India is emerging as a relatively stable anchor in a turbulent global economy, even as the West Asia crisis centred on the Iran–Israel–US conflict exacerbates energy‑price shocks and raises fears of stagflation in major economies.

Prime Minister Narendra Modi has emphasised that India’s economic fundamentals remain strong, with the country prepared for short‑, medium‑ and long‑term fallout from the closure of the Strait of Hormuz and other disruptions to trade and energy flows.

In speeches to both houses of Parliament, including an address in the Rajya Sabha on 24 March 2026, Modi has framed the current challenge in a way akin to India’s response to the earlier pandemic shock, underscoring the need for strategic self‑reliance rather than mere reactive measures.

At the heart of Modi’s strategy is a sizable push into domestic shipbuilding, with an outlay of ₹70,000 crore earmarked for the sector. This investment is aimed at building large‑scale shipyards and reducing dependence on foreign shipping lines, which had left Indian vessels temporarily stranded or delayed in the Strait of Hormuz.

New Indian tankers, such as the LPG‑carriers Shivalik and Nanda Devi, symbolise this shift toward indigenous maritime capacity. The government is positioning shipbuilding as a lynchpin of India’s “blue economy” ambitions, logistics‑hub aspirations and long‑term resilience against geopolitical volatility in key maritime chokepoints.

Energy security is another pillar of India’s prepared­ness. The government points to 53 lakh metric tonnes of strategic petroleum reserves, with plans to expand this by a further 65 lakh metric tonnes, giving the country a substantial buffer of crude oil.

Officials stress that current storage is adequate to ensure uninterrupted supply for a “reasonable period of time,” even as the Hormuz closure has initially affected around 22 Indian ships, several of which have since been allowed to move out.

India’s diversification of energy‑import sources—drawing more from Russia while also relying on traditional Gulf suppliers—helps cushion the impact of price spikes, although the Strait remains a critical chokepoint because roughly one‑fifth of the world’s oil passes through it.

The crisis has, however, spotlighted India’s vulnerability in liquefied petroleum gas (LPG) and gas supplies, which depend heavily on uninterrupted seaborne trade through West Asia. Eminent economists such as Prasanjit Basu note that while India’s refining capacity is robust—making it the world’s fourth‑largest refiner—its dependence on crude and gas imports still exposes it to external shocks.

The government is therefore keeping a close watch on fertilizer availability for the upcoming kharif season (June–October), with officials asserting that fertilizer stocks are sufficient and that food‑grain buffer reserves run to between about 210 and 410 lakh metric tons, depending on the time of year and offtake. This large agricultural stockpile is intended to insulate domestic food markets from short‑term energy‑and‑fertiliser‑linked price pressures.

To manage the broader fallout, seven empowered committees have been tasked with monitoring the crisis across multiple domains: strategic energy reserves, naval deployments, supply‑chain management (petrol, diesel, fertilizers, LPG and gas), logistics, public distribution and essential commodities. This multi‑pronged oversight mechanism reflects an effort to combine self‑reliance, proactive diplomacy with Gulf partners, and detailed contingency planning.

Modi has personally engaged with leaders in Iran, Israel and the United States, as well as key Gulf countries hosting large Indian diasporas, urging de‑escalation and reiterating that attacks on commercial shipping are unacceptable. Over 4,00,000 Indians have already been repatriated from conflict‑affected West Asian countries, facilitated by dedicated control rooms, emergency response teams and special flights to Delhi and Mumbai.

The Iran‑linked conflict has already strained the world economy, pushing energy prices higher, fuelling inflation and slowing growth across the United States, Europe, Japan and many other advanced economies. Business surveys show private‑sector activity in Europe nearing a standstill, with the Eurozone’s purchasing‑managers index falling to a 10‑month low, while confidence and output have weakened sharply in France and Germany.

In the United States, higher oil and gas prices are feeding inflation anxieties and weakening business sentiment, with services‑sector momentum slowing and hiring expectations cooling. The United Kingdom is recording its weakest growth in six months, even as manufacturers face input‑cost rises at the fastest pace since 1992. Japan’s growth has slowed to its weakest pace in three months. India’s own private‑sector growth has dipped to a three‑year low in March, underscoring that the global shockwave is not confined to the West.

Despite these pressures, analysts argue it is premature to speak of full‑blown stagflation—where stagnation combines with high inflation—because many economies, including India, are still registering positive growth and enjoy relatively well‑anchored long‑term inflation expectations.

India’s near‑surplus current‑account position, low headline inflation by historical standards and strong underlying growth provide a better starting point than many peers. However, if the war in West Asia persists for another month or more, economists warn that the risk of stagflation rises, particularly as elevated energy prices feed through into broad‑based inflation and fragile business confidence.

In this context, India’s combination of strategic reserves, diversified supply routes and substantial domestic investment in shipbuilding and logistics may prove critical in limiting the medium‑term damage.

At the same time, investors around the world are grappling with the traditional “safe haven” role of gold, even as the US dollar remains strong and gold prices have been under pressure. South Africa’s recent opening of its first underground gold mine in 15 years highlights the metal’s enduring appeal in times of geopolitical turmoil.

Central banks, especially from emerging markets, have been steadily increasing gold purchases over the past four years as part of a diversification away from a dollar‑centric reserve system. Gold’s appeal lies in its intrinsic scarcity, its independence from any single government, and its ability to store value over long periods. Even when short‑term price dips occur—driven by dollar strength and profit‑taking—gold is still widely regarded as a long‑term hedge against currency devaluation and geopolitical risk.

In West Asia itself, the confrontation has begun to extend beyond oil and energy infrastructure toward water, with Iran warning it could target desalination plants serving US and Israeli interests if its own fuel and gas installations are hit. Desalination is especially critical in one of the world’s driest regions, where per‑capita water availability is about one‑tenth of the global average.

Countries such as Qatar, the UAE and Saudi Arabia depend heavily on desalinated water, with some Gulf states deriving the majority of their fresh‑water supply from the sea. Yet most West Asian nations today hold reserves of only about two to seven days of water consumption, meaning they can withstand short‑term outages but would face severe humanitarian and economic consequences if desalination plants were incapacitated for a prolonged period.

This expansion of the battlefield into critical water infrastructure underlines how the West Asia crisis is reshaping not only global energy markets but also the basic conditions for human survival and urban life across the region.

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