Govt acts to shield economy from West Asia crisis, says Minister

The government has undertaken a range of measures to ensure availability of critical industrial inputs including energy, ease input cost pressures, facilitate trade, support industrial activity and safeguard macroeconomic stability in the wake of supply chain disruptions due to the West Asia crisis, the Parliament was informed on Monday.

Temporary customs duty exemption was provided on selected petrochemical feedstock. Further, the Bharat Maritime Insurance Pool RELIEF (Resilience and Logistics Intervention for Export Facilitation) Scheme were introduced to support businesses.

RoDTEP (Remission of Duties and Taxes on Exported Products) benefits were restored to mitigate higher freight, insurance and war-risk costs. Liquidity support was also extended through the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.

In addition, the government is strengthening trade resilience by expanding its network of Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs), Minister of State for Finance, Pankaj Chaudhary, said in a written reply to a question in the Lok Sabha.

In addition, energy security has been strengthened through diverse strategies such as diversification of crude oil import sources, expansion of strategic partnerships, augmentation of Strategic Petroleum Reserves, promotion of alternative fuels, domestic production of critical energy inputs, and implementation of Coal and Lignite Gasification Scheme. Demand-side initiatives, such as encouraging LPG consumers to shift to PNG, have also been undertaken to optimise energy use

The government has also ensured adequate availability of fertilisers and other essential agricultural inputs through assured gas supplies, diversification of import sources, advance procurement and maintenance of buffer stocks.

The recent geopolitical developments in West Asia have adversely affected the countries globally, with major implications for crude-oil-importing emerging economies. The conflict has led to an increase in international crude oil prices which has widened the crude oil import bill for India.

However, the average Indian crude oil basket prices have eased significantly from $114.5 per barrel in April 2026 to $77.6 per barrel in July 2026 (up to July 22). The decline in crude oil prices, together with sustained growth in services exports and remittance receipts, is expected to support the external sector and mitigate pressures on the current account.

Further, the recent measures announced by the government and the Reserve Bank of India (RBI) are expected to bolster capital inflows and help meet India's external financing requirements, said Chaudhary.

Together, these coordinated measures strengthen India's macroeconomic stability, contain inflationary pressures and minimise the impact of disruptions in the global energy market on the Indian economy.

While global uncertainties remain elevated, the high-frequency indicators for the first quarter of 2026-27 point to sustained momentum in economic activity and domestic demand.

Also, the average Consumer Price Index (CPI) inflation has remained moderate at 3.9 per cent during April-June 2026, reflecting price stability. Consistent with these trends, the Reserve Bank of India has projected real GDP growth at 6.6 per cent and Consumer Price Index (CPI) inflation at 5.1 per cent for 2026-27

The RBI has further noted that global commodity price movements and prolonged supply chain disruptions pose challenges to the growth and inflation outlook.

The government has adopted a balanced fiscal strategy to ensure macroeconomic stability and resilience amidst the evolving situation. It continues to assess the implications of crude oil price volatility on the fiscal position, including fuel subsidies and revenue collections, and has undertaken appropriate fiscal measures, including calibrated revisions in the Special Additional Excise Duty on petrol and diesel and customs duties on select imports, to preserve fiscal space.

"The availability of fiscal buffers, including the Economic Stabilisation Fund, provides additional flexibility to respond to external shocks while maintaining the fiscal consolidation path," the minister added.