Beyond energy, U.S.-Iran conflict may disrupt multiple import sectors in India: GTRI

The ongoing Iran and Israel-US conflict in the Middle East is disrupting the supply of imported goods (including oil) that cumulatively accounted for $98.7 billion in value in 2025. The region is a crucial supplier of energy, fertilisers and industrial raw materials to the country, an analysis by the Delhi-based think tank Global Trade Research Initiative (GTRI) notes. While the impact, in value terms, is mostly related to petroleum and allied products, the imported goods are used across sectors and industries and can affect a broad spectrum of the Indian economy, GTRI points out.

The war-affected region covered by GTRI includes the six Gulf Cooperation Council countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - along with other regional economies such as Iran, Iraq, Israel, Jordan, Lebanon, Syria and Yemen.

How vulnerable are petroleum and allied products to the Middle East conflict?

The impact of the war on petroleum products in India is already visible as oil marketing companies have announced increases in LPG cylinder prices. India imported $13.9 billion worth of LPG from the region in 2025, representing 46.9% of its LPG imports. Since LPG remains the primary cooking fuel for millions of households, and with stocks covering roughly two weeks of consumption, any disruption could quickly affect cooking fuel availability as well, says GTRI.

Other petroleum-related imports would also be affected. India imported $1.9 billion worth of refined fuels from the region, representing 19.7 per cent of imports, and $1.3 billion worth of petroleum coke, accounting for 37.3% of imports. Petroleum coke 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, GTRI points out.

Natural gas supplies face similar risks. In 2025, India imported $9.2 billion worth of liquefied natural gas (LNG) from the region, 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.

“The vulnerability is already visible. Qatar’s Petronet LNG has stopped LNG supplies to GAIL from March 4, 2026, owing to restrictions on vessel movement,” Ajay Srivastava, founder of GTRI, says.

Of the $70 billion worth of petroleum crude and products imported by India in 2025, the largest share was crude oil. In 2025, India bought $50.8 billion worth of crude oil from the region, accounting for 48.7% of its crude imports. Crude oil feeds India’s refineries, which produce petrol, diesel, aviation fuel and petrochemical feedstocks used across the economy.

With 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. Farmers would also feel the pressure through higher diesel prices for irrigation pumps and tractors.

Will fertiliser supplies face pressure if tensions escalate?

Fertiliser supplies are crucial to India’s farming sector. In 2025, India imported $3.7 billion worth of fertilisers from the affected region. 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.

Since fertilisers are essential for crop yields across cereals, fruits and vegetables, supply disruptions during the crop season could reduce fertiliser availability, increase government subsidy costs and push up food prices, GTRI notes.

India’s diamond export industry also depends on the supply of rough diamonds from the region. In 2025, the country imported $6.8 billion worth of rough diamonds from the region, accounting for 40.6 per cent of imports. These stones are processed in India’s diamond cutting and polishing hubs, particularly Surat in Gujarat, which supply polished diamonds to global markets. Any disruption in raw diamond shipments could slow production and affect employment in the jewellery sector.

Will the conflict disrupt raw material supplies to Indian industry?

GTRI points out that India imported $1.2 billion worth of polyethylene polymers from the Gulf region, accounting for 35.6% of imports of this plastic feedstock.

“Polyethylene is widely used in packaging materials, plastic pipes, containers, consumer goods and agricultural films used in irrigation. Supply shortages could disrupt packaging industries and consumer goods manufacturing,” Srivastava said.

Small in value in comparison, but mineral imports from the region are critical for India’s construction sector too. “India imported $483 million worth of limestone from West Asia, accounting for 68.5 per cent of its imports. Limestone is a key input for cement production, meaning shortages could push up cement prices and delay infrastructure projects,” Srivastava said.

Similarly, India imported $420 million worth of sulphur from the region, representing 65.8 per cent of its imports. Sulphur is used to produce sulphuric acid, an essential input for fertilisers and several chemical industries. India also imported $129 million worth of gypsum, accounting for 62.1 per cent of imports, which is widely used in cement and construction materials.

GTRI points out that 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 per cent of imports of this steelmaking input. The country also imported $869 million worth of copper wire, representing 50.7 per cent of imports, which is used in power transmission, electrical equipment and renewable energy infrastructure.

“If disruptions to shipping through the Strait of Hormuz continue beyond a week, the effects could quickly spread from energy markets to fertiliser supplies, manufacturing inputs, construction materials and export industries such as diamonds. What begins as a regional conflict could rapidly evolve into a broader supply shock for the Indian economy,” Srivastava says.