Govt may consider more relief packages for vulnerable sectors
New Delhi: The Centre is considering new relief measures for vulnerable segments of the economy, including micro, small, and medium enterprises, as the fallout from the ongoing West Asia conflict continues to push up costs and disrupt trade flows, according to official sources.
Officials indicated that more interventions could be announced if the situation persists, with the aim of helping businesses stay afloat while containing inflationary pressures in the domestic market. The government has already rolled out a series of steps this month and signalled it is prepared to act further to protect sectors facing stress.
Among the key measures, excise duty on petrol has been reduced to Rs 3 per litre, while diesel has been fully exempted from excise duty. The move is intended to shield consumers from the impact of rising global crude prices triggered by the conflict in the Middle East. In parallel, duties on exports of diesel and aviation turbine fuel have been reinstated to improve domestic supply availability.
Global oil markets have remained volatile since the United States and Israel launched military strikes against Iran on February 28, followed by retaliatory action from Tehran. Crude prices surged nearly 50 per cent in the aftermath, touching USD 119 per barrel earlier this month before easing to about USD 100 per barrel.
India’s heavy dependence on imports has heightened concerns. The country sources around 88 per cent of its crude oil and nearly half of its natural gas requirements from overseas, much of it routed through the strategically sensitive Strait of Hormuz. Escalating security risks in the region have disrupted shipping, leading to vessel diversions, longer transit routes, congestion at transhipment hubs and additional conflict-related surcharges.
These developments have driven up freight and insurance costs while creating uncertainty in the movement of export consignments. Exporters have reported operational challenges, prompting the government to step in with targeted support.
Earlier this month, certain relaxations were granted to exporters in meeting their obligations amid disruptions in logistics. Additionally, a Rs 497 crore scheme titled Resilience & Logistics Intervention for Export Facilitation, or RELIEF, was launched to address challenges such as steep freight hikes, rising insurance premiums and war-related risks.
The scheme is expected to help maintain supply chain stability, support MSME exporters, reduce the likelihood of order cancellations and protect employment in export-oriented sectors.
In a further boost, the government restored full benefits under the Remission of Duties and Taxes on Exported Products scheme. The Directorate General of Foreign Trade stated in a notification that “the RoDTEP rates and value caps as specified as applicable on February 22, 2026, are hereby restored with effect from February 23, 2026 to March 31, 2026 for all eligible export products.” The move reverses last month’s decision to halve duty benefits, which had drawn concerns from exporters.
Economic policymakers have acknowledged the broader risks posed by the conflict. Chief Economic Advisor V Anantha Nageswaran said India would need to extend immediate support to the most affected businesses and households while also creating fiscal space for long-term priorities.
“This calls for re-prioritisation of spending and targeted relief for the most affected and vulnerable businesses and households,” he said in the latest Monthly Economic Review released on Saturday.
The review noted that the economic impact of recent global shocks is being transmitted through higher input costs, supply constraints and sector-wide pressures, with early signs of moderation in economic activity. It warned that the near-term outlook remains uncertain, with external disruptions posing risks to growth.
At the same time, it pointed to strong macroeconomic fundamentals and resilient domestic demand as factors that could help cushion the impact. However, the report underlined that the evolving geopolitical situation presents layered challenges for India, given its energy dependence and deep trade, investment and remittance ties with the West Asia region.
