India is intensifying austerity measures to mitigate the effects of the U.S. war with Iran, including raising gasoline prices and import duties on gold, Bloomberg reports.
No Need to Commute to Work
On Friday, May 15, state-owned refineries raised gasoline and diesel prices by more than 3% to curb rising losses and domestic demand following a sharp increase in global oil prices amid the conflict in the Middle East. This is the first increase in four years, the agency notes.
Employees in the Delhi metropolitan area have been mandated to work from home twice a week to save fuel.
On May 13, the government also raised import duties on gold and silver. These include a basic customs duty of 10% and a 5% agricultural infrastructure development fee. Thus, the rate increased from 6% to 15%.
Additionally, authorities temporarily banned sugar exports to protect domestic stocks.
Pressure on the Rupee
Moreover, the Reserve Bank of India (RBI) proposed lowering taxes for foreign investors holding government bonds, which is another way to stimulate capital inflow, Bloomberg reports.
"The government is taking various preventive measures to preserve foreign exchange reserves amid pressure on the rupee," said economist Teresa John from Nirmal Bang Securities. She noted that the measures to restrict gold imports are similar to those taken during previous periods of "external stress."
India is the third-largest oil importer in the world and relies on energy supplies through the Strait of Hormuz, which has been effectively blocked for over two months due to the war with Iran.
The rise in energy prices has led to a sharp increase in the outflow of foreign investments from the country, putting pressure on the rupee, which has fallen to a record low. The currency's exchange rate recently dropped to 95.9587 per dollar, becoming the worst performer in Asia for 2026. The outflow of foreign investments this year has already exceeded last year's record of $19 billion.
