West Asia conflict could hit economy at many levels: GTRI

The West Asia conflict could widen into a broader supply shock for the Indian economy as it depends on large imports of oil, gas, fertilizers and industrial raw material from the region, according to a study by trade policy think tank Global Trade Research Initiative (GTRI).

The most immediate vulnerability lies in petroleum. In 2025, India imported about $70bn worth of petroleum crude and products from West Asia. 

Qatar’s Petronet LNG has stopped LNG supplies to GAIL from March 4, 2026 .In 2025, India imported $9.2 billion worth of liquefied natural gas (LNG) from West Asia, accounting for 68.4% of its LNG imports.  LNG is used by fertiliser plants, gas-based power stations and city gas distribution networks that supply compressed natural gas (CNG) for vehicles and piped cooking gas for households.

In 2025, India bought $50.8 billion worth of crude oil from the region, accounting for 48.7% of its crude imports. India has about 30 days of stocks, any prolonged disruption in shipments could quickly push up fuel prices, raising transport and logistics costs and feeding into inflation. 

India imported $13.9 billion worth of LPG from West Asia in 2025, representing 46.9 %of its LPG imports. LPG remains the primary cooking fuel for millions of households. With stocks covering roughly two weeks of consumption, any disruption could quickly affect cooking fuel availability.

Petroleum coke from imports from the region stood at around $1.3 billion, accounting for 37.3 % of imports. It is widely used as fuel in cement plants, aluminium smelters and power generation. Supply shortages would raise production costs in these sectors and could slow construction and infrastructure projects.

The effects could also reach India’s farm sector through fertiliser supplies. In 2025, India imported $3.7 billion worth of fertilisers from West Asia. This included $ 2.2 billion of mixed fertilisers (NPK), accounting for 31.1 % of imports, and $1.5 billion of nitrogen fertilisers, representing 30.3 % of imports. Supply disruptions during the crop season could reduce fertiliser availability, increase government subsidy costs and push up food prices.

Several industrial raw materials sourced from the Gulf are equally important. India imported $1.2 billion worth of polyethylene polymers, $ 483 million worth of limestone input for cement production. Limestone shortages could push up cement prices and delay infrastructure projects.

Even metals supply chains are linked to the region. India imported $190 million worth of direct reduced iron (DRI) from West Asia, accounting for 59.1% of imports of this steelmaking input. The country also imported $869 million worth of copper wire, representing 50.7 % of imports, which is used in power transmission, electrical equipment and renewable energy infrastructure.