Impact of the US-Israel versus Iran War on India
Key Affected Sectors
- Gas Supply:
- LPG for cooking and LNG for industries are significantly impacted.
- Commercial LPG consumers such as restaurants, dhabas, and canteens face shortages.
- Industries reliant on natural gas feedstock—fertilizers, petrochemicals, ceramics, and sponge iron—are notably affected.
- Uninterrupted Supplies:
- Petrol, diesel, piped, and compressed natural gas for homes and vehicles remain unaffected.
- Domestic LPG cylinder deliveries are maintained at pre-war levels.
Potential Future Impacts
- Prolonged war could lead to further disruptions in production of polymers like polyethylene, polypropylene, and polyvinyl chloride.
- This would affect manufacturers of bottles, buckets, pipes, and packaging materials.
- There may be price hikes in polyester and synthetic textile fibres, linked to crude prices.
- The semiconductor industry, dependent on LNG and helium from West Asia, may face downstream effects, impacting electronics and AI industries.
Economic Implications
- This war is a supply shock, potentially lowering output and raising price levels, resembling stagflation.
- Government interventions like during Covid-19 or the Russia-Ukraine conflict might not be effective due to broken supply chains.
Conclusion
The ongoing conflict poses significant challenges to both economic growth and inflation. The hope remains for a swift end to the war; however, sluggish growth and higher inflation might persist in the near future.
