Modi Warns Iran War Threatens India’s Economy, Calls for Fuel and Gold Restraint

Indian Prime Minister Narendra Modi urged citizens on Sunday to reduce fuel consumption, limit overseas travel, and hold off on gold purchases, CNBC reported. Modi made the appeal during a public address in Hyderabad, citing escalating pressure from the ongoing Iran war on India’s fragile import bill.

India’s Deep Reliance on Imported Energy

India sources roughly 85% of its fuel needs from abroad. The Strait of Hormuz alone accounts for around half of its crude oil imports, 60% of its liquefied natural gas supply, and nearly all of its LPG deliveries. That concentration leaves the economy acutely exposed to any Middle East disruption. Modi encouraged Indians to use public transport, carpool, and work from home wherever possible. India joins a growing list of Asian economies pushing similar conservation measures as regional energy costs climb.

The message carried financial urgency beyond the pump. Modi linked reduced gold purchases and fewer overseas trips directly to protecting India’s foreign currency reserves. The rupee is trading near record lows against the dollar. Gold imports alone cost the country close to $72 billion in the most recent financial year. India ranks as the world’s second-largest gold buyer after China, making any demand softening consequential for the current account.

A Widening Deficit and Slowing Growth

India spent nearly $175 billion on crude oil and petroleum products in the financial year ended March 2026, representing about 22% of total imports. Analysts warn that sustained high oil prices will push the trade deficit and current account gap materially wider. UBS Securities lowered its growth forecast for India’s financial year ending March 2027 to 6.2%, down from a prior estimate of 6.7%, describing the conflict as a historically large energy shock with asymmetric macro risks. India’s chief economic advisor had flagged in March that the trade deficit would rise significantly in the year ahead, requiring burden-sharing across government, households, and businesses alike.

Markets React to Modi’s Warning

Investors sold India-linked consumer names immediately after Modi’s remarks. Shares of Tata-owned jeweler Titan dropped close to 6% in early Monday trading, with Indian jewelry stocks broadly losing as much as 10%. Budget carrier IndiGo fell nearly 3%, reflecting concern about any pullback in outbound leisure travel. The government has so far kept retail pump prices unchanged, opting to cut taxes on oil companies rather than pass costs directly to consumers. Whether tougher fiscal measures follow remains an open question. Former Indian diplomat Nirupama Rao told CNBC she does not foresee an imminent economic shock but acknowledged the country faces “difficult times ahead” without a Middle East resolution.

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