domestic demand conditions

Travel Sector Players Expect Major Spike In Domestic Airfares

The West Asia conflict has severely impacted global aviation, causing a 3.4% drop in passenger demand in April due to soaring fuel prices and airspace disruptions. Middle East carriers saw a drastic 46.6% decline. Airlines are reducing flights and increasing fares as a result of these ongoing challenges.

India's economy shows 'cautious resilience' despite global headwinds like Middle East conflict and rising oil prices. While manufacturing and services remain strong, and forex reserves offer a buffer, inflation concerns are mounting due to wholesale price surges. A weaker monsoon could further challenge growth and rural demand.

Air India has temporarily reduced operations on select domestic routes between June and August 2026 due to high fuel prices and ongoing West Asia conflict impacts. This follows similar adjustments to international services, with the airline citing sustained operational pressures and a need for stability amid global aviation uncertainty.

The HSBC India Manufacturing PMI is a widely tracked indicator that assesses overall manufacturing performance based on factors such as new orders, production levels, employment trends, supplier delivery times and inventory holdings.

Loss on slide, P 9

India's burgeoning EV market, exceeding 1.5 million vehicles, is critically reliant on energy storage for its sustainable growth. This technology underpins reliable charging infrastructure, grid stability, and renewable energy integration, essential for achieving net-zero goals. Addressing challenges in grid reliability, cost, and workforce development is key to unlocking the full potential of India's electric mobility future.

Acknowledging the impact of the West Asia crisis, the RBI has said that several factors will help India counter the negative effects and emerge strong.

The U.S. is drawing heavily from its Strategic Petroleum Reserve, releasing approximately 50 million barrels since the conflict with Iran began. These withdrawals are pushing emergency oil stockpiles to multi-decade lows, with significant amounts being exported. Analysts warn this depletion necessitates future replacements, potentially leading to higher prices globally.