The cost of goods from India is rising in 2026.
Here is exactly why.

Bhutan imports more than 80% of its goods from India. That single fact means anything that raises the cost of doing business in India reaches Bhutan quickly — in supplier quotes, in freight invoices, and eventually in what end buyers pay. In the first half of 2026, costs have risen sharply across nearly every product category imported from India. The reasons are specific, interconnected, and traceable. Here is a full account of what is happening and why.

The trigger: an oil shock that changed everything

On 4 March 2026, as the US-Iran conflict escalated sharply, the Strait of Hormuz — through which roughly one-third of the world's seaborne crude oil passes — was closed. The International Energy Agency described what followed as the largest oil supply disruption in the history of the global oil market. Brent crude surged past $120 per barrel within days of the closure.

For India, this hit harder than for most countries. India imports approximately 90% of its crude oil needs and around 60% of its LPG (cooking and industrial gas) requirement, almost entirely from the Middle East. When the Strait closed, every oil-dependent cost in the Indian economy came under immediate and sustained pressure. There is no domestic buffer large enough to absorb a disruption at this scale.

What happened to fuel prices inside India

Oil marketing companies in India began revising fuel prices almost daily from late May 2026 onwards. Between May and mid-June 2026, India recorded 22 diesel price revisions in four weeks. The cumulative increases:

• Diesel: up ₹11.14 per litre in four weeks
• Petrol: up ₹9.17 per litre in the same period
• Petrol in Delhi: now ₹102.12 per litre
• Petrol in Mumbai: now ₹111.21 per litre
• Diesel in Mumbai: approximately ₹97.83 per litre

LPG cooking gas has seen two separate hikes since the conflict began. The first, on 7 March 2026, raised the price by ₹60 per cylinder. The second, effective 7 June 2026, added another ₹29. That is a cumulative increase of ₹89 per cylinder in three months. A domestic LPG cylinder in Delhi now costs ₹942 — up from ₹853 before the conflict. The Saudi CP benchmark, which sets the international LPG reference price, has risen 46% since late February 2026.

These are not marginal adjustments. This is a structural cost shift that has moved through the entire Indian economy — from the factory and the mill to the truck on the road to the border.

The rupee is making it worse

At the same time as fuel prices were rising, the Indian rupee weakened significantly against the US dollar. The INR hit a record low of ₹94.71 per dollar in March 2026, slipping further to ₹95.10 in early May. That represents approximately 14% depreciation over two years.

This matters because almost every industrial commodity — crude oil, copper, fertilisers, industrial metals — is priced globally in US dollars. A weaker rupee means that each dollar's worth of raw materials costs more when converted to Indian currency. This acts as a second, compounding layer of cost pressure running alongside the direct fuel price increases. Foreign institutional investors pulled approximately $17 to $18 billion out of Indian markets during this period, widening the current account deficit and adding further downward pressure on the currency.

For any Indian supplier buying raw materials priced in dollars, the cost base rose both because the dollar price went up and because the rupee bought fewer dollars. Buyers in Bhutan see the result in supplier quotations — even when the product itself has not changed.

How higher fuel costs reach your landed price

Fuel accounts for 35 to 45% of all road freight costs in India. Industry data shows that every significant fuel price revision pushes freight rates up by 5 to 8%. After 22 revisions concentrated into four weeks, the compounding effect on freight is substantial.

For any consignment moving from a supplier in West Bengal — a rice mill, a tea auction centre, a hardware distributor, a cable warehouse — to the Jaigaon–Phuentsholing border crossing, road freight is unavoidable. There is no route to Bhutan that does not require it. When we quote a landed price for a delivery to the border, the freight component is real and it is higher today than it was twelve months ago. Significantly higher.

What has moved, category by category

Rice and food grains

Government wheat stocks held by the Food Corporation of India fell 4.7% in June 2026 compared to the same period last year — to 29.91 million tonnes from 31.39 million tonnes. Wheat retail prices rose 7% in a single week in early June 2026 as domestic demand remained strong and stocks tightened.

Rice tells a more mixed story. Indian rice production in 2025/26 has been steady, and export volumes are forecast at a record 24 million metric tonnes. However, the FAO All Rice Price Index rose 2.7% in May 2026, driven by weather concerns in Asian producing countries and — importantly — higher crude oil input costs throughout the agricultural supply chain. Fertilisers, harvesting equipment, milling energy, and transport all run on fuel. When fuel rises, food production costs follow with a short lag.

Bhutan's cereal imports from India were valued at $43.47 million in 2025. The buyers behind those volumes are now paying more for the same quantities.

Tea from North Bengal and Assam

This one is close to home for us. We source from gardens and auction centres in the Dooars belt and Assam. Tea auction prices at North Bengal and Assam centres have risen consistently through 2026 — the data from Tea Board India auction records shows the trend clearly:

• January 2026: North India zone average ₹168.38 per kg — up ₹8.68 per kg versus January 2025
• February 2026: ₹160.17 per kg — up ₹12.66 per kg year-on-year
• March 2026: ₹184.11 per kg for the North India zone

The cause is not the oil shock — it is a crop shortfall driven by irregular and insufficient rainfall during the critical growing months across Assam and the Dooars belt. Less tea harvested against the same or higher demand means auction prices rise. For a buyer sourcing CTC, orthodox, or loose tea for the Bhutan market, this represents a year-on-year cost increase of between 5% and 8% on the raw material alone, before freight and documentation are added.

