Business prospects have been turned on their head
Two months into the West Asia conflict, Indian businesses find themselves at the intersection of geopolitical disruption and domestic ambition — a moment that reveals how tightly the fortunes of a growing economy are bound to the stability of distant regions. Rising energy costs, weakened currency, and fractured supply chains have replaced the optimism that followed recent tax reforms, forcing companies across sectors to revise their assumptions about the year ahead. The government, too, has acknowledged the fragility, signaling downside risks to a growth forecast that once seemed within reach. What unfolds in the first quarter of FY27 will say much about the resilience — and the limits — of India's economic momentum.
- Strikes on oil and gas installations in West Asia have created commercial gas shortages, forcing factories across India to slow or halt operations at the very start of the financial year.
- A compounding chain of pressures — rising crude prices, costlier packaging materials, weaker rupee, and climbing metal prices — is squeezing margins faster than most companies can absorb.
- Consumer goods giants like Dabur and Godrej are preparing price hikes of 7 to 10 percent from April, a move that risks dampening the very demand they were counting on to drive growth.
- The government has flagged downside risks to its 7 to 7.4 percent FY27 growth forecast, while small and medium enterprises — lacking the scale to weather shocks — face the most acute danger of cascading shutdowns.
- Engineering firms like L&T and KEC International tell a more nuanced story: logistical friction at West Asian project sites is being offset by strong collections, functioning banking channels, and new restoration tenders born from the conflict itself.
Two months into the West Asia conflict, Indian companies are recalibrating their year. What had looked like a promising start — consumer goods makers buoyed by tax reforms, demand expected to recover — has given way to a more cautious calculus. The war has done what geopolitical crises do: it has scrambled the assumptions on which businesses build their plans.
The disruptions are concrete and cascading. Strikes on oil and gas installations have created commercial gas shortages, forcing factories to slow operations. Crude prices have climbed, pulling up costs for plastic packaging and petroleum-linked materials. Metals have edged higher. The rupee has weakened. Dabur's global CEO Mohit Malhotra captured the whiplash plainly — a month ago, his sector was preparing for a stronger year; now that confidence has evaporated. Zydus Wellness chief Tarun Arora outlined the three-part squeeze: rising production costs, cautious consumers, and the looming pressure to raise prices — a cycle that, once started, feeds on itself.
The government has already signaled concern, warning of downside risks to its 7 to 7.4 percent FY27 growth forecast. For small and medium enterprises, the risk is especially acute. Enlight Metals' managing director Vedant Goel called for swift intervention — LPG subsidies, excise waivers, relaxed import rules — warning that without action, prolonged shortages could trigger factory shutdowns and erode India's export competitiveness.
Some sectors are already moving on prices. Edible oils, paints, and packaged water have begun raising them. Durables makers are preparing increases of 7 to 10 percent from April, driven by crude volatility, metal weakness, and currency headwinds.
Not all companies face the same pressure. Engineering firms with West Asia exposure are navigating a more mixed picture. Larsen & Toubro, with 37 percent of its order book in the region, has encountered logistical friction but found workarounds, and reports collections running better than expected. KEC International sees something closer to opportunity — the conflict has generated urgent demand for energy infrastructure restoration, and new tenders are emerging for companies with the right capabilities and relationships.
What emerges is a portrait of an economy caught between headwinds and handholds. The first quarter of FY27 will test which companies can navigate the pressure — and which will stumble.
Two months into the West Asia conflict, Indian companies are recalibrating their year. What looked like a promising start to the financial year—with consumer goods makers anticipating growth after tax reforms—has given way to a more cautious calculus. The war has done what geopolitical crises do: it has scrambled the assumptions on which businesses build their plans.
The disruptions are concrete and cascading. Strikes on oil and gas installations have created shortages of commercial gas, forcing factories across sectors to slow or pause operations. Crude prices have climbed, pulling up the cost of plastic packaging and other petroleum-linked materials. Metals like copper and aluminium have edged higher. The rupee has weakened against the dollar. For a company trying to hold margins steady, these pressures compound quickly.
