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Informist, Wednesday, Mar. 4, 2026

 

NEW DELHI - The government is closely monitoring the evolving geopolitical situation triggered by the military conflict in West Asia, but does not see the need for domestic support measures immediately, a senior government official said. "Stakeholder consultations are on but the government is not holding any specific meetings as of now to consider higher subsidy or support to oil companies," the official said, requesting anonymity. 

 

While the government has voiced optimism so far, crude oil prices have risen sharply to around $80 a barrel from less than $70 a barrel before the military conflict broke out. For India, which imports over 85% of its crude oil, a rise in oil prices points to higher inflation and a higher trade deficit.

 

According to a finance ministry official, the government is holding multiple inter- and intra-ministerial discussions, and will undertake calibrated measures, if the need arises. Even in the past, the government has avoided taking hasty relief measures in the face of adverse geopolitical conditions, including the previous challenge for India, which was the imposition of 50% tariffs by the US. The tariffs were imposed in August but the government launched the Export Promotion Mission only in November, albeit with an enhanced allocation than what was originally budgeted.

 

India currently faces fresh geopolitical risks after Israel and the US launched joint military strikes on Iran Saturday, prompting retaliation from Tehran. Iran's Supreme Leader, Ayatollah Ali Hosseini Khamenei, and several of the country's top military leaders were killed in the first wave of attacks by Israel and the US. Iran has since retaliated against Israel and has also targeted US military installations around the Persian Gulf.

 

Iran has also shut the Strait of Hormuz, a narrow waterway that connects the Persian Gulf with the Indian Ocean, resulting in a sharp jump in prices of crude oil and natural gas. A fifth of the global crude oil supply flows through the Strait of Hormuz. About half of India's crude oil imports--primarily from Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait--also pass through the strait, making the country particularly vulnerable to shipping bottlenecks there and to surging freight and insurance rates.

 

Against this backdrop, the government has already begun stakeholder consultations since Monday, in which participants presented their understanding of the evolving operational environment, including cargo re-routing and transit-time changes, vessel scheduling adjustments, container or equipment availability, freight and insurance cost trends, and implications for time-sensitive exports. The discussions also covered the need to maintain predictability in cargo movement, minimise delays, and ensure seamless documentation and payment processes for exporters and importers.

 

The commerce ministry has already formed an inter-ministerial panel to look into supply chain resilience, which will monitor global developments affecting supply chains and assess sector-wise export and critical import vulnerabilities. It will also facilitate coordination among ministries or departments, engage with stakeholders including export promotion councils, and recommend appropriate mitigation measures, wherever required.

 

Meanwhile, the oil ministry Tuesday said India is well stocked with crude oil and inventories of key petroleum products, including petrol, diesel and aviation turbine fuel, to deal with short-term disruptions arising from the war in West Asia. Oil Minister Hardeep Singh Puri, who also met oil companies Monday, said Indian energy companies have access to supplies that are not routed through the Strait of Hormuz. Such cargoes remain available and will help mitigate supplies that may be temporarily affected due to the closure of the Strait of Hormuz.  End

 

US$1 = INR 92.26

 

Reported by Priyasmita Dutta

Edited by Ashish Shirke

 

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