A prolonged conflict in the Gulf impacts Indian corporates through higher energy prices, logistics disruptions, and a possible moderation in remittance inflows. Oil and gas, fertilisers, and airlines are the sectors most exposed to the ongoing conflict, according to Jitin Makkar, senior vice president at the India-based credit rating agency ICRA.

India’s exposure stems largely from its dependence on Gulf-linked energy flows. Around 40% of India’s crude imports transit the Strait of Hormuz, while domestic crude inventories cover only about 25 days of demand. The Middle East also supplied roughly USD 70 bn worth of crude and petroleum products to India in 2025, making the region central to the country’s fuel supply chain.

Gas supply chains disrupted

QatarEnergy’s force majeure on gas export contracts is disrupting LNG supplies to India. Qatar’s plants are unlikely to restart for at least two weeks and may need another two to return to full production, according to a statement. The halt followed Iranian drone strikes that targeted the Ras Laffan industrial complex, the country’s main LNG export hub.

Why it matters: The Middle East accounted for around 68.4% of India’s LNG, leaving gas supplies exposed if tensions escalate, ICRA told us. Qatar is India’s largest LNG supplier, delivering about 11.4 mn tonnes annually, or more than 40% of India’s LNG imports.

India’s gas supply chain is entering a period due to the disruptions. India's Petronet LNG stated three tankers were unable to reach Qatar’s Ras Laffan terminal, prompting force majeure notices to suppliers and buyers including Gas Authority of India Ltd (Gail), Indian Oil, and Bharat Petroleum Corporation (BPCL). Refiners are quoting three times the price paid a month earlier, which is forcing buyers to walk away.

Industrial supply cuts have already begun: Gail may curb gas supplies to industrial customers even as supplies from other contracts remain unaffected for now. Gujarat Gas has reduced allocations to the ceramic industry in Gujarat’s Morbi by 50%. Meanwhile, the energy retailers are advising industrial consumers to switch to cheaper alternatives like naphtha or fuel oil.

PLUS: India may be looking at a cooking gas crunch within weeks as escalations in the Gulf disrupt liquefied petroleum gas (LPG) shipments, threatening supplies to mns of households and adding to inflation risks, Hindu Businessline reports.

LNG is also a key feedstock for fertilizer production. Fertilizer producers, responsible for nearly 30% of India’s gas consumption, warn production cuts may follow if LNG supplies do not resume soon.

High input costs for farmers

An increase in global fertilizer prices could lead to higher input costs for Indian farmers ahead of the upcoming sowing season. Diammonium phosphate prices are projected to touch USD 1k per tonne, up from roughly USD 850 per tonne. Already urea prices have increased to around USD 530 per tonne from USD 492, Hindu Businessline reports.

Why it matters: About 30 of India’s 32 urea plants rely on natural gas as feedstock, with roughly 60% of LNG used in fertilizer manufacturing imported from Qatar. As the critical supply link between Qatar and India snaps, fertilizer giants are left with no choice but to pass massive costs to the farmers. A surge in alternative fuel procurement could be next, which could alleviate demands to increase fertilizer subsidies for the government.

MRPL stops oil exports

State-owned Mangalore Refinery and Petrochemicals Ltd. (MRPL) has notified customers that it will suspend exports of refined fuels, as crude shipments through the Strait of Hormuz remain threatened. The refiner has informed buyers it may be unable to honor supply commitments if incoming crude cargoes are disrupted. The company, which operates a 300k bbl / d facility in Karnataka, has not formally declared force majeure. MRPL exports diesel, gasoline, and jet fuel, and currently holds crude stocks sufficient for roughly two weeks of refinery operations.

Aviation disruptions easing?

Indian airlines and Emirati airlines are gradually restoring connectivity to the Middle East and long haul destinations as airspace restrictions ease. Carriers including Air India, Air India Express, IndiGo, SpiceJet and Akasa Air have added capacity and scheduled special services to reconnect routes affected by the disruptions, Business Standard reports.

UAE-based Etihad Airways will also resume a limited commercial flight schedule from 6 March, operating services between Abu Dhabi and Indian cities, the airline said on X. SpiceJet and Akasa Air are running select special flights from Fujairah and Abu Dhabi to bring stranded passengers back to India.

Exporters could face earnings pressure

Export-oriented sectors with exposure to Gulf markets — including gems and jewellery, chemicals, pharmaceuticals and agriculture — could face near-term earnings pressure if disruptions persist, ICRA told us.

Why it matters: The Gulf is a major transit and logistics hub for time-sensitive shipments. GCC is India’s largest trade bloc accounting for 15.4% of India’s global trade.

Credit transmission: ICRA told us that if trade disruption is prolonged, then credit stress would principally transmit to Indian exporters via two channels: (a) Revenue loss upon order cancellations and shipment delays; (b) longer payments cycle for exporters where the contractual terms with buyers are on cost, ins. and freight (CIP) basis.

The exposure is particularly visible in the following sectors:

  • Gems and jewellery. The Middle East accounts for nearly a quarter of India’s annual gems and jewellery exports of about USD 30 bn, while the UAE supplies more than two-thirds of India’s rough diamond imports, making Dubai a critical trading hub for both exports and raw material sourcing.
  • Seafood: USD 300 mn worth of seafood shipments are currently stranded at Indian ports as exporters face uncertainty over cargo movement through regional trade corridors.
  • Pharma: The industry could face losses of up to INR 50 bn (600 mn) this month if export disruptions persist. India exported 1.6 bn worth of pharma products to the GCC in FY 2025 while the region also serves as a key transit hub for shipments to other markets, particularly the US.
  • Smartphone and electronics: Most high-value smartphone shipments move via Gulf transshipment hubs such as Dubai International Airport and Hamad International Airport in Doha, which connect Indian cargo to Europe, the US and Africa. Large volumes of smartphones are currently stranded at Chennai airport which could prompt exporters to utilize higher cost chartered cargo flights.
  • Food supplies: Rice exporters have sought government intervention amid shipping disruptions, rising freight and ins. costs. Domestic prices of Basmati rice have dropped by up to 10% over the last few days.

Meanwhile- The government is considering procedural flexibility and facilitation measures to address export disruptions following a review meeting held by the Department of Commerce in New Delhi, Times of India reports. Authorities are coordinating with customs, banks, and ins. agencies to ensure cargo clearance and maintain documentation and payment flows. A 24x7 monitoring mechanism will be set up to streamline inter-agency coordination, with customs authorities, the central bank and the Shipping Ministry involved to sort our trade bottlenecks.

Funding conditions and macro signals

Investors and lenders could become more selective in providing additional funding to companies with significant trade links to Gulf countries. Funding is likely to favor firms with a more diversified geographical footprint, Makkar said.

“However, India's larger economy and enhanced, actively managed macro buffers (including forex reserves, deeper markets, diversified trade, and more evolved risk management practices) allow it to absorb volatility better than in earlier decades when balance-of-payments pressures were a major constraint,” he added.

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