Mohit Malhotra, the global CEO of Dabur, captured the whiplash plainly: a month ago, his company and others in consumer goods were preparing for a stronger year, expecting the market to recover after recent tax reforms. Now that confidence has evaporated. Tarun Arora, who leads Zydus Wellness, outlined the three-part squeeze: inflation is pushing up production and packaging costs; consumer caution is likely to dampen demand; and the longer the war drags on, the more companies will feel forced to raise prices. That last point matters—price hikes erode demand further, a cycle that feeds on itself.
The government has already signaled concern. It warned that the economy faces downside risks to its growth forecast of 7 to 7.4 percent for the fiscal year, citing higher energy costs and supply disruptions. For small and medium enterprises, which lack the scale to absorb shocks, the risk is acute. Vedant Goel, managing director of Enlight Metals, called for swift government action: subsidies on commercial liquefied petroleum gas, excise duty waivers, relaxed import rules, and enforcement against hoarding. Without intervention, he warned, prolonged shortages could trigger cascading factory shutdowns, deeper inflation, and weakened competitiveness abroad.
Some sectors are already moving. Companies in edible oils, paints, and packaged water have begun raising prices. Durables makers are preparing to do the same from April. Kamal Nandi, the business head for appliances at Godrej Enterprises Group, said his company is considering price increases of 7 to 10 percent across categories, driven by volatility in crude, weakness in metals, and currency headwinds. The math is simple: costs are rising faster than companies can absorb them.
Not all companies face the same pressure. Engineering firms with significant exposure to West Asia are navigating a more mixed picture. Larsen & Toubro, which draws 37 percent of its order book from the region, has encountered some supply and logistical challenges at its sites there. But the company has found workarounds—road transport instead of air, for instance—and reports that business fundamentals remain sound. Customers are paying on time. Banking channels are functioning normally. Collections, in fact, have been better than expected.
KEC International, another engineering major, sees something closer to opportunity. The war has created urgent demand for restoration of energy transmission and distribution lines. New tenders are emerging from West Asian governments, and KEC views these as essential projects worth pursuing. For companies with the right capabilities and existing relationships in the region, the crisis has opened a different kind of door.
What emerges is a portrait of an economy in transition, caught between headwinds and handholds. The first quarter of the new financial year will test which companies can navigate the pressure and which will stumble. For now, the outlook remains weak, and the calculus remains uncertain.
Citas Notables
Business prospects have been turned on their head with the war in West Asia. Most FMCG businesses were preparing for a stronger FY27, but now businesses remain unsure.— Mohit Malhotra, global CEO, Dabur
The war has left businesses vulnerable on three fronts: imminent inflation pushing up production costs, risk to demand as consumer sentiment turns cautious, and the prospect of price hikes as the war drags on.— Tarun Arora, CEO and whole-time director, Zydus Wellness
La Conversación del Hearth Otra perspectiva de la historia
Why does a conflict two months away hit Indian companies so quickly?
Because supply chains are global now. A strike on an oil installation in West Asia ripples through the cost of plastic packaging in a factory in Gujarat. The rupee weakens, imports get more expensive. There's no lag—it's immediate.
Are these price hikes going to stick, or will they come back down once the conflict ends?
That's the real question. If companies raise prices now and demand falls, they may not be able to lower them later without looking like they're admitting they overcharged. And if the war drags on, the hikes become permanent. Consumers lose purchasing power either way.
The government warned about downside risks. What does that actually mean for someone buying groceries?
It means inflation is likely to accelerate. Your edible oil, your shampoo, your appliances—all of it is getting more expensive. And wages aren't rising to match. Real purchasing power shrinks.
But L&T and KEC seem to be doing fine. Why the difference?
They're in engineering and infrastructure. The war actually creates demand for them—countries need to rebuild transmission lines, restore energy systems. They have existing relationships in the region and the scale to absorb costs. A small manufacturer of packaged goods has neither advantage.
So the real victims here are small businesses and consumers?
Yes. Small and medium enterprises can't negotiate with suppliers or absorb cost shocks. And consumers bear the price increases. The large, diversified companies—they'll find ways through.
How long does this uncertainty last?
Until either the conflict ends or companies adjust their supply chains. That could be months or years. In the meantime, investment plans get postponed, hiring slows, growth weakens.