Rising crude oil, fertiliser and gold prices are increasing import costs, while the government focuses on stability measures to protect growth momentum

India’s economy continues to show resilience despite rising global uncertainty, but the ongoing tensions in West Asia are creating fresh pressure on the country’s foreign exchange reserves, Finance Minister Nirmala Sitharaman said on Monday.

Addressing an industry gathering in Mumbai, Sitharaman highlighted how elevated international prices of crude oil, fertilisers and gold are significantly increasing India’s import bill. She referred to these critical sectors as the “3Fs” — Fuel, Fertiliser and Foreign Exchange — explaining that all such imports require payments in foreign currencies, placing additional strain on the external account.

Volatile Crude Prices Worry Policymakers

The Finance Minister pointed out that crude oil prices have remained highly volatile over the last few months due to geopolitical instability in West Asia. Since India imports a large share of its energy requirements, any sharp rise in oil prices directly impacts inflation, transportation costs and industrial expenses.

According to Sitharaman, the government’s appeal to conserve foreign exchange should be viewed in the context of global commodity uncertainty rather than as a sign of economic weakness. She stressed that India must remain cautious at a time when global markets are witnessing unpredictable movements in energy and commodity prices.

Fertiliser and Gold Imports Add to External Pressure

Apart from crude oil, the Finance Minister also flagged concerns over the steep rise in fertiliser prices. India relies heavily on imported fertiliser inputs to support its agriculture sector, making the country vulnerable to international price shocks.

Gold imports have also surged due to strong domestic demand and rising global prices. Sitharaman stated that the combined impact of expensive fuel, fertiliser and gold imports is increasing pressure on foreign exchange outflows at a time when geopolitical risks remain elevated.

West Asia Crisis Affecting Businesses and Trade

The minister warned that the conflict in West Asia is not merely a diplomatic issue but also an economic challenge for businesses and consumers. She noted that disruptions in shipping routes, rising freight charges and delays in cargo movement are affecting supply chains globally.

Industries dependent on imported raw materials are witnessing higher costs, while exporters are facing uncertainty in overseas demand and delivery schedules. Small and medium businesses are particularly vulnerable because prolonged instability affects working capital planning and business confidence.

MSMEs Face Greater Challenges Amid Uncertainty

Sitharaman acknowledged that micro, small and medium enterprises (MSMEs) are among the sectors facing the biggest impact from global volatility. Rising input costs, fluctuating demand and financing concerns are making business operations more difficult for smaller firms.

However, she said the government’s policy response has been carefully calibrated to support vulnerable sectors without disrupting overall economic growth. Measures are being taken to ensure liquidity support and financial stability for businesses facing temporary stress.

India’s Economic Indicators Continue to Remain Strong

Despite external pressures, the Finance Minister maintained that India’s economic fundamentals remain healthy. She highlighted that GST collections crossed ₹22 trillion in FY26, reflecting steady economic activity and improving tax compliance.

Several high-frequency indicators also showed strong momentum in April. Domestic wholesale tractor sales rose 26%, passenger vehicle sales increased 25%, while two-wheeler and three-wheeler sales registered growth of 28% and 32%, respectively. New business premiums of life insurance companies also climbed 39%, indicating improving consumer sentiment.

Banking Sector Stability Supports Growth

Sitharaman further noted that India’s banking sector remains stable and well-capitalised. Gross non-performing assets (NPAs) of public sector banks declined to 1.93% in FY26, showing continued improvement in asset quality.

Credit growth across retail, agriculture and MSME sectors also remained robust at 18.1%, 15.5% and 18.2%, respectively. The Finance Minister said strong banking support is helping maintain economic momentum even amid global uncertainty.

Economic Stabilisation Fund to Act as Safety Cushion

The government has also created an Economic Stabilisation Fund exceeding ₹1 trillion to prepare for external shocks and supply chain disruptions. Sitharaman described the fund as a precautionary buffer designed to help India respond quickly during periods of global economic stress.

She added that the fund would support sectors facing sudden liquidity challenges while helping the country maintain growth stability in an increasingly uncertain global environment.

Government Urges Confidence Amid Global Risks

Concluding her remarks, Sitharaman cautioned against panic and fear-driven narratives. She emphasised that India cannot afford “fear-mongering” during a period of geopolitical tension and global volatility.

According to the Finance Minister, maintaining confidence among businesses, investors and consumers will be critical as India navigates external risks while continuing its long-term growth trajectory.