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If the ongoing geopolitical uncertainties in West Asia escalate further or persist for a longer period, it could have an adverse impact on several Indian sectors, including basmati rice, fertilisers, diamond polishing, travel operators and airlines due to their direct exposure to the region, according to a report by Crisil Ratings.
The report noted that sectors such as ceramics and fertilisers, which are highly dependent on imported liquefied natural gas (LNG), could also face near-term production challenges and will require close monitoring. It stated, "Middle East uncertainties, Direct trade, LNG-dependent and crude-linked sectors could bear the brunt of prolonged disruption". Crude-linked sectors such as downstream oil refiners, tyres, paints, speciality chemicals, flexible packaging and synthetic textiles may also be affected if energy prices remain elevated. India imports around 85 per cent of its crude oil and half of its LNG requirement, with about 40-50 per cent of crude oil and 50-60 per cent of LNG shipments passing through the Strait of Hormuz. According to the report, most shipping vessels have stopped sailing on this route since March 1, 2026, due to increased risks of passage. Any prolonged disruption of this route could impact global crude oil and LNG availability and push prices higher. The price of Brent crude has already surged to around USD 82-84 per barrel (bbl) from an average of USD 66-67 during January-February 2026. Similarly, the Asian spot LNG price has risen sharply from about USD 10/MMBtu to USD 24-25/MMBtu. A further increase in energy prices could widen India's current account deficit and fuel inflation. It may also impact the profitability of Indian companies, given the critical role of energy across industries. India also imports around two-thirds of its liquefied petroleum gas (LPG), with most supplies coming from West Asia. However, since LPG is largely used for household consumption and only about 10 per cent is used as industrial fuel, the impact on India Inc may remain limited. Among sectors facing higher exposure, basmati rice exports could see delays as around 70-72 per cent of India's basmati export volume of nearly 6 million tonnes last fiscal was shipped to the West Asian countries. The fertiliser sector may also face challenges as India imports around 30 per cent of its fertiliser requirement, with West Asia supplying around 40 per cent of these imports. The aviation sector could also face disruptions as about 10 per cent of total flights operated by Indian airlines transit to or through West Asia. Airspace restrictions and airport closures, particularly in Dubai, could increase fuel costs and affect operating margins. However, the report said the near-term impact on most Indian companies may remain limited due to their strong balance sheets, which provide some cushion against the current uncertainties. (ANI)
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