The West Asia conflicts, after three months of the geopolitical tensions are exerting a deeper influence on India's economy. The disruption imposed by higher commodity prices, elevated freight costs and supply chain bottlenecks are gradually influencing demand patterns and balance sheet resilience across sectors. A differentiated impact is emerging, depending on sectoral linkages to energy costs, global trade, and discretionary consumption.

Energy-intensive industries such as aviation, refining, fertilizers, and chemicals face the most pronounced challenges due to elevated input costs and operational disruptions. Aviation is under significant stress due to high aviation turbine fuel (ATF) prices, airspace restrictions and weak demand. Limited fare pass-through, currency depreciation and rerouting inefficiencies will bloat losses in FY2027.

Crude and Liquefied Petroleum Gas (LPG) disruptions, along with elevated prices, are widening under-recoveries and working capital requirements for the Refining & Marketing players, weighing heavily on profitability despite sourcing from alternate geographies. On the City Gas Distribution (CGD) side, high Liquefied Natural Gas (LNG) prices and limited pass-through are compressing margins, especially in industrial and commercial Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) segments, while PNG (domestic) segment remains relatively insulated.