Impact of West Asia Conflict on Indian Manufacturing Sector
The ongoing war in West Asia is significantly affecting Indian manufacturers across various industries such as steel, aluminium, textiles, and alcoholic beverages. These sectors are encountering operational disruptions due to increased freight rates, shipment delays, gas shortages, and payment issues, primarily stemming from the closure of the Strait of Hormuz.
Textile Industry Challenges
- A leading textile brand in Mumbai is facing a critical scarcity of raw materials with only 30 days of stock remaining.
- Import consignments, especially flax from Europe, are delayed due to the conflict and the Strait of Hormuz closure.
- Shipments are stuck at locations such as Jebel Ali, and potential further delays are anticipated for consignments heading to Khalifa.
Impact on Chemical Sector
- According to Ajay Joshi, the conflict represents a raw-material shock affecting seventeen chemical value chains.
- Industries at high risk include agriculture, construction, and FMCG, with sulphur prices escalating by 80% year-on-year.
- Disruptions impact fertiliser prices, which are crucial during the Kharif sowing season, highlighting food security concerns.
Aluminium Industry Concerns
- Gas shortages have forced a major Indian aluminium producer to halt extruded aluminium production.
- The Aluminium Extrusion Manufacturers Association of India (ALEMA) is seeking government relief for severe LPG and PNG shortages.
- Without intervention, the sector risks defaulting on working capital and term loans.
Brewing Industry Challenges
- The Brewers Association of India (BAI) reports rising costs due to increased material and logistic expenses.
- Prices of inputs like glass bottles, paper cartons, and adhesives have significantly increased, impacting production costs by an estimated 12-15%.
- Limited LNG supply strains glass bottle manufacturers, potentially leading to production shutdowns and affecting beer supplies during peak summer demand.
Stainless Steel Industry Issues
- Challenges are concentrated in the seamless pipes and tubes division due to LPG dependency.
- Increased gas prices contribute to the rise in process costs.
- Prolonged supply chain disruptions could lead to material shortages and subsequent price hikes in the long term.
