Explained: Not just oil and gas, the West Asia conflict is hitting core Indian industries

With the conflict continuing in the region, and missile and drone strikes hitting several energy and logistics facilities across the Gulf, fears of supply disruptions have intensified. The possibility of a closure of the Strait of Hormuz — one of the world’s most critical energy and trade routes — has heightened concerns of a global energy supply shock.

For India, the region remains a crucial supplier of both energy and industrial inputs. According to a report by New Delhi-based trade think tank GTRI, India imported goods worth $98.7 billion from the region in 2025. So, any turbulence in the region or disruption to shipping routes such as the Strait of Hormuz could quickly impact multiple Indian industries beyond oil and gas.

Sectors beyond oil, gas

As a major supplier of oil and gas to the world, any turbulence in West Asia tends to make global energy markets immediately vulnerable. India is no exception.

The impact of the war is already being felt. With crude oil stockpiles estimated to last only about a month, Indian refiners have begun increasing purchases of discounted Russian oil. Gas companies, too, are weighing the possibility of curbing industrial supplies if disruptions to LNG shipments from Qatar persist.

The fallout, however, may not remain confined to the energy sector if disruptions to shipping through the Strait of Hormuz continue for more than a week.

According to the GTRI report, the effect could be felt in fertilizer supplies, manufacturing inputs, construction materials and export industries such as diamonds.

The construction sector, which depends on mineral imports from the region, could be among the sectors that feel the impact if the conflict persists. The GTRI report estimated that India imported $483 million worth of limestone from West Asia, accounting for 68.5% of its total imports, and $129 million worth of gypsum, representing 62.1% of imports. 

Both minerals are crucial for the construction ecosystem. Limestone is a key input for cement production, while gypsum is widely used in cement and other construction materials. Any disruption in supplies could push up cement prices and delay infrastructure projects.

There are other minerals too that are critical for the fertilizer and steel industries. 

India imported $420 million worth of sulphur from West Asia, accounting for 65.8% of its imports. Sulphur is used to produce sulphuric acid, an essential input for fertilizers and several chemical industries. 

Similarly, India imported $190 million worth of direct reduced iron (DRI) from the region, representing 59.1% of its imports. DRI is a key input used in steelmaking.

India also imported $869 million worth of copper wire from West Asia, accounting for 50.7 per cent of its total imports of the commodity. Copper wire is a critical component in power transmission networks, electrical equipment and renewable energy infrastructure, making the sector vulnerable to any disruption in supplies from the region. 

The conflict could also impact India’s diamond processing industry. The country imports over 40 per cent of its rough diamonds from West Asia, which are then processed in India’s diamond cutting and polishing hubs — particularly Surat in Gujarat — before being exported as polished diamonds to global markets. 

Energy stress on steel sector

Industry experts say that while alternative sources for some raw materials exist, the bigger concern lies in rising energy costs. A steel industry insider said that alternative sources are available for inputs such as limestone and DRI, but the real challenge is volatility in oil and gas prices. “Limestone can be sourced from countries like Thailand and Vietnam. If required, DRI can also come from places such as Libya or Malaysia. The real challenge is the movement in oil and gas prices,” the person said.

The steel industry uses various production routes, including blast furnace (BF) and DRI. While BF is the dominant route in the Indian steel industry, DRI accounts for around 20% of the total installed capacity of the top five primary steel players in India, Ankit Hakhu, Director, Crisil Ratings, said.

“Unlike BF, which relies on coking coal, DRI uses natural gas as a key input. Given that a significant portion of India’s gas supplies come from the Middle East, a prolonged conflict in the region could potentially impact gas supplies,” he said, adding that it could affect the production rates of domestic steel makers that rely on the DRI route If the conflict prolongs and alternative sourcing takes time.

The steel industry in India also relies on gas as part of its decarbonisation efforts, making it vulnerable to fluctuations in global gas markets.

“Steel is facing a major challenge in terms of securing key inputs, particularly energy and scrap. Most plants depend on LPG and LNG, and availability has become an issue,” said Pankaj Chadha, Chairman of the Engineering Exports Promotion Council (EEPC).

However, the fertilizer sector may not feel the impact immediately, but there could be an impact if disruptions linger on for a month, or more. 

Prashant Vashisht, Senior Vice President and Co-Group Head, Corporate Ratings at ICRA Limited, said supply disruptions of fertilizer inputs such as LNG and sulphur may not hit the industry right away as it is currently an off-season for fertilizer consumption in India.

“However if the LNG supply disruptions linger on for a month or so, the domestic urea production and availability of urea for the upcoming season will get impacted,” Vashisht said.

The fertilizer industry is exploring other suppliers such as South East Asia for sulfur, he added.