As the conflict in West Asia enters its second month, Corporate India is staring at a fresh wave of uncertainty. The growing tensions — which have refused to abate despite talks of a truce — have disrupted trade flows, pushed up energy costs, strained global supply chains, and hurt production at home. One more month of the war, according to corporate leaders, could hurt balance sheets and push back investment plans lined up for the new financial year (FY27). For now, the growth outlook for the first quarter of FY27 remains weak, they said.
“Business prospects have been turned on their head with the war in West Asia,” said Mohit Malhotra, global CEO, Dabur. “Just over a month ago, most FMCG businesses were preparing for a stronger FY27 as they were anticipating the (FMCG) market to get back on the growth path following the GST 2.0 reforms. Now, businesses remain unsure,” he added.
“The war has left businesses vulnerable,” said Tarun Arora, CEO and whole-time director, Zydus Wellness. “On one hand, there is imminent inflation due to the war. This is pushing up production and packaging costs. The second aspect is the risk to demand as consumer sentiment will get cautious. The third aspect is the prospect of price hikes, which increases as the war drags on,” he added.
Sounding caution, the government has also said that the economy faced downside risks to its growth forecast of 7-7.4% for FY27 due to higher energy costs and supply disruptions.
A shortage of commercial gas triggered by the strikes targeting oil and gas installations in West Asia has disrupted operations in factories across sectors in India. Vedant Goel, managing director, Enlight Metals, said that while prioritising steel and other industries was vital to reviving economic growth, seamless availability of commercial gas was a challenge.
“To protect the economy’s engine, namely SMEs and MSMEs, policymakers must act swiftly with targeted measures. This includes immediate subsidies on commercial LPG (beyond Ujjwala), excise duty waivers, relaxed import norms and strict anti-hoarding enforcement. Prolonged shortages risk cascading shutdowns, inflation and weakened global competitiveness,” Goel said.
Manufacturing Under Pressure
While some companies in sectors such as edible oils, paints and packaged water have already begun taking price hikes, some others such as durables are expected to do so from April.
“Volatility in crude prices has pushed up the cost of crude-linked derivatives such as plastic packaging, which are used in the manufacture of home appliances. Metals such as copper and aluminium have inched up and the rupee has been weakening against the dollar. These challenges have compelled us to consider price hikes of around 7-10% across categories in April,” Kamal Nandi, business head and executive vice-president, appliances business, Godrej Enterprises Group, said.
Strategic Shifts
Engineering major Larsen & Toubro (L&T) has said the tensions have posed some supply and logistical challenges at its sites in West Asia. At a broader level, though, it is business as usual. “Alternative channels such as road transport are being explored,” Subramanian Sarma, deputy managing director & president, L&T, said.
“Customers (in West Asia) are paying on time. Banking channels are normal. In fact, it has become a little better than we expected in terms of invoice collections,” Sarma said about business activity in the region following the war. Of L&T’s total order book, 37% comprises projects from West Asia.
Vimal Kejriwal, MD & CEO, KEC International, said opportunities for urgent restoration of energy transmission and distribution lines had grown in the wake of the war. “They (West Asian countries) are coming out with some new tenders. These orders are important, what I call need-to-have projects. These will be in focus for us,” he said.