Noting that the West Asia war has impacted supply chains, Finance Minister Nirmala Sitharaman on Monday said that it could also mean higher fuel costs, delayed cargo, costlier shipping, shortage of inputs, pressure on working capital, and uncertainty in export orders.
Addressing the foundation day programme of the Small Industries Development Bank of India (SIDBI) in Mumbai, Sitharaman said the impact of the West Asia crisis extends far beyond diplomacy and geopolitics, with direct implications for businesses and ordinary citizens.
“Just imagine all of them coming together because of the West Asia crisis,” she said while outlining the multiple economic pressures emerging from the conflict.
“It is a big challenge for countries, not just for India but for any other country,” she said.
Explaining Prime Minister Narendra Modi’s recent appeal to conserve foreign exchange, Sitharaman said the government is operating in an increasingly uncertain global environment marked by volatile commodity prices and external economic shocks.
“These launches and initiatives are taking place when the global environment is uncertain,” she said, pointing towards today’s key initiatives launches by SIDBI.
The minister pointed to sharp fluctuations in international crude oil prices, saying the situation has remained highly dynamic over the past several weeks.
“One rate at one point of time, within a week another, and within another week something else. That has been the situation for nearly 80 to 90 days,” she said.
Apart from crude oil, Sitharaman highlighted the steep rise in global fertiliser prices and elevated gold prices as major concerns for India’s external sector.
She described these as the “three Fs” — Fuel, Fertiliser and Foreign Exchange — and stressed that payments for crude oil, fertiliser imports and gold purchases have to be made in foreign currency.
“All these three payments have to be made in foreign exchange. There is no rupee trading there. We need to understand the context of these three Fs — Fuel, Fertiliser and Foreign Exchange,” she said.
The minister noted that many of the current challenges facing the economy are externally driven and not reflective of domestic economic weakness.
“India’s domestic economic situation remains positive and resilient even today,” she said.
Backing her assessment with economic indicators, Sitharaman said GST collections continue to remain strong despite the rationalisation measures undertaken in 2025. Gross GST collections crossed Rs 22 lakh crore in FY2025-26, registering an annual growth of 8.3 per cent.
She also highlighted robust demand reflected in high-frequency indicators.
In April, domestic wholesale tractor sales rose 26 per cent year-on-year, passenger vehicle sales increased 25 per cent, three-wheeler sales jumped 32 per cent, and two-wheeler sales grew 28 per cent.
The Finance Minister said the insurance sector was also witnessing healthy growth, with new business premium collections in life insurance rising 39 per cent.
On the banking front, she said the financial system remains strong and supportive of economic expansion.
Gross non-performing assets (NPAs) of public sector banks declined to 1.93 per cent in FY2026, while credit growth remained broad-based across sectors.
Retail lending grew 18.1 per cent, agriculture credit expanded 15.5 per cent, and MSME lending increased 18.2 per cent.
Sitharaman also noted that the government had set aside more than Rs 1 lakh crore under the Economic Stabilisation Fund in February to deal with unforeseen developments and external shocks.
Highlighting SIDBI’s role in supporting MSMEs, the Minister said India’s growth story can’t move forward without micro, small, and medium enterprises, and so the role of SIDBI becomes more important.
She also launched key initiatives such as SIDBI-RRB-Co-Lending platform, Modernization of Rural Enterprises (MoRE) programme, Micro Credit Scheme for Micro Enterprises, and SIDBI MSME exchange.
All these initiatives are aimed at boosting the country’s MSME ecosystem.
