Prolonged geopolitical uncertainty in West Asia could affect several Indian sectors directly exposed to the region, as well as industries dependent on crude oil and liquefied natural gas (LNG), research agency Crisil Ratings said while issuing a credit alert warning on Thursday.
It said that sectors such as basmati rice, fertilisers, diamond polishing, travel operators and airlines have immediate exposure through trade and operational links. In addition, industries reliant on imported LNG, including ceramics and fertilisers, may see short-term production challenges.
Crude-linked sectors such as downstream oil refiners, tyres, paints, specialty chemicals, flexible packaging and synthetic textiles could also face cost pressure.
The report added that countries in West Asia account for about 30 per cent of global crude oil and 20 per cent of global LNG production, much of which passes through the Strait of Hormuz. India imports about 85 per cent of its crude oil and half of its LNG. Of these, 40–50 per cent of crude and 50–60 per cent of LNG shipments move through the strait. Most shipping vessels have avoided the route since 1 March 2026 due to heightened risk.
Prices have already reacted. Brent crude has risen to around $82–84 per barrel from an average of $66–67 in January–February 2026. Asian spot LNG prices have increased from about $10/MMBtu to $24–25/MMBtu. Crisil noted that any further increase could widen the current account deficit, add to inflation and affect corporate profitability.
The alert also points to rising freight costs and insurance premiums for trade-dependent sectors.
Sector-wise impact assessment
Basmati rice: Exports to West Asia make up 70–72 per cent of India’s basmati export volumes. Shipment delays and potential payment disruptions could affect working-capital cycles, though exporters’ balance sheets offer some cushion.Fertilisers: India imports about 30 per cent of its fertiliser requirement, with West Asia supplying roughly 40 per cent. Disruptions could affect imports of both finished fertilisers and raw materials such as rock phosphate, phosphoric acid and muriate of potash. LNG availability and prices may also influence urea production and subsidy requirements.
Diamond polishers: Israel and the United Arab Emirates account for about 18 per cent of India’s polished-diamond exports and nearly 68 per cent of rough-diamond imports. Alternative hubs such as Belgium and Hong Kong may mitigate the impact.
Airlines: Around 10 per cent of flights operated by Indian carriers transit West Asia. Airport and airspace closures, particularly at Dubai International Airport, have disrupted schedules. Rerouting to Europe and the US will raise fuel costs, which already form 35–40 per cent of airline operating expenses. A weaker rupee could further pressure margins due to foreign-currency lease liabilities.
Travel operators: India’s outbound travel includes about 25 per cent to the UAE, 10 per cent to Saudi Arabia and 10 per cent to Qatar, Kuwait and Oman. Cancellations and postponements may shift revenue recognition to later periods, while higher fares and uncertainty could slow new bookings.
Ceramics: Reduced availability of LNG and LPG could force plants to operate at lower utilisation. West Asia accounts for over 15 per cent of ceramic exports, and shipment delays may affect revenue and margins.
City gas distribution: LNG imports account for about 40 per cent of the sector’s demand. Industrial volumes may decline if supplies tighten, though margins could be partly protected because alternative fuels are also linked to crude prices.
Crude-linked industries:
Downstream oil refiners may face pressure on gross refining margins.Paints and specialty chemicals could see margin pressure as about 30 per cent of production costs are crude-linked.Tyre makers, with about half of costs connected to crude derivatives, may face delays in passing on higher input costs.Flexible packaging and synthetic textiles, where 70–80 per cent of costs are crude-linked, may see moderate impact due to an improved demand-supply balance.Crisil added that upstream oil companies may benefit from higher crude prices, while shipping firms could gain from higher charter rates due to vessel shortages and increased tonne-mile demand. The alert also noted that any major disruption to the Suez Canal could amplify effects on global trade.
The research agency said that it expects near-term impact on most Indian companies to be limited because of strong balance sheets, but prolonged uncertainty could elevate risks due to sustained increases in oil and gas prices and supply-chain disruption.
