threaten Iran's territorial integrity. India can draw this line credibly because it has no history of aggression in the region and no military bases in the Gulf.
Second, India's value to Iran does not disappear because India sells defensive equipment to the UAE. Chabahar remains Iran's most important non-Chinese economic link to the outside world. Indian demand for Iranian oil -- when sanctions permit -- is a structural feature of the energy market. Iran's calculation regarding India is driven by these fundamentals, not by whether India sells radar systems to Abu Dhabi.
Third, India can pursue both tracks simultaneously. Diplomatic engagement with Tehran -- including back-channel mediation -- can proceed alongside defensive cooperation with Gulf partners. The two are not contradictory. They are, in fact, complementary: a country that is seen as a security contributor to the Gulf has more, not less, diplomatic weight with Iran, because Tehran understands that such a country has genuine influence over the parties it needs to negotiate with.
The cost of sitting still
India's multi-alignment strategy has been described by various analysts as strategic patience, strategic ambiguity, or simply hedging. All of these characterisations share an assumption: that inaction has low costs.
That assumption no longer holds.
Every week that the Hormuz crisis continues, India pays a higher oil bill. Every month that Gulf partners absorb attacks without seeing India contribute to their defence, the relationship becomes more transactional and less strategic. Every quarter that passes without Indian mediation being offered, the space for credible intervention narrows as other actors -- China, Turkey, potentially Russia -- position themselves as alternatives.
The Gulf states are making long-term defence procurement decisions right now, under wartime pressure. Countries that show up during the crisis will be at the front of those queues for decades. Countries that wait will find the doors have closed.
India's non-alignment served it well during the Cold War, when the conflicts were distant and the stakes were ideological. The Gulf crisis is neither distant nor ideological. It is happening in India's strategic backyard, to India's closest economic partners, with India's energy security as collateral.
The shift from non-alignment to multi-alignment was supposed to mean that India engages actively with all sides to advance its interests. This is the moment that theory gets tested by practice.
What careful action looks like
The Indian government will have considered all of this and more. What follows is not a policy recommendation but an observation about the strategic logic that appears available.
On the diplomatic front, India could offer to host back-channel talks -- not as a formal mediator with a public mandate, but as a discreet venue where parties can explore off-ramps without the theatre of official negotiations. India has the relationships to make that call credible. Whether Tehran or Washington would accept is another matter, but the offer itself repositions India from bystander to participant.
On the defence front, expedited discussions on missile defence and maritime surveillance cooperation with Gulf partners -- particularly the UAE -- would send a signal without requiring a military deployment. Equipment sales, joint maintenance agreements, and shared maritime domain awareness in the Arabian Sea are concrete, achievable steps that build long-term partnerships.
On the energy front, the crisis accelerates the case for diversification that India has been discussing for years without acting on with sufficient urgency. The Andaman Basin exploration, strategic petroleum reserve expansion, and accelerated renewables deployment are not alternatives to Gulf engagement -- they are complements that reduce the vulnerability which makes Gulf engagement so critical in the first place.
None of these steps requires India to choose a side. They require India to choose a role -- not neutral bystander, but active architect of a regional order that serves its interests.
The graduation moment
India's foreign policy establishment has spent decades building the relationships that make this moment possible. The ties with Iran are deep and civilisational. The ties with Gulf partners are economic and increasingly strategic. The ties with the United States and Israel are military and technological. No other country holds all of these cards simultaneously.
But cards are only valuable if played. Holding them indefinitely is not strategy. It is collection.
The Gulf crisis of 2026 will end -- through negotiation, exhaustion, or escalation. When it does, the countries that helped shape the outcome will have a seat at the table that follows. The countries that watched from the sidelines will discover that neutrality, once a source of strategic flexibility, has become a form of irrelevance.
India has the relationships, the defence capability, the diplomatic credibility, and the economic self-interest to act. The cost of careful action is manageable. The cost of continued inaction is compounding daily, measured in dollars per barrel and trust per crisis.
Multi-alignment was never supposed to mean standing in the middle of the road. It was supposed to mean walking with purpose in multiple directions at once. The Gulf is where that purpose is needed most.
Ramachandran Rajeev Kumar is the Chief Executive Officer of the Aarksee Group of Companies, based in Saudi Arabia. His perspective draws from two decades of operating across the India-Gulf corridor.
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