The Iran War Is Bleeding India’s Economy

The main industry group representing India’s aviation sector, once among the fastest-growing in the world, issued an extraordinary warning last week: It may be forced to shut down operations due to higher fuel costs stemming from the Iran war.

The Federation of Indian Airlines has warned the government that recent price increases could lead to “insurmountable losses,” resulting in grounded aircraft and flight cancellations. The Air India group, the country’s flagship carrier, has revised its fuel surcharge on both domestic and international routes following a sharp rise in global jet fuel prices.

The war in the Middle East has disrupted global energy flows, driven up oil prices and triggered cascading effects across South Asia’s largest economy, from airlines and pharmaceuticals to household cooking gas and food costs. The shock has begun to drive inflation, causing the rupee to weaken and weighing on India’s growth outlook, while also heightening political tensions around energy security and foreign policy.