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Beyond Oil : How the conflict in the West Asia is affecting industries at Home?

The current crisis in West Asia is not just about oil and gas prices spiking for a few weeks before settling down. It is about imports of some of the critical industries that form the backbone of our country’s infrastructure. From Limestone for infrastructure, to rough diamonds for Surat's polishing units. These are the raw materials that keep the factories running, farms productive and infrastructure projects on schedule. But this time, their supply lines are looking vulnerable. 


Numbers tell the Story 


India’s trade with the Gulf reached nearly a total of $ 99 billion worth of goods in FY25. Crude oil comprised half of that figure, but $ 49 billion were a diverse range of goods that are integral to India’s industrial sectors. These include limestone for cement, sulphur for fertilisers, direct reduced iron for steelmaking, copper wire for power transmission, and rough diamonds for processing and exporting. Though oil is still managed under strategic reserves and other markets, many of these essential industrial commodities have fragile supply chains and fewer immediate alternatives.


The Hidden Dependencies 


With respect to limestone, India imported $ 483 million worth of limestone from West Asia last year comprising 68% of its total limestone imports. Limestone is the primary raw material for cement production which forms the foundation of the majority of the infrastructure activity. Thus, this disruption comes at a time when the GoI has resolved to increase its capital expenditure on roads, railway and other critical infrastructure development projects; any stalling in limestone supplies would directly affect project costs and timelines. Another vital raw material is Gypsum, which India imported around 62% of its total imports from the Gulf region only. Gypsum is widely used in cement and construction, making it another critical input, and is now at risk with growing intensity of the conflict. 


Additionally, the fertilizer sector is affected by these vulnerabilities. India imported $420 million worth of sulphur from the region last year, accounting for nearly 66% of total sulphur imports. Sulphur is an essential commodity for producing sulphuric acid, which in turn is a key input for phosphate fertilisers such as Di-Ammonium Phosphate (DAP). DAP is widely used in Indian agriculture during the rabi and kharif seasons. This is a crucial statistic, because agriculture contributes around 18% to our GDP and employs nearly half of the country’s workforce, thereby making it a cornerstone of the Indian economy. 


Such disruptions in sulphur supplies would directly impact DAP production, leading to higher fertilizer prices and shortages at critical points in the cropping calendar. This can strain farmer’s finances, threatening agricultural output, with ripple effects on food inflation and the broader economy. While the current off-season provides some buffer, prolonged disruptions could affect availability ahead of the main cropping season. Some experts note that prolonged LNG supply interruptions could also impact domestic urea production, with direct consequences for agricultural output and food prices. 


Steel, Power and Exports under pressure


The steel industry presents some complex vulnerabilities. India imported $ 190 million worth of Direct Reduced Iron (DRI) from West Asia in 2025, representing 59 % of its DRI imports. DRI is used in steelmaking, particularly by producers who employ the gas- based route. Ankit Hakhu of Crisil Ratings mentions that while the dominant blast furnace method relies on coking coal, the DRI segment depends heavily on natural gas, much of which is sourced from the Gulf. Any sustained disruption to gas supplies could affect production levels for this segment that accounts for around 20 % of installed capacity among major steel players. 


For the power sector, its own set of risks have emerged. India imported $ 869 million worth of copper wire from West Asia in 2025, over half of all copper wire imports. Copper wire is critical for power transmission networks, electrical equipment, and renewable energy infrastructure. As India accelerates its energy transition, with ambitious targets for solar and wind capacity, any disruptions in supply and eventually availability of components like copper wire becomes increasingly important. Such critical situations could affect not only routine maintenance of the power grid but also the pace at which new renewable capacity is integrated. 


Even India’s diamond processing industry has now been exposed to this risk. Over 40 % of rough diamond imports come from West Asia. These are processed in cutting and polishing hubs such as Suart before being re-exported to global markets. Any interruption in rough diamond supplies would directly affect export earnings and livelihoods in this sector that supports hundreds of thousands of workers in Gujarat. 


Strategic implications for India 


The picture that has emerged from the ongoing conflict has exposed vulnerabilities that span across various industries. India is not merely anticipating future risks, it is already facing delayed shipments, rising input costs, and uncertain supply lines. The immediate task is to manage these disruptions through inventory management, diversification of sourcing in the short term, and coordination with international partners to keep access to shipping lanes. 


But the current situation has also pointed towards long term measures that need to be prioritized. India’s dependence on a single region for such a wide range of essential raw materials is a structural vulnerability, addressing it will require a concrete effort to diversify import sources, encourage domestic production and build resilient supply chains. This should not mean reducing engagement with the Gulf partners, but ensuring that no single disruptive event can cause risk to core sectors of the economy. 


This conflict is also a reminder that in a globalised interconnected economy, there is no such thing as a distant war. Any instability in one region has the capacity to expose vulnerabilities in the economy of another region. All the raw material imported from the Gulf region is now subject to risks that were not part of the calculation a few months ago. 


Conclusion 


These effects are already visible, and they are likely to persist as long as the conflict continues. The pragmatic approach for this situation will be to focus on managing storages and keeping critical industries operational, in the short term. Over the longer term, the lesson is clear- overdependence on any single source of supply is a big risk to be ignored. Diversifying import destinations, building strategic reserves for such critical commodities and strengthening domestic capabilities are not just policy goals but a practical necessity. 



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