The growing conflict between the United States and Iran has begun affecting India’s economy and political landscape.
On Monday, the ripple effects of the crisis were visible in both financial markets and Parliament.
The situation escalated after coordinated strikes by the United States and Israel inside Iran, followed by retaliatory drone and missile attacks across several Gulf nations.
Indian Stock Markets See Steepest Fall in Six Years
Indian equity markets witnessed their sharpest fall in six years amid global uncertainty triggered by the conflict. The benchmark index BSE Sensex plunged more than 2,500 points, while the Nifty 50 also dropped significantly.
Since hostilities began in late February, the total market capitalisation of companies listed on the Bombay Stock Exchange has declined from ₹463.9 lakh crore to below ₹440 lakh crore.
This represents a loss of more than ₹25 lakh crore in investor wealth—nearly one-seventh of India’s annual GDP.
Analysts say investors are moving funds away from emerging markets like India toward safer assets such as gold and the US dollar, a phenomenon often described as a “flight to safety”.
Oil Price Surge Raises Economic Risks
One of the most significant consequences for India is the surge in global crude oil prices. The benchmark Brent crude oil has climbed more than 20% to exceed $120 per barrel following the escalation of the conflict.
India imports more than 85–90% of its crude oil requirements, making the economy highly sensitive to price fluctuations in global energy markets.
Economists warn that if oil prices remain between $120 and $130 per barrel, India’s GDP growth could slow to around 6% in the coming fiscal year, down from earlier projections of 7%.
The situation has worsened due to disruptions around the Strait of Hormuz, a key route that carries roughly half of India’s oil imports.
Rising Costs Begin to Affect Households
Consumers have already begun feeling the effects of rising energy prices. Domestic LPG cylinder prices increased by ₹60 over the weekend, pushing the price of a 14.2-kg cylinder in Delhi to ₹913.
Supply disruptions have also created unusual challenges at the local level. In Pune, authorities temporarily shut down gas-based crematoriums because the conflict disrupted the supply of propane and butane, the main components of LPG.
Meanwhile, senior Congress leader Shashi Tharoor warned that disruptions to gas supplies from Qatar could affect industrial activity.
Opposition Protests in Parliament
The crisis has also triggered political confrontation in New Delhi. Leaders from the opposition bloc staged protests in Parliament demanding a detailed debate on the government’s handling of the situation.
Prominent opposition figures including Rahul Gandhi, Mallikarjun Kharge, and Priyanka Gandhi accused the government of failing to anticipate the economic fallout of the conflict.
Opposition members held banners stating that India needed “leadership, not silence” amid the crisis affecting the Gulf region.
Government Response and Diplomatic Efforts
External Affairs Minister S. Jaishankar delivered a statement in Parliament outlining the government’s response.
He confirmed that the Cabinet Committee on Security, chaired by Prime Minister Narendra Modi, convened on March 1 to assess the situation and address the safety of Indian citizens abroad.
According to the government, nearly 67,000 Indian nationals have already been evacuated from conflict-affected areas through approximately 150 flights over the past three days.
Jaishankar emphasised that India’s national interest—including energy security, trade flows, and the safety of citizens—remains the government’s top priority.
Which Sectors Are Most Affected?
Industries that rely heavily on fuel costs have been hit the hardest by market volatility. Aviation companies are facing significant pressure due to rising aviation turbine fuel prices.
Shares of InterGlobe Aviation declined by more than 7%.
However, energy-producing companies such as Reliance Industries and Coal India have shown relative stability as investors shift funds toward sectors that may benefit from higher energy prices.
Risk of Stagflation and Currency Pressure
Economic analysts have warned about the possibility of “stagflation,” a situation where economic growth slows while inflation continues to rise.
The Indian currency has already weakened, with the rupee breaching the 92 mark against the US dollar earlier this month.
Global institutions such as the International Monetary Fund have warned that sustained oil price increases could push global inflation higher.
Why the Gulf Region Matters for India
The crisis is particularly significant for India because of its deep economic ties with West Asia. Nearly one crore Indians live and work across Gulf countries, and trade between India and the region is valued at around $200 billion annually.
With both economic and human interests at stake, India continues to advocate diplomatic solutions while closely monitoring developments in the region.
