West Asia conflict threatens India's growth trajectory. EY warns that persistent regional tensions could reduce India's FY27 GDP growth by approximately 1 percentage point while pushing retail inflation up by 1.5 percentage points from baseline projections. With India importing nearly 90 percent of its crude oil, the economy remains highly vulnerable to global energy market disruptions. Key sectors including textiles, chemicals, fertilizers, cement and tires face direct impacts, with employment-intensive industries particularly at risk. Supply chain disruptions in energy markets could cascade across multiple sectors through interconnected linkages. The baseline GDP growth estimate stands at 7 percent with inflation at 4 percent. If conflict persists throughout the fiscal year, growth could decline to around 6 percent while inflation rises to 5.5 percent.
