India's Strategic Measures Amid Rising Oil Prices and Currency Depreciation

As the conflict in West Asia escalates, India is taking significant steps to address the economic fallout, including raising fuel prices and adjusting import duties on gold and silver. The Reserve Bank of India is also implementing measures to stabilize the rupee and manage foreign exchange reserves. With potential changes to the Liberalised Remittance Scheme and strategies to attract NRI deposits, the country is navigating a complex economic landscape. This article delves into the implications of these actions and what they mean for consumers and the economy.

By Narendra Chaudhary May 20, 2026, 14:16 IST

India's Response to Economic Challenges

In light of the escalating conflict in West Asia, India is implementing significant strategies to mitigate the economic impact, particularly concerning soaring crude oil prices and the weakening of the rupee. Fuel Price Adjustments On May 19, 2026, oil companies increased petrol and diesel prices for the second time within a week, following a more than 50% surge in global crude oil prices since the onset of the conflict. While some analysts view this fuel price increase as unavoidable given the global instability, others warn that consumers should prepare for additional incremental hikes in the near future if the situation in West Asia does not stabilize.

Changes in Gold and Silver Tariffs The government has raised the import duty on gold and silver from 6% to 15%, a move aimed at curbing non-essential imports and safeguarding the nation’s foreign exchange reserves. Measures to Support the Rupee According to reports, the Reserve Bank of India (RBI) is actively working to support the rupee, which has seen a decline of $32 billion in foreign exchange reserves since the conflict began. The RBI is reportedly taking steps to limit speculation in the currency markets.

Adjustments to the Liberalised Remittance Scheme Under the 'Liberalised Remittance Scheme', Indian residents can send foreign currency for purposes such as travel and education. However, there are indications that the annual limit of $250,000 may be temporarily reduced for certain categories to manage dollar outflows more effectively. Attracting NRI Deposits To bolster dollar reserves, the RBI may consider offering competitive interest rates to Non-Resident Indians (NRIs), a strategy previously employed in 2013 that successfully attracted $30 billion at an interest rate of around 3.5%. However, with current US interest rates significantly higher, this option may prove to be more costly for the RBI now.