Rising Airfare, Plummeting LNG Imports: West Asia Conflict Takes Toll on Indian Economy

Multiple reports published this week highlight the interconnected pressures across aviation, energy imports, foreign exchange reserves, manufacturing and equity markets, despite various policy interventions.

The Wire Staff

rising airfare plummeting lng imports west asia conflict takes toll on indian economy

People carry empty LPG cylinders to a nearby gas agency, amid disruptions in LPG supplies due to the ongoing West Asia war, at Sanpada, in Navi Mumbai, Wednesday, March 25, 2026. Photo: PTI.

New Delhi: India's economy is grappling with widespread repercussions from the ongoing West Asia conflict, which has driven up global energy prices, disrupted supply chains and prompted capital outflows. Multiple reports published this week highlight the interconnected pressures across aviation, energy imports, foreign exchange reserves, manufacturing and equity markets, despite various policy interventions.

Domestic airfares have risen sharply. Rohit Vaid in The Hindu BusinessLine reported that ClearTrip data showed average domestic ticket prices climbing from Rs 5,850 in April 2025 to Rs 8,450 this month. International airfares rose by about 43%, with average ticket prices moving from Rs 52,000 to Rs 74,500 over the same period.

Wego India data also indicated that average domestic booking values this month ranged between Rs 9,000-10,000, compared with Rs 8,500-9,500 in 2025, reflecting a 12% year-on-year increase.

The government, in one of its policy interventions, decided to remove fare caps and the 60% free seat allocation rule, and provided a rebate on aviation turbine fuel (ATF). However, the BusinessLine reported that these measures have not fully cushioned airlines against higher ATF prices, airspace restrictions and currency pressures. Airlines have responded with fuel surcharges and reduced summer schedule flights, keeping fares elevated.

Energy imports have seen even more dramatic shifts. India's LNG imports fell 34% cumulatively over January to March amid supply disruptions linked to the West Asia conflict. Saurav Anand reported in The Financial Express on April 3 that imports dropped 12.5% month-on-month to 1.68 million tonnes (MT) in March. Qatar's share, which had been as high as 40% historically and stood at about 39.6% (0.76 MT) in February, collapsed to just 3.6% (0.06 MT) in March.

Oman emerged as the top supplier with 0.53 MT (31.5% share), followed by the United States at 0.34 MT (20.2%) and Nigeria at 0.33 MT (19.6%). The decline followed a peak of 2.57 MT in January and 1.92 MT in February. Sehul Bhatt, director at Crisil Intelligence, has noted that prices of these commodities are expected to remain elevated and volatile in April.

India's foreign exchange reserves have also come under tremendous pressure. Anjali Kumari and Anupreksha Jain, in Business Standard, reported that the forex kitty fell $30.5 billion in March following the intensification of the West Asia conflict in late February. The Reserve Bank of India (RBI) intervened as the rupee depreciated over 4% against the dollar. Total reserves declined from a record high of $728.5 billion (week ended February 27) to $688 billion by late March. Foreign currency assets (FCA), the main component, fell almost $14 billion in FY26 so far, though gold reserves provided some offset through valuation gains.

The reserves still offer about 11 months of import cover, but the forward-book cover has narrowed to nine months amid a widened net short dollar position.

This article went live on April sixth, two thousand twenty six, at two minutes past two in the afternoon.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.