The Morning Brief Iran War: India’s Macros Under Strain
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Mar 26, 2026 Santanu Sengupta, MD and Chief India Economist at Goldman Sachs, offers concise macro analysis. He explains why Middle East oil shocks hit India harder. He highlights which exports and remittances will shift. He outlines risks to gas, fertilizers and food inflation. He describes fiscal cushions, crude sourcing shifts, and likely central bank rate moves.
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India's Unique Middle East Exposure
- India is unusually exposed because the Middle East is both a major supplier and a market, making the region the epicentre rather than an offsetting buffer.
- About 13% of exports, ~20% of imports (40% of that is crude) and 40% of remittances link India tightly to Middle Eastern disruption.
Export Impacts Vary By Sector
- Exports to the region will fall unevenly with agriculture (notably rice) and gems hit near term, while some petroleum flows may reroute.
- Gemstone jewelry often transits the region to Europe, so disruptions cause rerouting and short-term export losses.
Remittances Are A Delayed Shock Absorber
- Remittances are a lagged vulnerability: energy conflict won't dent flows immediately but could flatten growth in coming quarters if workers return.
- Remittances rose from ~$80bn (pandemic) to $135bn, with Middle East share down to ~40% from 55% in 2021, so impact is possible but delayed.