India is poised to implement emergency measures, such as raising oil prices and restricting gold purchases, in order to preserve its dwindling foreign exchange reserves amidst the Iranian crisis.
On May 12, 2026, at 10:20 AM, Bloomberg News reported that the Indian government is considering emergency measures to protect its foreign exchange reserves amid the impact of the Iran-Iran conflict and soaring oil prices. These measures may include restricting imports of non-essential goods such as gold and electronics, as well as raising domestic fuel prices.
Sources indicate that officials from the Prime Minister's office and the Indian Ministry of Finance have held discussions with the Reserve Bank of India (RBI) on ways to mitigate the economic impact of the energy price crisis.
One of the key proposals is a fuel price increase, which, if implemented, would be the first price hike since the Iran-Iran conflict began and would come after Indian Prime Minister Narendra Modi's recent landslide victory in state-level elections. However, no final decision has been made regarding such an emergency measure.
One source indicated that gold and consumer electronics are classified as non-essential imports, and the government may impose import restrictions due to concerns over the expanding current account deficit and the need to maintain foreign exchange reserves.
India, the world's third-largest oil importer, has been severely impacted by soaring energy prices and disruptions to shipping routes through the Strait of Hormuz. This has resulted in massive outflows of foreign currency to finance energy imports and pushed the rupee to record lows.
This situation has forced the RBI to continuously implement measures to support the currency. Most recently, India's foreign exchange reserves fell to $690,700 billion as of May 1st, the lowest level in over a month, although still sufficient to cover imports for approximately 10-11 months.
On Sunday, Modi urged people to use public transport and work from home to reduce gasoline and diesel consumption, and asked them to postpone purchases of gold, one of the country's main imports, as well as reduce international travel.
Garima Kapoor, an economist at Elara Securities India, said the market is watching for the possibility of a gradual increase in oil prices, as well as measures to control gold imports and encourage capital inflows. She added that Modi's call for citizens to help preserve foreign exchange reserves reflects the reality India is facing.
The report also noted that measures of this nature are not new, as many Asian countries, such as Thailand and Vietnam, have previously asked citizens to work from home to conserve fuel and maintain the amount of dollars in the economy.
Sources further indicate that Modi's remarks were aimed at preparing the public for possible future shortages, and that if the public does not cooperate, the government may consider temporarily restricting foreign exchange withdrawals for non-essential activities.
Reference: bloomberg.com
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