Srinagar, Mar 25 — The ongoing conflict involving the United States, Israel and Iran is beginning to impact India’s economy across sectors, with disruptions in energy supply chains triggering shortages, industrial slowdowns and inflationary concerns.
India, which imports nearly 85 per cent of its crude oil requirements, remains highly exposed to instability in West Asia, particularly around key transit routes such as the Strait of Hormuz. Any escalation risks pushing global oil prices higher, with cascading effects on domestic prices and economic stability.
LPG shortage hits small industries, education
Shortages of liquefied petroleum gas (LPG), linked to supply disruptions, have led to the shutdown of several small-scale industries, particularly dyeing units that rely heavily on gas for operations. The closures have forced hundreds of workers to return to their native villages amid loss of employment.
The crisis has also affected the education sector in parts of the country. Several universities have shifted to online classes as hostels and paying guest accommodations struggle to function without adequate LPG supplies.
Fertilizer supply tightens in Himachal Pradesh
The agricultural sector, particularly in Himachal Pradesh, is facing emerging stress due to fertilizer shortages. Authorities have introduced rationing measures as demand for key inputs such as urea and NPK fertilizers rises ahead of the apple bloom season.
Officials attributed the shortage to global logistical disruptions and raw material constraints linked to the conflict. Supply chains have been further strained by reduced availability of liquefied natural gas (LNG), a key input in fertilizer production.
Himachal Pradesh State Cooperative Marketing and Consumers Federation Limited (Himfed) said it is unable to meet rising demand and has moved to ensure “equitable distribution” among farmers. High demand in apple-growing regions has made rationing unavoidable, officials said, adding that steps are being taken to stabilise supply in the coming months.
Government flags prolonged global disruption
Prime Minister Narendra Modi recently cautioned that the evolving global situation could persist, urging preparedness in the face of prolonged disruptions. The conflict has already begun to strain global energy supply chains, with implications for countries dependent on imports.
Inflation, growth risks mount
Rising crude oil prices are expected to have a direct impact on India’s trade balance and fiscal position. Higher fuel costs typically translate into increased transportation and logistics expenses, pushing up prices of essential goods and manufacturing inputs.
Economists warn that prolonged volatility could feed into inflation, put pressure on the rupee, and slow economic growth. Within India’s inflation-targeting framework, sustained price pressures may limit the Reserve Bank of India’s ability to ease interest rates, affecting borrowing costs, consumption and investment.
Outlook
While authorities are taking steps to manage supply disruptions, experts caution that the extent of the impact will depend on the duration and intensity of the conflict. A prolonged crisis could deepen shortages, sustain high energy prices and weigh further on India’s economic outlook.