US-Iran conflict might deter investments in India, says report
03 Mar 2026

The ongoing conflict in the Middle East could have major implications for India's economic growth, a new report by Fitch Group's BMI has warned.

The firm said that the geopolitical tensions could deter investments in India, and offset the positive impact of trade deals with the US and EU on GDP.

Despite these risks, BMI has maintained its FY2026/27 growth outlook at 7%.

Iran's threats to global oil supply chain
Costs

The report also highlights Iran's threats to ships in the Strait of Hormuz, a key chokepoint for global oil supply.

A full closure of this strait could directly shave off up to 0.5% from India's GDP through higher energy costs.

This is particularly relevant given that India imports almost 88% of its crude oil needs and any spike in prices would increase its import bill and fuel inflation.

A boost for India's economy?
Question

On the flip side, BMI also noted that the new India-US trade agreement and the US Supreme Court's decision to strike down Trump-era tariffs could boost India's economy more than expected.

India and the US had earlier agreed on a framework for an interim trade deal under which Washington would reduce tariffs to 18%.

Whether it will be formalized into a legal document for implementation is in question now, as the US SC deemed such tariffs illegal.