Page 24 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Input cost pressures remained elevated during the period, reflecting higher fuel, transportation, and raw
material costs. Firms continued to pass on part of the increased costs to consumers through higher selling
prices, while business sentiment moderated amid concerns regarding global growth, supply chain
disruptions, and inflationary pressures.

Employment conditions continued to improve, with firms reporting ongoing hiring activity supported by
expectations of future demand recovery and expansion in business activity. However, export-oriented
sectors remained under pressure due to weakening international demand conditions and rising global
uncertainties.

Figure 12: HSBC India Manufacturing PMI

Source: S&P Global PMI

India’s external position

India’s forex reserves

India’s foreign exchange reserves remained at comfortable levels during May 2026 despite continued
volatility in global financial markets and pressure on the Indian rupee arising from elevated crude oil prices
and geopolitical uncertainties. According to data released by the Reserve Bank of India (RBI), India’s forex
reserves declined by US$ 8.09 billion to US$ 688.89 billion during the week ended May 15, 2026, following
an increase of US $6.295 billion in the previous week when reserves stood at US$ 696.99 billion.

The reserves had earlier touched an all-time high of US$ 728.494 billion during the week ended February
27, 2026, before moderating in subsequent weeks due to pressure on the rupee and RBI interventions in
the foreign exchange market through dollar sales. Elevated global crude oil prices and increased importer
demand for dollars also contributed to currency volatility during the period.

May 2026 Page | 23