India's Industrial Sector Grapples with Fallout from US-Israel-Iran Conflict
While the shockwaves from recent US and Israeli strikes on Iran may appear geographically distant from India's shores, the tangible impact is already reverberating through the nation's industrial landscape. Gas restrictions, significant production cuts, export delays, and relentlessly escalating operating costs are creating a ripple effect across critical sectors including fertiliser plants, ceramic kilns, sanitary ware manufacturing units, textile mills, and tyre factories.
Production Halts and Supply Chain Disruptions
In Gujarat, Triveni Iron and Steel Industries is preparing for a drastic 50% reduction in production capacity. This severe cutback stems from the company's heavy dependence on West Asian liquefied natural gas (LNG), leaving it particularly vulnerable to the supply disruptions triggered by regional conflicts. Meanwhile, Jindal Stainless anticipates considerable delays in steel shipments as the escalating tensions continue to snarl crucial trade routes and logistics networks.
Mangalore Refinery and Petrochemicals (MRPL) has taken the extraordinary step of temporarily suspending fuel exports while simultaneously struggling to secure crude oil cargoes amidst mounting global uncertainty. Industry executives are sounding alarms that tensions in major oil and gas-producing regions possess the immediate potential to severely disrupt global energy supply chains.
Historical Parallels and Current Crisis Management
MS Banani, joint managing director of Axiom Gas Engineering, draws a sobering parallel to previous disruptions during the Iraq war, which drove crude prices to nearly $140 per barrel and triggered sharp increases across LNG, LPG, petrol, and diesel prices. The current conflict involving Iran, Israel, and the United States is once again placing immense pressure on Gulf supply routes, creating significant procurement challenges, logistical delays, and rising costs for Indian importers, according to Banani.
To manage this escalating crisis, the Indian government has invoked emergency powers to prioritize LPG supplies for households. Fertiliser plants, tea processors, and other priority sectors will receive LNG allocations first. Energy giants including Reliance Industries (RIL) and ONGC have received directives to maximize LPG output while restricting its utilization for petrochemical manufacturing purposes.
Reliance Industries has confirmed it is ramping up LPG production at its massive Jamnagar refining and petrochemical complexes to help stabilize domestic supplies. Additionally, natural gas from its KG-D6 basin will be strategically diverted to priority sectors, in strict alignment with government directives and national energy priorities.
Broader Economic Implications and Sector-Specific Challenges
V K Vijayakumar, chief investment strategist at Geojit Investments, notes that while the current situation remains manageable, prolonged disruptions could potentially lead to physical shortages affecting transportation networks, hospitality sectors, and various industrial operations. Although LPG supplies are being prioritized for households, if Brent crude prices persist above $90 per barrel, businesses across the spectrum could face mounting cost pressures.
Tyre manufacturers are experiencing particular strain, as crude-oil derivatives including synthetic rubber and carbon black constitute nearly 70% of their essential raw materials. Erratic LPG supply is already creating operational challenges for forging companies. "We are witnessing some shortages in LPG, which is absolutely essential for running our operations, as private players are struggling with consistent supplies," revealed the CEO of a prominent forging manufacturer.
With approximately 80–85% of LPG currently directed toward domestic household consumption, commercial and industrial users are left with a limited share, rendering them especially vulnerable during supply disruptions.
Textile and Apparel Sector Under Dual Pressure
Apparel exporters, already battered by months of punitive US tariffs, are now grappling with rising operational costs. In the textile hub of Tiruppur, more than 450 small and medium dyeing units that rely on gas-fired boilers are struggling to maintain production amid spiking raw material prices, including caustic soda, acetic acid, sodium sulphate, and ferroxide.
Gandhi Rajan, head of the dyeing units' owners' association, explained that most units typically maintain gas reserves sufficient for approximately 15 days of operation. Beyond this critical threshold, widespread shutdowns become virtually inevitable, threatening the livelihoods of thousands of workers and the stability of India's crucial textile export sector.
