How the West Asia Conflict Threatens Indian Industries Beyond Oil & Gas

Introduction

The ongoing conflict in West Asia is usually discussed in terms of its impact on global oil and gas supplies. However, for India, the risks go much deeper. Several core sectors such as steel, fertilisers, cement, power transmission and even diamonds rely heavily on raw materials sourced from this region. Any prolonged disruption can quickly spill over into construction, manufacturing and export-oriented industries.

India’s Dependence on West Asia

West Asia broadly includes the six Gulf Cooperation Council (GCC) countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE — along with Iran, Iraq, Israel, Jordan, Lebanon, Syria and Yemen.

According to a report by New Delhi-based trade think tank GTRI, India imported goods worth around $98.7 billion from this region in 2025. This makes West Asia a crucial supplier of:

• Energy (crude oil and gas)
• Key industrial raw materials
• Rough diamonds for processing and export

Rising Supply Risks and Geopolitical Chokepoints

Missile and drone strikes on energy and logistics facilities in the Gulf have raised fears of major supply disruptions. A central concern is the potential closure or disruption of the Strait of Hormuz — one of the world’s most critical energy and trade corridors.

If shipping through the Strait is blocked even for over a week, GTRI warns that the impact will move rapidly beyond oil and gas to wider industrial and export sectors.

Immediate Energy-Sector Fallout

The conflict’s impact is already visible in India’s energy sector:

• Crude oil: With domestic stockpiles estimated to last about a month, Indian refiners have begun increasing purchases of discounted Russian oil to hedge against West Asia risks.
• Natural gas: Gas companies are considering curbing industrial supplies if disruptions to LNG shipments from Qatar continue.

These developments signal how quickly energy insecurity can spill into the broader economy.

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Key Industrial Inputs at Risk

Beyond oil and gas, India relies on West Asia for several critical industrial inputs. More than half of India’s imports of certain commodities come from this region.

1. Construction Materials: Limestone and Gypsum

The construction ecosystem is highly exposed to West Asian supply lines:

• Limestone
  • India imported about $483 million worth of limestone from West Asia.
  • This accounted for 68.5% of India’s total limestone imports.
  • Limestone is a core raw material for cement production.
• Gypsum
  • India imported about $129 million worth of gypsum from the region.
  • This represented 62.1% of total gypsum imports.
  • Gypsum is widely used in cement and other construction materials.

Potential impact on India:

• Shortages of limestone and gypsum could push up cement prices.
• Higher cement costs and supply delays may slow down infrastructure projects and real estate construction.

2. Fertilisers and Chemical Industries: Sulphur

Sulphur is a critical raw material for fertilisers and many chemical processes.

• India imported about $420 million worth of sulphur from West Asia.
• West Asia accounted for 65.8% of India’s sulphur imports.
• Sulphur is used to manufacture sulphuric acid, an essential input for fertiliser production and several chemical industries.

Potential impact on India:

• Disruptions could tighten the supply of fertilisers, with downstream effects on agriculture.
• Costs for chemical manufacturers may rise, impacting margins and output prices.

3. Steelmaking: Direct Reduced Iron (DRI)

India’s steel industry also depends on West Asia for a significant share of its DRI imports:

• India imported about $190 million worth of DRI from the region.
• This represented 59.1% of total DRI imports.
• DRI is a key feedstock in steelmaking, especially in electric arc furnaces.

Potential impact on India:

• Reduced availability of DRI could constrain steel production.
• Possible increase in steel prices, affecting sectors like construction, automobiles and capital goods.

4. Diamond Processing and Exports

India is a global hub for diamond cutting and polishing, and its supply of rough diamonds is closely tied to West Asia.

• Over 40% of India’s rough diamond imports come from West Asia.
• These rough diamonds are processed in domestic hubs and then exported as polished stones to international markets.

Potential impact on India:

• A disruption in rough diamond supplies could impact employment and exports in the diamond processing clusters.
• While alternative sources might exist, rising energy costs and supply-chain uncertainties remain a serious concern for this high-value export industry.

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Broader Economic Implications

If conflict-related disruptions in West Asia and through the Strait of Hormuz extend beyond a week, GTRI warns that India could face:

• Strains in fertiliser availability, affecting agriculture and food security.
• Delays and cost overruns in infrastructure and construction projects due to cement and material shortages.
• Pressure on manufacturing sectors that rely on imported inputs.
• Volatility in export industries such as diamonds, impacting foreign exchange earnings.

Experts indicate that while India may find alternative suppliers for some raw materials, the larger and more persistent challenge is the increase in energy costs, which feeds into almost every sector of the economy.

Summary

• The conflict in West Asia is not only an energy shock risk but also a broad industrial supply risk for India.
• India’s high dependence on the region for limestone, gypsum, sulphur, DRI and rough diamonds exposes key sectors such as construction, fertilisers, steel and gems & jewellery.
• Even short-term disruptions in critical shipping routes like the Strait of Hormuz can quickly raise costs, delay projects and squeeze industrial production.
• While diversification of suppliers is possible in some cases, the overall rise in energy and logistics costs remains the most significant and difficult-to-avoid consequence.

Source: Indian Express