The government could roll out more relief measures for vulnerable parts of the economy, including the MSME sector, if the conflict in Middle East drags on, with the aim of helping businesses stay afloat and keeping inflation under control, according to sources cited by news agency PTI.The Centre has already announced a series of steps this month and is prepared to do more if the situation worsens, especially to shield sectors most exposed to rising fuel, freight and input costs.
More support likely if crisis deepens
Sources told PTI that the government “will not hesitate” to announce additional support packages if the prolonged geopolitical crisis starts putting greater pressure on domestic prices and weaker segments of the economy.The Centre recently cut excise duty on petrol to Rs 3 per litre and fully exempted diesel from excise duty, aiming to soften the impact of rising global crude prices on consumers amid the ongoing war in Middle East.Alongside that, the government also reimposed export duties on diesel and aviation turbine fuel (ATF) to improve domestic availability.Global crude prices have surged by nearly 50 per cent since the US and Israel launched military strikes on Iran on February 28, triggering large-scale retaliation from Tehran.International oil prices had climbed to $119 per barrel earlier this month before easing to around $100 per barrel.The pressure is particularly significant for India because it imports 88 per cent of its crude oil requirement and around half of its natural gas needs, with much of that supply moving through the Strait of Hormuz.
Exporters already given relief on freight, logistics and duty refunds
The government has already moved to support exporters facing disruption from the conflict.Earlier this month, it provided certain relaxations to exporters in meeting their export obligations, after businesses reported difficulties in moving goods due to the crisis in Middle East.It also launched the Resilience & Logistics Intervention for Export Facilitation (RELIEF) scheme worth Rs 497 crore to offset the impact of unusually high freight rates, rising insurance costs and war-related export risks.The scheme is meant to keep India’s supply chains stable, protect MSME exporters, prevent order cancellations and safeguard jobs in the export sector.In another key step, the government on Monday restored full benefits under the RoDTEP scheme to support exporters dealing with elevated freight costs.Last month, the government had halved the duty benefit rates under the scheme, drawing strong criticism from exporters who sought a rollback.“The RoDTEP rates and value caps as specified as applicable on February 22, 2026, are hereby restored with effect from February 23, 2026 to March 31, 2026 for all eligible export products,” the Directorate General of Foreign Trade (DGFT) said in a notification.
Economic review flags rising risks, calls for targeted relief
Escalating security risks around the Strait of Hormuz have led to vessel diversions, longer sailing routes, congestion at transhipment hubs and emergency conflict-linked surcharges. This has pushed up logistics costs and created uncertainty for export shipments moving to or through the region.In the latest Monthly Economic Review released on Saturday, chief economic advisor V Anantha Nageswaran said India must provide immediate support to the most affected households and businesses while also creating fiscal room for longer-term strategic needs exposed by the conflict.“This calls for re-prioritisation of spending and targeted relief for the most affected and vulnerable businesses and households,” he said.The report said recent shocks are already being transmitted through higher input costs, supply constraints and pressure across sectors, with early signs of some moderation in economic activity.It added that the near-term outlook remains uncertain, with the Middle East crisis posing downside risks to growth through elevated input costs and possible supply disruptions. However, the review also noted that strong macroeconomic fundamentals and robust domestic demand could help cushion the blow.The government sees the geopolitical crisis as a complex risk for India because of the country’s heavy dependence on imported energy and its strong trade, investment and remittance ties with the Middle East region.
