Iran unrest poses limited near-term risk to India Inc., crude prices key watchpoint: CRISIL

The ongoing unrest in Iran has had a negligible impact on Indian corporates so far, with limited exposure to direct trade and no immediate stress on credit profiles, according to a latest credit alert by CRISIL Ratings. However, the ratings agency cautioned that a prolonged or escalated geopolitical situation could pose risks through higher crude oil prices and supply-chain disruptions.

Trade exposure remains marginal

India’s direct trade exposure to Iran remains minimal, accounting for about 0.3% of total exports and less than 0.1% of total imports in the last fiscal. Exports are largely dominated by basmati rice, which forms over 60% of shipments to Iran, while imports primarily comprise fruits, nuts and select crude-linked products.

Crude oil the primary transmission risk

CRISIL noted that the larger risk for India Inc. lies in Iran’s role in global energy markets rather than bilateral trade. Iran contributes around 4–5% of global crude oil supply, and any disruption could trigger a spike in oil prices, intensifying cost pressures for crude-dependent sectors.

Industries such as oil refining, aviation, specialty chemicals, paints, petrochemicals, flexible packaging and synthetic textiles could face margin pressures, depending on their ability to pass on higher input costs to customers.

Brent crude prices briefly rose above $65 per barrel following the onset of unrest but later stabilised, offering temporary relief. Still, CRISIL flagged crude price volatility as a key variable to monitor, given India’s high dependence on oil imports.

Basmati rice exports face limited demand risk

For domestic basmati rice exporters, Iran is the third-largest market, accounting for nearly 13% of exports in FY25. Demand impact is expected to remain limited as basmati rice is a staple food in Iran. Moreover, India’s diversified export footprint across the Middle East — including Saudi Arabia, Iraq and the UAE — helps reduce concentration risk.

However, CRISIL warned that prolonged unrest could delay payments from Iranian counterparties, potentially stretching exporters’ working capital cycles.

Imports largely non-essential

On the import side, fruits and nuts from Iran make up over 60% of India’s imports from the country and around 10% of total imports in that category. As these are largely non-essential items, demand is expected to be highly elastic in case of supply disruptions.

CRISIL said it is closely monitoring developments and will assess any impact on corporate credit quality on a case-by-case basis.