Our Bureau
New Delhi
A new report from global firm EY warns that the ongoing Iran war could cut India’s GDP growth by 1 percentage point in FY27. This means growth may drop to around 6% from the earlier estimate of 6.8% to 7.2%.
The month-long conflict shows no signs of ending soon. It has pushed up crude oil prices, hitting India hard as the country imports nearly 85% of its oil needs. Retail inflation could rise by up to 150 basis points above the Reserve Bank of India’s 4% target. One basis point equals 0.01%.
India also relies heavily on imported natural gas and fertilisers. Shortages of LPG are already affecting millions of households. Even if the war ends soon, supply chains for oil, storage, and transport will take time to recover.
Key sectors face big risks. Manufacturing areas like textiles, paints, chemicals, and tyres will suffer. Infrastructure industries such as cement and fertilisers are also in danger. This could lead to job losses and lower demand for goods.
EY calls for strong action from the government. New Delhi should use countercyclical measures and boost the Economic Stabilisation Fund, set up in FY26 with ₹1 lakh crore. Large industrial states should join these efforts to protect the economy.
India, the world’s fastest-growing major economy and now the fourth largest, must act fast to shield growth from this global shock. The report urges quick steps to avoid long-term damage.
