India Becomes Victim of US-Iran War, Citizens Urged to Stop Buying Gold
Prime Minister of India Narendra Modi has urged citizens to reduce fuel consumption, cut back on overseas travel, and even postpone gold purchases. He made these remarks while emphasising that the US-Iran war will have serious impacts on India’s economy.
“Global fuel costs have surged,” said Modi in a public speech in the southern city of Hyderabad on Sunday local time, calling on Indians to use public transport, work from home, and carpool to save fuel, as reported by CNBC International on Monday (11/5/2026).
“Reducing overseas travel and gold imports will help conserve foreign exchange reserves as rising oil prices increase pressure on India’s import bill,” the site quoted Modi as saying.
India is the latest among several Asian countries to encourage reduced fuel consumption due to rising energy costs amid tensions in the Middle East. It is worth noting that India imports nearly 85% of its fuel needs.
The country relies on the Strait of Hormuz for around 50% of its crude oil imports and 60% for its liquefied natural gas, where nearly all of its liquefied petroleum gas (LPG) supply comes from. India spent US$174.9 billion (Rp2.798 trillion) on crude oil and petroleum products, or 22% of its total imports, in the fiscal year ending March 2026.
Around 32.7 million Indians travelled abroad in 2025, including more than 14 million recreational tourists. The country is also the world’s second-largest gold buyer after China, spending nearly US$72 billion on gold imports.
The current situation is expected to significantly widen the country’s trade deficit and current account deficit. The rupee currency is also under pressure and trading near its all-time low against the dollar.
“The Middle East conflict is a historically massive energy shock with asymmetric macro risks,” said an analyst from global brokerage firm UBS Securities in a note dated 4 May, downgrading India’s economic growth forecast for the fiscal year ending March 2027 to 6.2% from the previous 6.7%.
“I do not believe the (economic) shock will happen immediately,” said Nirupama Rao, former Indian ambassador to the US, China, and Sri Lanka.
However, she said the country faces “tough times ahead”. Unless there is peace or a resolution to the crisis in the Middle East.
Analysts also expect Modi’s government to introduce tougher economic measures after his Bharatiya Janata Party won recent elections in several key states. It is worth noting that, specifically for energy, despite the pressure on the economy, the government has kept fuel prices at petrol stations stable and instead chosen to cut taxes to ease the burden on oil companies.
“Keeping it under control will require burden-sharing between the government, through fiscal absorption, and households and businesses,” said India’s chief economic adviser V. Anantha Nageswaran in March, warning that the country’s trade deficit would “increase significantly” in the next fiscal year ending March 2027.