NEW DELHI: India’s economic growth is expected to slow to 6.7 per cent in the current fiscal year, down from 7.7 per cent in FY 2025-26, amid rising oil prices and global economic uncertainty triggered by the ongoing Iran conflict, according to a report by BMI, a Fitch Group company.

The report stated that the Iran war and continued disruptions around the Strait of Hormuz are likely to create an “oil price shock,” increasing inflationary pressure and weakening consumption and investment demand across the Indian economy.

BMI warned that escalating tensions in West Asia could further impact India’s fiscal position as the government balances higher defence spending and fuel price stabilisation measures alongside its fiscal consolidation targets.

Economists said India remains particularly vulnerable due to its dependence on imported crude oil and liquefied natural gas. Rising global energy prices have already placed pressure on the rupee, capital flows, and industrial activity.

The report added that while earlier GST and income tax reforms may partially cushion inflationary pressures, the benefits of those measures are expected to fade during FY27. BMI also highlighted risks from weak monsoon forecasts and supply disruptions affecting food and energy markets.

Several global agencies, including Moody’s and S&P Global, have also revised India’s growth outlook downward in recent weeks due to rising energy costs and geopolitical instability linked to the Iran war.