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West Asia Conflict
The ongoing conflict in West Asia is disrupting global energy markets and supply chains, creating risks for several core sectors of the Indian economy that depend heavily on imports from the region.
Impact of West Asia Conflict on India’s Economy:
| Dimension | Key Details |
|---|---|
| West Asia Region | Includes the six Gulf Cooperation Council countries-Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE-along with Iran, Iraq, Israel, Jordan, Lebanon, Syria and Yemen. |
| Recent Conflict | Escalating confrontation involving joint U.S.-Israel military strikes against Iran and retaliatory actions targeting energy and logistics infrastructure. |
| Strategic Risk | Missile and drone strikes on energy infrastructure have increased fears of supply disruptions in global oil and gas markets. |
| Strait of Hormuz Concern | Possible closure of the Strait of Hormuz, a major global energy and trade route, raises concerns of a global energy supply shock. |
| Economic Exposure | A report by the Global Trade Research Initiative estimates that about $98.7 billion worth of Indian imports could be affected. |
| Crude Oil Dependence | India maintains roughly one month of oil stockpiles and is increasing purchases of discounted Russian oil to manage price volatility. |
| LNG Supply Risk | Dependence on Qatari liquefied natural gas creates potential supply risks for industries. |
| Industrial Impact | Steel and fertilizer industries are particularly vulnerable to prolonged LNG supply disruptions. |
| Construction Sector | India imports about 68.5% of its limestone and 62.1% of its gypsum from West Asia, affecting cement production and infrastructure projects. |
| Fertilizer Sector | Approximately 65.8% of sulphur imports used in sulphuric acid production originate from West Asia. |
| Steel Sector | The region supplies about 59.1% of Direct Reduced Iron and natural gas used in steel production. |
| Electronics and Power | About 50.7% of copper wire imports come from West Asia, affecting renewable energy and power grid expansion. |
| Diamond Industry | India imports more than 40% of rough diamonds from West Asia, impacting the Surat-based diamond cutting and polishing industry. |
| Overall Impact | The conflict threatens supply chains, increases price volatility and poses risks to key sectors of the Indian economy. |