Indian Prime Minister Narendra Modi speaks at a joint press conference with Singaporean Prime Minister Lawrence Wong (not pictured) at Hyderabad House on Thursday, September 4, 2025 in New Delhi, India.
Prakash Singh | Bloomberg | Getty Images
Indian Prime Minister Narendra Modi on Sunday stressed the serious economic impact of the Iran war, urging people to curb fuel use, reduce international travel and suspend gold purchases.
In a street speech in the southern city of Hyderabad, Prime Minister Modi stated that global fuel costs are rising, and appealed to Indians to use public transport, work from home, and carpool to conserve fuel.
India is one of the latest in a growing number of Asian countries to encourage people to cut fuel consumption as tensions in the Middle East drive up energy costs.
President Donald Trump on Sunday said Iran’s counter-offer to end the US war with Israel is “completely unacceptable!”, dashing hopes for peace and pushing up global oil prices.
India imports almost 85% of its fuel needs and relies on the Strait of Hormuz for about 50% of its crude oil imports, 60% of its liquefied natural gas imports, and almost all of its liquefied petroleum gas (LPG) supplies.
Rising energy costs are expected to significantly widen the country’s trade and current account deficits. Rupee also under stress, trading near all-time highs Cheap against the dollar.
Prime Minister Modi said cutting overseas travel and gold imports would help save foreign exchange reserves as rising oil prices put pressure on India’s import bills.
Shares of Indian jewelery companies fell as much as 10% on Monday, with shares of jewelers owned by the Tata group also falling. titan Shares fell nearly 6% in early trading.
Indian airline stocks indigo It also fell by 2.8%. The airline is expanding its international service and expects 40% of its daily flights to be international by 2030, according to local media reports.
economic hardship
India spent $174.9 billion on crude oil and petroleum products in the fiscal year ending March 2026, accounting for 22% of its total imports, highlighting the economy’s dependence on foreign goods. The country is the world’s second-largest gold buyer after China, spending nearly $72 billion on gold imports.
Approximately 32.7 million Indians traveled abroad in 2025, of which over 14 million were leisure travelers.
“The Middle East conflict represents a historically significant energy shock with asymmetric macro risks,” global securities firm UBS Securities said in a May 4 report, lowering India’s economic growth forecast for the fiscal year ending March 2027 to 6.2% from 6.7%.
“I don’t think an (economic) shock is just around the corner,” Nirupama Rao, former Indian ambassador to the United States, China and Sri Lanka, told CNBC’s Inside India on Monday.
But he said the country faced “difficult times ahead” unless there was peace in the Middle East or a resolution to the crisis.
Despite the pressure on the economy, the government has stabilized retail fuel prices and instead opted for tax cuts to ease the burden on oil companies. Fuel demand remains unaffected as pump prices remain stable.
Analysts expect the Modi government to introduce tougher economic measures after the ruling People’s Party won recent elections in several key states, but such policy changes are not yet clear.
India’s chief economic adviser, V. Ananta Nageswaran, warned in March that India’s trade deficit would “increase significantly” in the next fiscal year, which ends in March 2027.
“To keep it manageable, the burden needs to be shared between the government, households and businesses through fiscal absorption,” Nageswaran said.
