The Aryavarth Express New Delhi, April 6 — ICICI Bank has lowered India’s GDP growth forecast for FY27 to 6.8–6.9%, down from its earlier estimate of 7.2%, citing disruptions in energy supply and weakening manufacturing momentum due to ongoing geopolitical tensions.
The report noted that rising global oil prices and supply chain blockages have begun to weigh on domestic production. The revised outlook assumes crude oil prices will eventually stabilize around $85 per barrel as supply conditions improve.
Before the conflict, India’s economic trajectory appeared stronger. GDP grew 7.8% year-on-year in Q3 FY26, with year-to-date growth revised to 7.6%. High-frequency indicators such as automobile sales and bank credit also pointed to solid momentum through February.
However, the conflict has significantly disrupted supplies of key energy inputs like liquefied natural gas (LNG) and liquefied petroleum gas (LPG), affecting industrial activity. This is reflected in the Manufacturing PMI, which slowed to 53.9 in March from 56.9 in February.
The bank highlighted that energy constraints are forcing prioritization of household consumption over industrial use, leading to reduced output in sectors such as fertilizers, ceramics, metals, glass, and hospitality. Corporate margins are also expected to come under pressure, which could weigh on overall Gross Value Added (GVA).
Drawing parallels with past trends, the report observed that moderate increases in oil prices have limited impact on GDP growth. However, significantly elevated prices — such as the $111 per barrel average during 2012–14 — have historically led to slower growth.
The near-term impact is expected to be most visible in Q4 FY26 and Q1 FY27, when supply constraints are likely to peak. External trade is also facing challenges, particularly due to disruptions in the Strait of Hormuz, affecting exports to GCC countries that account for about 15% of India’s exports.
Although supply chains are expected to gradually normalize, ICICI Bank cautioned that growth in the near term will remain under pressure, especially with oil prices hovering around $100 per barrel since the onset of the conflict.
