Modi Warns Iran War Poses Severe Risks to India

CNBC reported Monday that Indian Prime Minister Narendra Modi called on citizens to reduce fuel consumption, limit overseas travel, and hold off on gold purchases, citing the Iran war as a grave threat to the country’s economic stability.

Modi’s Public Appeal Reflects Deep Import Dependency

Speaking in Hyderabad on Sunday, Modi urged Indians to carpool, use public transit, and work from home where possible. The remarks signal growing alarm inside New Delhi as energy prices climb. India imports roughly 85% of its fuel requirements. Around half of its crude oil flows through the Strait of Hormuz, as does 60% of its liquefied natural gas and nearly all of its liquefied petroleum gas.

In the financial year through March 2026, India spent approximately $174.9 billion on crude and petroleum products. That figure represented about 22% of all imports, underscoring how exposed the broader economy is to any sustained disruption in Gulf supply chains.

Background: A Rupee Under Pressure and a Widening Deficit

The rupee has been sliding toward record lows against the dollar. A heavier oil import bill is expected to push both the trade deficit and the current account deficit materially wider in the year ahead.

Gold is a separate but related pressure point. India is the world’s second-largest buyer of the metal after China, having spent close to $72 billion on gold imports in the prior year. Modi’s call to pause purchases is aimed at limiting foreign currency outflows at a moment when reserves are being tested.

Shares in jewelry group Titan fell nearly 6% in early Monday trade. Airline IndiGo slipped close to 3%, with the carrier in the middle of an international expansion push that it expects will account for 40% of daily flights by 2030.

Also Read: Trump Calls Iran Peace Proposal “Totally Unacceptable,” Oil Prices Jump

Analysts Cut India Growth Forecasts

Global brokerage UBS Securities downgraded its India growth outlook to 6.2% for the fiscal year ending March 2027, down from an earlier 6.7% projection. The firm described the Middle East conflict as a historically large energy shock carrying asymmetric macro risks for the region’s import-dependent economies.

Former Indian ambassador Nirupama Rao told CNBC she does not foresee an immediate economic crisis but warned of difficult times ahead unless the Middle East conflict finds a resolution. Despite the mounting pressure, New Delhi has kept retail fuel prices steady at the pump, opting instead to trim taxes to cushion oil companies. Tougher demand-side measures have yet to materialise, even after Modi’s Bharatiya Janata Party posted gains in several recent state elections.

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