Modi says Iran war poses severe risks to India, urges cuts in fuel use and gold purchases

Indian Prime Minister Narendra Modi on Sunday underlined the serious impact of the Iran war on the economy by urging citizens to restrict fuel use, reduce foreign travel and halt gold purchases.

Modi says global fuel costs are rising public address In the southern city of Hyderabad, he called on Indians to use public transport, work from home and carpool to save fuel.

India has become the latest in a growing number of Asian countries to encourage lower fuel consumption as energy costs rise amid tensions in the Middle East.

President Donald Trump on Sunday dashed hopes for peace and sent global oil prices soaring, saying Iran’s counteroffer to end the war with the United States and Israel was “TOTALLY UNACCEPTABLE.”

India imports about 85% of its fuel needs and relies on the Strait of Hormuz for about 50% of its crude imports, 60% of its liquefied natural gas and almost all of its liquefied petroleum gas (LPG) supplies.

Higher energy costs are expected to significantly widen the country’s trade deficit and current account deficit. Rupee has also come under pressure and is trading near its all-time high It is low against the dollar.

Modi said reducing travel abroad and gold imports would help preserve foreign exchange reserves as high oil prices increase pressure on India’s import bill.

Shares of Indian jewelery companies fell as much as 10% on Monday, along with shares of the Tata group-owned jeweler. Titan It was down about 6% in early trading.

Shares of Indian air carrier IndiGo also fell by 2.8%. Airline expands its services internationally It expects overseas flights to account for 40% of daily services by 2030. local media reports.

india spent $174.9 billion It accounts for crude and petroleum products or 22% of total imports in the fiscal year ending March 2026; This underlines the economy’s dependence on overseas goods. The country is the world’s second largest gold buyer after China, spending approximately $72 billion on gold imports.

About 32.7 million Indians The number of people traveling abroad in 2025 exceeded 14 million.

“The conflict in the Middle East represents a historically large energy shock with asymmetric macro risks,” global brokerage UBS Securities said in a May 4 note, cutting its forecast for India’s economic growth in the fiscal year ending March 2027 to 6.2% from 6.7% previously.

“I do not believe in that [economic] Shock is coming, Nirupama Rao, India’s former ambassador to the US, China and Sri Lanka, told CNBC’s Inside India on Monday.

But he said the country would face “difficult times” unless there was peace in the Middle East or a solution to the crisis.

Despite the pressure on the economy, the government has kept retail fuel prices at the pump steady, opting instead to cut taxes to ease the burden on oil companies. Fuel demand was not affected as pump prices remained stable.

Analysts had expected the Modi government to introduce tougher economic measures after the ruling Bharatiya Janata Party won recent elections in several key states, but these policy changes are yet to emerge.

In March, India’s chief economic advisor V. Anantha Nageswaran warned that the country’s trade deficit would “increase significantly” in the next fiscal year ending March 2027.

“Keeping this manageable will require burden sharing between the government and households and businesses through fiscal absorption,” Nageswaran said.