Centre Weighs Relief Measures for MSMEs, Fuel Amid Prolonged West Asia Crisis

New Delhi: Sensing that the crisis in the West Asia war may prolong further, the Centre may step in with some more measures soon to give relief for the vulnerable segments of the Indian economy, including the incentive packages for the MSME sector, fertilisers stock for farmers and sufficient fuel availability for common man and others alike to help them sustain and keep inflation under check in the domestic market if the crisis continues further, according to the sources.

The move of the government comes at a time when there is a sense that the recent oil shocks due to the West Asia War may transmit through higher input costs, resulting in downside risks to growth in the economy. Even the finance ministry in its report has indicated that the near-term outlook remains uncertain, with external shocks, particularly the West Asia crisis, posing downside risks to growth through elevated input costs and potential supply disruptions.

The government, the sources said, has categorically underlined strategies for different sectors to keep the pace of the economy in the country. “The government, however, has focussed on the most affected sectors, such as oil and gas, export, MSME, agriculture, aviation, which have been impacted in the Gulf war and sought constructive inputs from all the ministers concerned to ensure that India remains resilient,” the sources said, adding that the government policy efforts should remain in synergy and be implemented in a time-bound manner.

Last week, the government announced a slew of measures, including cutting excise duty on petrol and diesel during the month and will not hesitate to announce more to shield the vulnerable sectors of the economy. The government slashed the excise duty on petrol to Rs 3 a litre and exempted diesel from the duty to protect consumers from the impact of rising global crude prices amid the ongoing war in the Middle East.

Alongside, the government brought back duties on the export of diesel and aviation turbine fuel (ATF) to improve domestic availability. Global crude prices have risen by almost 50 per cent since the United States and Israel launched military strikes against Iran on February 28, triggering sweeping retaliation from Tehran.

Recently, the government also intervened to keep India's supply chains resilient, protect MSME exporters, prevent order cancellations and safeguard jobs in the export sector. Subsequently, the government recently restored full benefits under the remission of duties and taxes on exported products (RoDTEP) scheme to provide support to exporters facing elevated freight costs.

On Saturday, the finance ministry in its monthly economic review report also said that it has called for re-prioritisation of spending and targeted relief for the most affected and vulnerable businesses and households. “The latest data reflect that the recent shocks are being transmitted through higher input costs, supply constraints, and pressures across sectors, with early indications of some moderation in economic activity,” the report said.

It further said that near-term outlook remains uncertain, with external shocks, particularly the West Asia crisis posing downside risks to growth through elevated input costs and potential supply disruptions. “However, strong macroeconomic fundamentals and robust domestic demand may help cushion the impact,” it added.