20.06.2026, India.
More than three months of the closure of the Strait of Hormuz have had a negative impact on the Indian economy, but have not yet led to a crisis.
India has a developed economy – the country ranks fourth in the world in terms of GDP. But one of the most vulnerable points is the import of resources, which, due to its geographical location, is heavily tied to the Middle East.
After the start of the war in the Persian Gulf and the closure of the Strait of Hormuz, India faced a number of serious problems. Let us consider how it has coped with them so far.
Liquefied petroleum gas
The most serious problem for India in connection with the war in the Persian Gulf has been the issue with liquefied petroleum gas (LPG). It is used in India mainly for cooking. Up to 70% of households cook with it, as do most catering establishments.
India imported 60% of the required gas, and 90% of imports came from the Persian Gulf. So the halt in exports of this gas from the Persian Gulf became a serious problem for India – many street food outlets were forced to close. The government tried to cope with the crisis by sharply increasing domestic LPG production, as well as increasing purchases from other suppliers.
Thanks to the crisis in the Persian Gulf, the United States became India’s main supplier of LPG. According to Kpler, in May Washington supplied New Delhi with 630,000 tons of liquefied petroleum gas, which is approximately 60% more than the volume supplied in a month by all the Persian Gulf countries combined.
However, these measures are still insufficient; the cost of gas remains significantly higher than before the war. For example, a cylinder of commercial gas, which on February 1 in Delhi cost 1,740 rupees, now costs 3,113 rupees. Thus, the crisis in this area still remains for New Delhi the most significant consequence of the war in the Persian Gulf.
Food crisis
India is one of the world’s largest consumers of chemical fertilizers, using up to 63 million tons of these fertilizers per year. The country is heavily dependent on imports of fertilizers from the Persian Gulf, so there were concerns that this year’s sowing campaigns would be disrupted.
However, there was no acute shortage in the country – India’s fertilizer stocks in March exceeded those of the previous year, giving the country time to find alternative suppliers. Most likely, one of the beneficiaries in this situation will be Russian fertilizer producers. The transition to long-term contracts for fertilizer supplies was discussed by India and Russia back in early February – before the war in the Persian Gulf. There is no doubt that after the closure of the Strait of Hormuz, the position of the Russian side in the negotiations has strengthened.
The situation with food for India is somewhat alleviated by record-high grain stocks in government storage. The government reported that rice stocks rose by 15% and by early June reached a record level of 68.4 million tons, which is several times higher than the planned 13.5 million tons. Government wheat stocks reached a five-year high of 53.41 million tons, twice the target of 27.6 million tons.
“Rice stocks are more than sufficient. This should give the government confidence that exports can continue, despite forecasts of below-normal rainfall that could affect production,” a trader told the Economic Times.
These stocks were created thanks to a record harvest in the 2025/2026 season, when 154 million tons of rice and 120 million tons of wheat were harvested. Therefore, India’s food security is ensured for the coming years, and the country does not face the threat of famine, even in the event of a crop failure this year.
Record export growth
In May, India’s merchandise exports hit a record of $45.2 billion. This is 18% higher than a year earlier. At the same time, exports of engineering products grew by 24.5% to $12.3 billion. Services exports also grew by 13.2% to $36.8 billion.
And India is not going to stop. On June 15, it signed a trade agreement with Slovakia, which will help it strengthen its position in the Central European market.
However, imports are growing at a faster pace, so India’s trade deficit has increased by almost one and a half times – from $6.8 billion to $10.5 billion in May 2026.
GDP outlook assessment
Despite the crisis caused by the war in the Persian Gulf, the Ministry of Statistics and Programme Implementation raised its GDP growth forecast for the 2026/2027 financial year. While in February the forecast was 7.6%, in June the ministry forecast 7.7% growth for the year. A year earlier, this growth was 7.1%.
However, the Central Bank is more pessimistic about the state of the country’s economy: it raised its inflation forecast for the financial year by 50 basis points to 5.1%, and its GDP growth forecast fell from 6.9% to 6.6%.
The optimism of foreign estimates has also moderated. In early June, rating agency Fitch Ratings, in its global forecast of the state of the world economy, lowered its estimate of India’s GDP growth from 6.7% to 6.4%. As risk factors, they cite high inflation, which will lead to a reduction in real incomes and a decrease in the purchasing power of the population, as well as the impact of the war in the Middle East, which will be noticeable in the second and third quarters of the current financial year.
This trend is confirmed by the fall in the rupee exchange rate. Since the beginning of the year, it has weakened by more than 6% against the dollar. Negative factors are the increased cost of oil and the predicted low rainfall caused by the El Niño phenomenon, which is likely to lead to poor harvests.
Russian oil purchases
Indian authorities consistently defend their position on the purchase of oil and gas from Russia. Painful for New Delhi were media reports that India was allegedly influenced by the temporary US permission to buy oil from Russia.
On May 18, Deputy Minister of Petroleum Sujata Sharma, speaking about this decision by Washington, stated that India does not rely on it.
“Basically, for us, when buying, commercial sense is important… There is a shortage of oil. Sufficient volumes of oil have been repeatedly reserved… and this, regardless of the presence or absence of an exception, will not affect the situation,” she emphasized.
In June, Indian Foreign Minister Subrahmanyam Jaishankar stated that since 2022, the country had been increasing oil purchases from Russia at the request of US authorities. The minister noted that Washington wanted to prevent a sharp rise in prices on the global energy market. The diplomat emphasized that India is guided by economic considerations in its purchases.
The minister criticized the US sanctions policy on Russian oil and called not to hide economic interests behind high principles.
On June 8, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri estimated the increase in oil purchases from Russia. “In February, we imported 1.65 million barrels per day from Russia. Now this figure has grown to about 2–2.5 million,” he said.
Given that India imports about 6 million barrels per day in total, Russia’s share can be estimated at 30–40%. Once again, it can be stated that there has been no abandonment of Russian oil by India, which US President Donald Trump and Western media constantly claim.
Nuclear energy
India continues cooperation with Russia in the field of nuclear energy. On June 15, Rosatom installed the reactor vessel of the fifth power unit of the Indian Kudankulam NPP. Two power units of the NPP are already operational, and two more are planned to be launched over the next year and a half to two years. A total of six power units will be built at the station.
Despite the loud words and promises of American companies about breakthrough nuclear technologies, the only NPP using foreign technologies that is actually being built in India remains Kudankulam. All other foreign projects remain only on paper.
So there is a high probability that it is Rosatom that will participate in the implementation of India’s ambitious program for the development of nuclear energy. New Delhi plans to raise electricity generation at NPPs from the current 8.8 GW to 100 GW by 2047.
Results
India’s economy is the fastest growing among the world’s major economies, and it continues to grow confidently, despite all the problems and crises. Russia and India have a great foundation for increasing economic interaction. New Delhi is not inclined to blindly obey Western sanctions and abandon cooperation with Moscow, but, unfortunately, apart from the nuclear energy sector, Russia for the most part has nothing to offer India except resources.
Source: Rossa Primavera News Agency
