- Nirmala Sitharaman warned Middle East conflict may raise fuel, shipping costs, disrupt exports
- She said government eased customs and rerouted cargo to reduce export disruptions
- Rising crude and gold prices pressure inflation and foreign exchange reserves, she noted
Nirmala Sitharaman warned that the ongoing conflict in the Middle East could create further pressure on India's economy through higher fuel prices, elevated shipping costs and disruptions to exports, while insisting that India's broader economic fundamentals remain strong. Speaking at the SIDBI Foundation Day programme, Sitharaman said the geopolitical tensions may affect working capital cycles for businesses and create uncertainty around export orders.
“The conflict could affect fuel cost further, leading to costly shipping,” the finance minister said, adding that Indian export cargo had already faced disruptions during the crisis. To minimise the impact, the government simplified customs procedures and allowed exporters to reroute or bring back cargo affected by disruptions, she said.
Sitharaman also linked Prime Minister Narendra Modi's recent appeal for austerity to rising global crude oil, fertiliser and gold prices, saying the pressure on imports had implications for both inflation and foreign exchange reserves. “Forex reserves hit on high fuel, fertiliser cost,” she said.
Economic Trajectory
At the same time, Sitharaman pushed back against concerns around India's economic trajectory. “India cannot afford fear mongering,” she said, adding that “naysayers de-cry achievements of own people.”
The finance minister argued that high-frequency indicators continue to point to resilient domestic demand. GST collections remained strong despite rate rationalisation in September 2025, while vehicle sales and credit growth across retail, agriculture and MSME segments remained healthy, she said.
She also cited CII data showing private sector expenditure rose 67% year-on-year in September 2025, while corporate profit margins hit their highest level in the March quarter.
Policy Push For MSMEs
On the policy front, Sitharaman announced several MSME-focused measures, including a co-lending platform between Small Industries Development Bank of India (SIDBI) and regional rural banks aimed at expanding credit access.
She also said the government introduced a special micro credit card under the CGTMSE scheme, allowing Udyam-registered MSMEs to access collateral-free loans of up to Rs 5 lakh. Additionally, the Cabinet has approved ECLGS 5.0, which will enable up to Rs 2.55 lakh crore in loans for MSMEs.
Sitharaman added that the government is likely to absorb a revenue hit of nearly Rs 1 lakh crore in FY27 due to reductions in excise duty on petrol and diesel, a move aimed at shielding consumers and businesses from surging global energy prices.
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