Energy:
A majority of energy is transported through the Strait of Hormuz, located between Oman and Iran and the vital artery for global energy trade, which has been shut. India imports 85 per cent of its crude oil and half of its LNG requirement. Of this, 40- 50 per cent of crude oil and 50-60 per cent of LNG are shipped through the Strait of Hormuz. Any prolonged disruption of this trade route will have a bearing on global crude oil and LNG availability, and their prices.
India also imports about two-third of its liquefied petroleum gas (LPG) with majority of it from the Middle East. LPG is primarily used towards household consumption with only 10 per cent used as fuel in industries, limiting the impact on India Inc
The ongoing uncertainties have increased air/sea freight costs and insurance premiums for export/import-based sectors, which could impact the profitability of those with significant trade exposure globally. This will bear watching.
Basmati rice:
Exports to the Middle East and other west Asian countries constituted about 70-72 per cent of India’s basmati export volume of nearly 6 million tonne last fiscal.
Fertiliser:
India imports 30 per cent of its fertiliser requirement and the Middle East supplies 40 per cent of it. India also depends on this region for 30 per cent of its imports of key raw materials and intermediates, such as rock phosphate, phosphoric acid and muriate of potash. The ongoing uncertainties can lead to supply-chain disruption with possible impact on imports to India. Since the region also plays a key role in the global supply chain, there is a likelihood of an increase in the international prices for urea and di-ammonium phosphate. Additionally, LNG is a feedstock for manufacturing urea. Its reduced availability, or increased prices, will impact production or raise input costs. All of these, in turn, can result in a higher subsidy requirement than budgeted by the government.
Diamond polishers:
The Middle East is a major trading hub with Israel and the United Arab Emirates (UAE) together accounting for 18 per cent of total diamond exports in the first nine months of this fiscal. Additionally, 68 per cent of all Indian rough diamond imports are from the UAE and Israel due to the auctions held in the region. What can be a mitigant here is that polishers have alternative trading hubs, such as Belgium and Hong Kong, with ultimate buyers based in the United States and Europe. This will help them manage further adverse impact on a sector that has been under pressure from higher US tariffs
Domestic airlines:
Around 10 per cent of total flights operated by Indian airlines transit to, or through, the Middle East. Airport and airspace closures in most key cities, especially Dubai, the second-busiest international airport in the world, has crippled air travel. While limited flights have resumed operations from 3 March 2026, mainly to evacuate tourists and foreign nationals, a return to normalcy is seen taking time. Due to airspace restrictions over the Middle East, flights by Indian carriers to and from Europe and the US will incur higher fuel cost as diversions and detours add to flying time. Fuel accounts for 35-40 per cent of operating cost for airlines. An increase in crude oil prices will impact operating margins. Any sharp depreciation in the rupee will also have a bearing on the profitability of Indian airlines as a significant portion of their lease liabilities is in foreign currency.
Travel operators:
India’s outbound travel mix comprise 25 per cent to UAE, 10 per cent to Saudi Arabia, and 10 per cent across Qatar, Kuwait and Oman. Cancellations and postponements may rise, but most cancellation charges being insured, incremental cash outflow remains limited.
Ceramics:
With the availability of LNG and LPG affected, majority of ceramic plants will be forced to operate at lower, or even nil, utilisation levels. Second, exports contribute 40 per cent of their overall revenue, out of which the Middle East contributes more than 15 per cent. Shipments to this region are likely to see a decline, which would impact both revenue and margin of exporters.
City gas distribution:
LNG imports account for 40 per cent of sector’s total demand and ongoing uncertainties can affect LNG supplies in the near term. The impact, however, would be primarily on the industrial segment, which is heavily reliant on imported gas.
Downstream oil refiners:
A prolonged rise in oil prices would pressure gross refining margins as higher input costs may not be fully or immediately passed through an increase in retail fuel prices.
Paints and specialty chemicals sector:
30 per cent of the production cost is linked to crude oil prices
Tyre sector:
About half of the operating cost for the sector is linked to crude prices
Flexible packaging and synthetic textiles:
70-80 per cent of production cost for these sectors is linked to crude prices, the impact of an increase in the latter could be moderate due to the improved demand-supply scenario and firms’ ability to pass on costs to customers, albeit with a slight lag.
Overall:
The near-term impact on most Indian companies is expected to be limited, given their robust balance sheets, which provide a cushion against vulnerabilities.
However, prolonged geopolitical uncertainties in the Middle East could exacerbate the impact, primarily due to stickily elevated oil and gas prices and disruption of supply chains that could, in turn, stoke inflationary pressures.
Source: Crisil Ratings
 Plastics & Manufacturing:
Over one-third of India’s polyethylene imports come from the Gulf, affecting packaging, consumer goods and plastic manufacturing.
Construction & Chemicals:
More than 60% of India’s imports of limestone, sulphur and gypsum originate in West Asia — critical inputs for cement, fertilisers and chemical industries.
Source: Ajay Srivastava, Founder, GTRI
