EY warns India may need bigger reserves of oil, fertilizers, medicines to shield consumers from global crises
New Delhi, May 28
Amid rising geopolitical tensions and volatile global commodity prices, consultancy firm EY has said India needs to build larger strategic reserves of crude oil, fertilizers, rare earth materials and essential medicines to protect the economy and consumers from future global shocks.
In its latest Economy Watch May 2026 report, EY warned that the ongoing West Asia crisis has exposed India's dependence on imported energy and critical supplies, which could directly affect fuel prices, inflation, food costs and availability of essential goods for ordinary households.
"In view of the West Asian crisis and other unfavourable economic developments, a substantial reorientation of policies may be needed," the report said.
The report noted that India should focus on "building relatively larger reserves of crude and primary commodities where India's import dependence and vulnerability are high."
For consumers, this could mean better protection against sudden spikes in petrol, LPG and fertiliser prices during global conflicts or supply disruptions. Higher fertilizer costs often feed into food inflation, while expensive crude oil impacts transport costs, electricity prices and daily household expenses.
EY said India should maintain "suitable strategic reserves" of key commodities including "(1) crude oil, (2) LPG, (3) fertilizers, (4) processed and unprocessed rare earth materials, (5) basic medicines and critical medical equipment."
The report pointed out that India's current strategic crude oil reserves remain limited compared to major economies. According to EY, India's crude oil inventories are sufficient for only around four to five days of domestic consumption.
"India's strategic crude oil inventories... are sufficient for only about four to five days of domestic consumption," the report said, while comparing it with significantly larger reserves maintained by countries such as China and Japan.
The report comes at a time when global crude oil prices have risen sharply amid tensions in West Asia. EY said average global crude prices increased to USD 103.9 per barrel in April 2026, the highest level since July 2022.
The consultancy firm also cautioned that India's current account deficit and inflation could come under pressure if oil prices remain elevated for a prolonged period.
Beyond oil, the report highlighted the need for India to reduce dependence on vulnerable global supply chains and critical trade routes.
EY said India should continue diversifying its energy import sources and accelerate alternative trade and transport corridors such as the India-Middle East-Europe Economic Corridor (IMEC) and Indo-Pacific routes.
The report also called for faster adoption of green energy, electric vehicles and domestic energy production to reduce long-term dependence on imported fossil fuels.
"In view of the mounting pressures emanating from the West Asia crisis and the changing world trade and economic order in general, India may recast its growth strategy," the report added.
According to EY, the current geopolitical environment shows that economic security is becoming as important as economic growth, especially for large import-dependent economies like India.
— ANI
Reader Comments
Interesting perspective from a Western consulting firm. But I wonder if building all these reserves will put additional burden on our fiscal deficit? We need a balanced approach - not just stockpiling but also accelerating domestic production and green energy transition. The IMEC corridor idea is promising.
As a homemaker, I can tell you that every time global oil prices spike, our monthly budget takes a hit. Petrol, LPG, even vegetables become costlier. We need better buffer stocks of fertilizers and medicines too - last year we saw how shortages affected farmers and patients. Common sense policy this. 👍
While EY's analysis is valid, I hope this doesn't become an excuse for more taxes or higher prices. The government should fund these reserves from windfall gains when oil prices are low, not pass the cost to consumers. Also, focus on domestic exploration and renewables is the real long-term solution.
This is exactly what Atmanirbhar Bharat should mean - not just manufacturing but also securing our essential supplies. The way West Asia crisis has disrupted everything from fuel to fertilizer, we need to learn our lesson. Government should create a strategic reserve fund and fill it up when global prices are reasonable. 😤
EY's suggestions are good, but we should also think about diversifying our energy sources faster. Solar and wind are great for the long term, but we need more focus on nuclear power and ethanal blending for the medium term. Also, the IMEC corridor is a strategic game-changer - should become a top priority.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.