Fertilisers To Flights: What India Is Doing To Cushion Iran Conflict Impact

Even as a ceasefire between the United States and Iran has taken effect, global markets remain alert, with energy flows, freight routes and commodity prices still sensitive to developments in the region.

Amid this backdrop, India has moved quickly with a calibrated, multi-pronged strategy to insulate its economy from potential spillovers. The approach spans cost relief, supply assurance, liquidity support and sector-specific interventions, aimed at ensuring stability across consumers, farmers, businesses and exporters.

Here’s how the government is cushioning the impact:

Farmers Shielded: Higher Fertiliser Subsidy To Offset Global Price Swings

With fertiliser markets directly exposed to global disruptions, the government has increased support to protect

farmers from rising input costs.

The Cabinet has approved a subsidy outlay of Rs 41,533 crore for the Kharif 2026 season under the Nutrient Based Subsidy (NBS) scheme — an increase of about 11.60 per cent from last year’s Rs 37,216.15 crore.

“It is clear that the West Asia conflict has had an effect on this [fertilisers]… That has been kept in mind when today’s approval was done… There has been no question mark on the availability of fertiliser anywhere in the country,” Union Minister Ashwini Vaishnaw said.

India relies on imports for key fertiliser inputs such as phosphoric acid, rock phosphate, sulphur, ammonia and potash, making the sector particularly sensitive to global disruptions. The revised subsidy rates aim to ensure farmers continue to get fertilisers at affordable prices during the Kharif sowing season.

Flyers Get Relief: 25% Cut In Airport Charges To Keep Fares Stable

As rising aviation turbine fuel prices put pressure on airline costs, the government has announced a 25 per cent cut in landing and parking charges for domestic flights for three months.

The Ministry of Civil Aviation has directed the Airports Economic Regulatory Authority (AERA) of India to implement the reduction at major airports, while the Airports Authority of India has been asked to extend the same relief at non-major airports. Officials said the move is expected to save airlines roughly Rs 400 crore over the three-month period.

The announcement builds on an earlier step under which the government capped the pass-through of ATF price increases for domestic carriers at 25 per cent, with the stated aim of preventing a sharp rise in airfares. “Even in the prevailing challenging situation, we have ensured that cancellations and rising fuel costs do not severely affect domestic operations,” Civil Aviation Minister Ram Mohan Naidu said.

Credit Lifeline For Businesses: Rs 2.5 Lakh Crore Guarantee Scheme In The Works

To support businesses facing cost pressures and uncertainty, the government is preparing a large-scale credit support mechanism.

A Rs 2.5 lakh crore credit guarantee scheme is likely to be rolled out, expanding the framework of the Emergency Credit Line Guarantee Scheme (ECLGS) that was used during the Covid-19 pandemic, according to a report by Moneycontrol.

The proposed scheme is expected to offer up to 90 per cent government-backed guarantees on loans, reducing risk for lenders and improving access to credit for businesses across sectors.

Officials indicated that the scheme will be broader in scope and scale. “We are looking at enhancing both the scope and the overall limit of the scheme so that a larger set of sectors and enterprises can access guaranteed credit more easily,” a government official told Moneycontrol.

Like the earlier ECLGS framework, the scheme is expected to keep borrowing conditions favourable, with capped interest rates, limited collateral requirements and structured repayment support.

Consumers First: Fuel Duty Cut To Contain Price Shock

With global crude markets seeing volatility amid disruptions around the Strait of Hormuz, the government in March stepped in to limit the pass-through of higher energy costs.

Excise on petrol was cut to around Rs 3 per litre from Rs 13, while diesel excise effectively reduced to zero from Rs 10. The move reduces the tax burden in retail fuel prices, enabling state-run oil marketing companies (OMCs) to absorb a portion of the rise in crude costs instead of passing it on to consumers immediately.

Securing Domestic Supply: Export Levies On Diesel, ATF

To ensure domestic availability is not compromised during global supply disruptions, the government has imposed export levies on key fuels.

Diesel now attracts a levy of Rs 21.5 per litre, while aviation turbine fuel (ATF) carries a levy of Rs 29.5 per litre — measures aimed at prioritising domestic consumption at a time of tight global supply.

Refineries At Full Capacity: Ensuring Steady Fuel Availability

India’s refining ecosystem has been ramped up to maintain uninterrupted supply across sectors.

All refineries are operating at high capacity with adequate crude inventories, ensuring fuel availability remains stable. Domestic LPG production has also been increased to meet household demand, reducing reliance on external supply chains. On April 7, more than 53.5 Lakh domestic LPG cylinders were delivered.

Total commercial LPG allocation has been increased to about 70 per cent of pre-crisis levels, including 10 per cent reform-linked allocation.

Gas Supply Strengthened: PNG, CNG Rolled Out At Scale

To ease pressure on conventional fuels, the government has ensured uninterrupted supply of cleaner alternatives.

PNG for households and CNG for transport are being supplied at 100 per cent capacity. Expansion is also underway, with over 3.9 lakh new PNG connections added in March alone, strengthening last-mile energy access.

Exporters Get Cushion: SEZ Flexibility, Freight Support And Tax Relief

To sustain trade momentum amid rising logistics costs and disrupted shipping routes, the government has rolled out a multi-part relief package for exporters.

Special Economic Zone (SEZ) units have been allowed to sell up to 30 per cent of their output in the domestic market for one year, from April 2026 to March 2027. These sales will be subject to concessional customs duties, with effective rates reduced to roughly 5 to 15 per cent depending on the product.

At the same time, the government has extended the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme till September 30, 2026, ensuring exporters continue to receive refunds on embedded taxes.

A dedicated support package of about Rs 497 crore has also been introduced to offset the surge in freight charges and war-risk insurance premiums.

Together, these measures provide exporters with both an alternative market and financial cushioning, helping them maintain production levels despite global disruptions.

Liquidity Relief: RBI Eases Credit And Payment Timelines For Exporters

The Reserve Bank of India has complemented these measures by easing financial conditions for exporters facing delays in shipments and payments.

The maximum period for export credit has been extended from around 270 days to 450 days. In addition, the timeline for realisation of export proceeds has been relaxed from nine months to up to 15 months.

Manufacturing Shielded: Duty Waivers On Petrochemical Inputs

To protect domestic manufacturing from input shortages and price spikes, the government has removed customs duties on select petrochemical feedstocks.

The exemption, valid until June 30, 2026, applies to key intermediates used across plastics, pharmaceuticals, textiles, chemicals and automotive components.