Building materials and hardware

Tiles, sanitaryware, fittings, and ceramic products are manufactured in kilns at high temperatures. They are among the most energy-intensive products in India's manufacturing sector. When energy costs rise — and in 2026 they have risen sharply through both higher gas and electricity prices — production costs follow directly and quickly.

Cement, a key input in construction and a significant export to Bhutan, has risen approximately 5% year-on-year in the first eight months of FY2026, with prices currently ranging from ₹340 to ₹420 per 50 kg bag depending on brand and region. Environmental restrictions on sand and aggregate mining have tightened supply in several states, adding another layer of cost to construction inputs. Aggregate costs have risen sharply in parts of West Bengal.

India's manufacturing PMI for May 2026 reached 55.0 — a healthy output figure — but the input cost component hit a four-year high. Nearly 70% of Indian manufacturers reported that production costs as a percentage of sales had increased during the quarter.

Electrical supplies — wires, cables, and fittings

Wires and cables are priced against copper, which trades on the London Metal Exchange in US dollars. As of 12 June 2026, copper in India is priced at approximately ₹1,364 per kg, with the LME reference rate at ₹1,321 per kg as of 1 June. Cable manufacturers in India update their list prices whenever LME copper moves more than approximately 3% — meaning price lists change frequently and the direction has been upward.

FR cable (the standard wiring used in most building and commercial projects) ranges from approximately ₹15 per metre for 1mm² to ₹70 per metre for 6mm² as of mid-2026. These prices reflect both the underlying copper cost and the freight and energy costs of manufacturing and distributing them. A buyer importing electrical supplies into Bhutan is absorbing a three-part increase: higher copper (dollar-priced), a weaker rupee, and higher freight.

Light fittings, switches, sockets, and other electrical accessories track similar dynamics — import components priced in dollars, assembly energy costs, and outbound freight, all of which have risen.

Where more pressure is building — and when it arrives

The cost increases described above are what has already reached quotations and invoices. There is more to come.

The critical figure is this: only 8% of Indian manufacturers are currently passing cost increases through to buyers. The remaining 92% are absorbing increases internally — holding prices to retain customers in a competitive environment. That position is not sustainable when input costs have risen this sharply. The deferred price increases that buyers have not yet seen are likely to surface in quotations over the next one to two quarters.

India's Consumer Price Index for March 2026 was 3.40% overall and 3.87% for food items — still within the Reserve Bank of India's comfort zone of 2–6%. But these figures were measured before the full fuel price pass-through had completed. The WPI (Wholesale Price Index) for February 2026 was 2.13%. Both indices will likely revise upward in coming months as the energy and freight cost increases complete their pass-through into retail and wholesale prices.

What this means for buyers in Bhutan

Three conclusions are worth drawing clearly for anyone placing orders from India right now.

The increases in quotations are real, not inflated. What Indian suppliers are quoting in 2026 reflects genuine cost movements at every point in the chain — raw material, energy, labour, and freight. Negotiating on the basis that these increases are margins being protected is likely to damage the supplier relationship without producing a better price.

Relief may come, but slowly. The US and Iran have moved toward a peace agreement. If crude oil prices ease as a result, some downstream relief in freight and manufacturing energy costs will follow — but not immediately. The increases already embedded in inventories, freight contracts, LPG cylinder stock, and energy bills already paid do not reverse when Brent crude drops. The supply chain lags by several weeks to months.

Fixing a landed cost in advance is the most effective protection. Spot purchasing in a rising cost environment means consistently buying at the worst price — you purchase at today's elevated rate, and if costs rise further before your next order, you pay more again. Committing to volumes with a supplier who can provide a fixed landed price from origin to the Phuentsholing border removes that exposure. You know your cost. You can price your product. You can plan.

Where we stand

We are based in Hasimara, on the India side of the border, and we source goods across West Bengal and Assam every week. We see these cost movements in real time — in the freight rates we are quoted, in what suppliers charge at their gates, in what it costs to clear a consignment at the Jaigaon–Phuentsholing crossing today versus six months ago.

We do not give you an ex-factory price and leave freight, customs documentation, and border clearance as unknown variables. We quote one landed number — from the supplier in India to the border crossing in Bhutan. When that number changes because diesel has moved, or because tea auction prices have moved, or because copper has moved, we tell you exactly why and by how much.

Bhutan sources over 80% of its imports from India. That is not changing. What is changing in 2026 is the cost structure behind it — and that shift is real, documented, and larger than it has been in several years. Understanding the reason clearly is the first step to managing it well.

If you want to know the current landed cost of a specific product into Bhutan, contact us directly. We will give you the real number.