Archive · 1 Oct 2026
Crude Oil Surge and US Trade Risks Test India’s Economy
India’s economy is growing quickly, but it is facing new problems from abroad.
Oil prices rose sharply in September.
India imports much of the oil it uses, so more expensive oil can make the country’s import bill larger.
It can also raise costs for transport, factories, and other businesses.
The Ministry of Finance said price pressures have increased, although overall inflation is still mostly under control.
India’s economy grew 7.8% in the first quarter of FY27.
At the same time, uncertainty about trade with the United States could make it harder to attract investment.
The ministry said foreign investment may still improve in FY27.
India’s crude oil basket averaged $116.04 per barrel in September, up 28.66% from August.
The Ministry of Finance warned that higher oil prices could increase import costs and domestic price pressures.
India’s real GDP grew 7.8% in the first quarter of FY27.
Manufacturing, construction, services, and industry recorded strong growth during the quarter.
A US bill allowing tariffs of up to 100% on countries buying Russian crude has increased trade uncertainty.
- Who
- The Ministry of Finance, Indian businesses and consumers, and global trade partners, including the United States, are involved.
- What
- India is dealing with a sharp rise in crude oil prices and increased uncertainty over US trade policy.
- When
- Crude prices rose sharply in September; the economic growth data covers the first quarter of FY27.
- Where
- The effects concern India’s economy and its international trade and investment environment.
- Why
- Higher oil prices can raise India’s import bill and business costs, while potential US tariffs create uncertainty for trade, supply chains, and investment.
Growth Signals
Economic Risks
India’s economic momentum
Growth Signals
Strong domestic activity continued, with real GDP growing 7.8% and manufacturing, construction, and services recording strong growth.
Economic Risks
The Finance Ministry said stronger domestic growth is being tested by a less favorable global environment.
Inflation outlook
Growth Signals
Overall inflation remained largely anchored despite renewed pressures.
Economic Risks
Higher oil prices and weather-related volatility intensified price pressures across retail, wholesale, and producer levels.
Foreign investment
Growth Signals
Indicators suggest net foreign direct investment could improve in FY27, and capital inflows have supported the balance of payments.
Economic Risks
Trade tensions, supply-chain uncertainty, and competition from developed economies could make attracting global capital more challenging.
- September Indian crude basket
- $116.04 per barrel on average
- August Indian crude basket
- $90.19 per barrel on average
- Monthly increase
- $25.85 per barrel, or 28.66%
- First-quarter FY27 real GDP growth
- 7.8%
- First-quarter FY27 real Industry GVA growth
- 7.7% year-on-year
- First-quarter FY27 manufacturing growth
- 9.2%
- Potential US tariff authority
- Up to 100% on countries buying Russian crude