Moody’s has lowered India’s real GDP growth forecast for fiscal 2026–27 to 6% from 6.8%, citing disruptions to global energy markets caused by the US‑Israeli campaign against Iran. The rating agency warned that heightened geopolitical risk will drag on private consumption, industrial activity and gross fixed capital formation, while lifting inflation — now projected to average about 4.8% in FY27, up from an estimated 2.4% in FY26.
India’s exposure is acute because much of its crude and LPG supplies transit the Strait of Hormuz, a chokepoint affected by recent attacks and temporary closures. With seaborne supplies constrained, New Delhi has prioritized household energy needs, cutting allocations to some industries. Several sectors, including stainless steel and plastics, report production curbs as feedstock and fuel shortages combine with higher input costs. Analysts warn that a worsening energy import bill could widen the current account deficit if disruptions persist.
Refiners have diversified crude sources in response to the shocks. For the first time since 2019, some Indian refiners took Iranian crude after the US granted waivers, the petroleum ministry said, noting that refiners retain commercial flexibility and that there are no payment obstacles for Iranian shipments. The ministry rejected reports that a tanker carrying Iranian crude rerouted from India to China for payment reasons as “factually incorrect.” Separately, one US‑sanctioned vessel did change course mid‑voyage, though officials have not specified why.
LPG supplies have been a particular concern. Vessel tracking data showed India‑bound LPG tankers — including the Mitsui‑owned Green Sanvi, carrying about 46,000 tonnes — transiting the Strait of Hormuz en route to Mumbai. Those shipments have offered temporary relief, but India, which relies on imports for roughly 60% of household LPG, continues to face shortages and upward price pressure. The government has issued emergency directives to manage supplies and has engaged with Tehran to secure safe passage for Indian‑flagged ships.
Alongside the energy shock, several domestic developments are weighing on sentiment. Families of victims of the June 2025 Air India AI171 crash have petitioned Prime Minister Narendra Modi for release of the cockpit voice recorder and flight data to clarify the cause of the tragedy that killed 260 people. In Maharashtra’s Nashik district, nine relatives — including six children — died after their car fell into an unprotected roadside well, drawing attention to infrastructure and safety gaps. In Kerala, Congress MP Shashi Tharoor’s convoy was reportedly stopped and his security personnel assaulted while he campaigned. Parts of north India also felt tremors from a 5.9‑magnitude earthquake in Afghanistan, which killed at least eight people there.
Moody’s assessment highlights the near‑term fragility of India’s recovery as energy shocks ripple through costs, consumption and investment. How quickly refiners can restore steady supplies, what measures the government takes to cushion households and industry, and whether geopolitical tensions ease will determine growth and inflation dynamics over the coming year.