New Delhi [India], 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.