Uday Kotak Raises Concern Over Inflation and Fuel Risks Amid Geopolitical Tensions

Kotak cautions that rising energy and oil prices from west asia tensions will transmit through India’s economy, affecting households and businesses and heightening macro risks.

Uday Kotak has warned that rising energy prices linked to tensions in West Asia could soon squeeze India’s economy, with both companies and households likely to feel the strain. The founder of Kotak Mahindra Bank said tougher days may be ahead as the impact of the ongoing US-Iran conflict starts to filter through.

Kotak argued that India cannot assume it is safe from global shocks, even though the domestic economy appears stable for now. He urged businesses and families to prepare for tougher conditions instead of waiting for the damage to appear, stressing that the country should stay alert during this period of heightened geopolitical risk.

Rising energy prices and oil prices threaten Indian households

According to Kotak, many Indians are yet to experience the real effect of higher oil prices because older fuel stocks are still dampening the blow. Kotak believes this buffer will fade, pushing up costs for transport, cooking fuel and a wide range of goods, especially for households already trying to manage limited and fixed incomes.

He noted that higher fuel costs often spread through the economy. Even people who do not buy much fuel directly can still pay more for food, services and manufactured items. Referring to the recent conflict in the Middle East, Kotak said, "We have not seen the impact in the last two months of the Middle East war in terms of energy price transmission. It's coming. And it's coming big," Kotak said.

Rising energy prices and oil prices linked to West Asia tensions

Kotak’s comments come at a time when crude oil prices have climbed sharply amid worries over the fragile US-Iran ceasefire and possible supply disruptions through the Strait of Hormuz. The Indian rupee has weakened against the US dollar, while domestic stock markets have faced sharp swings as investors track developments in West Asia.

Kotak warned that the apparent calm for shoppers may not last long. "The consumers have not felt the pressure at all," he said, warning that families with stretched budgets could face serious stress. He added, "Think about a consumer with limited income, having to spend more directly on fuel and indirectly on other items dependent on fuel. The shock is coming," Kotak warned.

Rising energy prices and oil prices highlight India’s vulnerability

The banker underlined that India’s heavy dependence on imported crude leaves the economy exposed during global tensions. India imports more than 85% of its oil needs, so a sustained jump in prices can raise inflation, weaken the rupee and strain overall financial stability, especially if global finance also turns cautious at the same time.

Kotak said India’s current account deficit stays manageable when crude prices hover near $60 a barrel. However, if oil moves towards $100 a barrel, the pressure on the external account could intensify. He urged policymakers not to remain in a "comfort zone" and said, "My view is we should prepare for paranoia before the event," Kotak said. "We must prepare for the worst."

Kotak’s caution follows Prime Minister Narendra Modi’s recent appeal asking citizens to conserve fuel, cut back on non-essential foreign travel and delay unnecessary gold purchases. Supporting the logic, Kotak said countries should avoid "living beyond their means" in volatile periods. "There are some simple things that a country can do, which is to moderate unnecessary consumption," he said, comparing national choices to managing a financial balance sheet.

Kotak delivered these views at the CII Annual Business Summit 2026, where policymakers, economists and corporate leaders are already debating the wider fallout of prolonged instability in West Asia. His warning adds to growing concern that rising energy prices, a weaker rupee and unsettled markets could combine to test India’s resilience in the months ahead.