India in May 2026: the most important developments in economy
India's economy in May 2026 was dominated by the energy shock from the war involving Iran and the disruption of shipping through the Strait of Hormuz. On May 10 and 11, Prime Minister Narendra Modi urged Indians to use less petrol and diesel and to avoid buying gold, in order to protect foreign exchange reserves; Indian shares and jewellery stocks fell. On May 15 the government raised petrol and diesel prices by 3 rupees per litre, the first such increase in four years. Further increases followed, the fourth in ten days by May 25, when petrol passed 100 rupees per litre in Delhi. Finance Minister Nirmala Sitharaman defended the hikes and said the government could lose 1 lakh crore rupees in revenue. Jet fuel and cooking gas prices also rose, and Air India cut nearly 100 flights until July and later 22 percent of its domestic flights. More than 40 India-bound ships were stuck near Hormuz in early May; by the end of the month individual tankers carrying LPG, LNG and crude had reached India, and the country turned to Latin American and African oil.
The rupee weakened through the month, from about 95 to the dollar on May 4 to a record of about 96.8 in spot trade around May 20, while the one-year forward rate reached 100. Foreign exchange reserves fell by 7.79 billion dollars in one week to 690.69 billion. India more than doubled its import tariff on gold and silver to 15 percent on May 13 and tightened silver import rules. The Reserve Bank of India sold dollars heavily to defend the currency, and the rupee rebounded from its lows by May 22.
On trade and investment, India and the European Union agreed a trade deal on May 16. India and the United States signed a rare earth agreement on May 26, and India committed to buying 500 billion dollars of US goods, a pledge experts questioned. The United Arab Emirates signed oil and gas supply deals, agreed to store 30 million barrels in India's strategic reserves and announced 5 billion dollars of investment. India banned sugar exports until September 2026.
by WorldBrief & Maksim Micheliov | AI-generated summary
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