According to reports from CNBC TV18, The Economic Times, Business Standard, The Times of India, and LiveMint, Crisil Ratings has significantly reduced its estimate of the damage from West Asia's recent conflict, with the impact on India Inc's operating profitability now likely to be limited to around 100 basis points this fiscal. This represents a substantial reduction from the 200-basis-point hit that the ratings agency had projected under an earlier stress scenario that assumed prolonged disruption and closure of the Strait of Hormuz. As reported by Crisil, the recent sharp correction in crude oil prices and likely normalisation of gas supplies are beneficial for India Inc as they would ease cost pressures meaningfully. According to Subodh Rai, Managing Director, Crisil Ratings, if the armistice sustains, two-thirds of the 34 sectors will see minimal disruption, with margin recovery in the second half mostly offsetting pressures of the first half. The revised outlook follows the reopening of the Strait of Hormuz and a subsequent fall in crude oil prices under a fragile US-Iran memorandum of understanding, though Crisil cautioned that geopolitical uncertainty remains elevated and gas supply disruptions may take longer to ease.
According to Crisil's analysis reported by CNBC TV18, The Economic Times, Business Standard, The Times of India, and LiveMint, assuming Brent crude averages $80-85 per barrel this fiscal and gas supply disruptions persist for around 4 months, only 10 of the 34 sectors analysed are expected to see a meaningful decline in profitability, compared with 22 sectors under the earlier stress-case assumptions. However, 24 of the 34 sectors are expected to see only limited impact on revenue and margins. Among the sectors expected to remain vulnerable are airlines, ceramics, flexible packaging, specialty chemicals, polyester textiles and diamond polishing, which continue to face pressure from higher input costs, supply-chain challenges and limited pricing power. As per Crisil's latest stress test covering sectors representing 65% of its rated corporate debt, 22 sectors would see operating profitability being culled more than 10% due to higher inventory costs and inability to fully pass on the burden to consumers immediately. Under the revised scenario, none of the sectors are likely to experience a severe impact on revenues or profitability, with the assessment assuming Brent crude averages $80-85 per barrel this fiscal and gas supply disruptions continue for roughly four months. The agency noted that four of the 10 sectors under pressure have a stable or neutral credit outlook due to strong balance sheets, while the remaining six carry a moderately negative outlook.
The government demonstrated remarkable resilience during the Gulf crisis through strategic supply chain management and fiscal interventions. As reported by Business Standard, the government cut excise duty on petrol and diesel by ₹10 per litre, forgoing approximately ₹1.7 trillion in revenue to absorb the fuel shock rather than passing it on to households and firms. Oil marketing companies maintained pump prices steady for over two months before implementing restrained revisions. Domestic refiners increased cooking-gas output by 50% within a week, largely replacing lost imports, while India diversified energy sources by widening purchases from the United States, Russia and adding new suppliers. The government secured necessary waivers to continue buying Russian crude and implemented measures for long-term energy security, including converting homes from cylinders to piped gas and expanding ethanol blending programs. Business Standard notes that India was among the few nations that kept its cargoes moving even as Hormuz traffic fell to a trickle, demonstrating operational resilience.
India's external accounts remained remarkably stable during the Gulf crisis, with the government implementing targeted measures to maintain financial stability. As reported by Business Standard, gross foreign direct investment reached $95 billion in the last financial year, breaking out of the $70-80 billion band of post-pandemic years. The current account deficit was barely 0.6% of GDP in FY26 and is now expected to be only marginally higher in FY27. The government removed withholding and capital gains taxes on foreign institutional purchases of government debt and widened securities under the Fully Accessible Route, drawing money into the bond market. A new non-resident dollar deposit scheme is expected to bring in a sizeable sum of dollars. Business Standard reports that exports of non-oil, non-gems-and-jewellery merchandise and services grew by more than 12% in April and May 2026 over the same period a year earlier, with free trade agreements signed over the years contributing to this performance.
Looking ahead, India's medium-term challenges require sustained focus on reducing import dependence and attracting foreign investment. As reported by Business Standard, the merchandise trade deficit runs at about 8% of national income, with the deficit excluding oil at 5% and excluding oil and gold at 3.5%. Goldman Sachs recently upgraded India's growth forecast to 6.8% for CY26 and 6.5% for FY27, both up by 30 basis points from previous forecasts. The government must place a high premium on attracting foreign direct investment through balanced bilateral investment treaty frameworks, certainty in tax policy, and dependable logistics. Business Standard emphasizes that India must indigenise what it can produce competitively and work harder on agreements, particularly new pacts with the United Kingdom and European Union taking effect this year. The analysis concludes that while India met the first test of Gulf crisis resilience, the years ahead will test other forms of resilience, requiring persistent focus on structural reforms and supply chain diversification.
