Prolonged disruptions to shipping through Strait of Hormuz to impact key Indian sectors: GTRI

New Delhi, Mar 5 (PTI) Prolonged disruptions to shipping through the Strait of Hormuz beyond a week could rapidly spill over from energy markets to fertiliser supplies, industrial inputs, construction materials and export sectors such as diamonds, think tank GTRI said on Thursday.

The Strait of Hormuz is a narrow channel located between Iran and Oman that links the Persian Gulf to the Arabian Sea. Spanning roughly 55 kilometres at its narrowest point, it is regarded as one of the most vital and heavily used maritime routes globally, particularly for the energy trade.

A large portion of the world's oil and liquefied natural gas shipments transits through this passage, making it a strategically crucial corridor for global shipping and energy supplies.

Following the joint attack by the US and Israel on Iran, the Islamic nation has announced the closure of the Strait. Iran is also targeting West Asian nations, including Qatar, the UAE and Saudi Arabia.

"If disruptions to shipping through the Strait of Hormuz continue beyond a week, the effects could quickly spread from energy markets to fertiliser supplies, manufacturing inputs, construction materials and export industries such as diamonds," the Global Trade Research Initiative (GTRI) said.

The conflict is likely to impact the movement of goods between India and West Asia.

In 2025, India imported USD 98.7 billion worth of goods from West Asia, making the region a crucial supplier for energy, fertilisers and industrial raw materials.

The region includes the six Gulf Cooperation Council countries '” Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE '” along with other regional economies such as Iran, Iraq, Israel, Jordan, Lebanon, Syria and Yemen.

"The most immediate vulnerability lies in petroleum. In 2025, India imported about USD 70 billion worth of petroleum crude and products from West Asia," GTRI Founder Ajay Srivastava said, adding the largest share was crude oil.

In 2025, India bought USD 50.8 billion worth of crude oil from the region, accounting for 48.7 per cent of its crude imports. Crude oil feeds India's refineries, which produce petrol, diesel, aviation fuel and petrochemical feedstocks used across the economy, he said.

"India has about 30 days of stocks, any prolonged disruption in shipments could quickly push up fuel prices, raising transport and logistics costs and feeding into inflation. Farmers would also feel the pressure through higher diesel prices for irrigation pumps and tractors," he said adding natural gas supplies face similar risks.

In 2025, according to the GTRI, India imported USD 9.2 billion worth of liquefied natural gas (LNG) from West Asia, accounting for 68.4 per cent of its LNG imports.

LNG is used by fertiliser plants, gas-based power stations and city gas distribution networks that supply compressed natural gas (CNG) for vehicles and piped cooking gas for households.

Similarly, he said, India imported USD 13.9 billion worth of LPG from West Asia in 2025, representing 46.9 per cent of its LPG imports.

It remains the primary cooking fuel for millions of households. With stocks covering roughly two weeks of consumption, any disruption could quickly affect cooking fuel availability.

It also said that the effects of the conflict could also reach India's farm sector through fertiliser supplies.

Last year, India imported USD 3.7 billion worth of fertilisers from West Asia. This included USD 2.2 billion of mixed fertilisers (NPK), accounting for 31.1 per cent of imports, and USD 1.5 billion of nitrogen fertilisers, representing 30.3 per cent of imports.

"Fertilisers are essential for crop yields across cereals, fruits and vegetables. Supply disruptions during the crop season could reduce fertiliser availability, increase government subsidy costs and push up food prices," Srivastava said.

He added that India's diamond export industry also depends on Gulf supplies.

In 2025, the country imported USD 6.8 billion worth of rough diamonds from West Asia, accounting for 40.6 per cent of imports.

These stones are processed in India's diamond cutting and polishing hubs, particularly Surat in Gujarat, which supply polished diamonds to global markets.

Any disruption in raw diamond shipments could slow production and affect employment in the jewellery sector, he said.

The country also imported USD 1.2 billion worth of polyethylene polymers from West Asia, accounting for 35.6 per cent of imports of this plastic feedstock.

Polyethylene is widely used in packaging materials, plastic pipes, containers, consumer goods and agricultural films used in irrigation. Supply shortages could disrupt packaging industries and consumer goods manufacturing.

Further, for the construction sector, it said India imported USD 483 million worth of limestone from West Asia, accounting for 68.5 per cent of its imports.

Limestone is a key input for cement production, meaning shortages could push up cement prices and delay infrastructure projects.

Other minerals are also critical. India imported USD 420 million worth of sulphur from West Asia, representing 65.8 per cent of its imports. Sulphur is used to produce sulphuric acid, an essential input for fertilisers and several chemical industries.

India also imported USD 129 million worth of gypsum, accounting for 62.1 per cent of imports, which is widely used in cement and construction materials.

Even metals supply chains are linked to the region. India imported USD 190 million worth of direct reduced iron (DRI) from West Asia, accounting for 59.1 per cent of imports of this steelmaking input.

The country also imported USD 869 million worth of copper wire, representing 50.7 per cent of imports, which is used in power transmission, electrical equipment and renewable energy infrastructure.

"Together, these figures highlight how closely India's economy is tied to West Asian supply chains," Srivastava said, adding, "What begins as a regional conflict could rapidly evolve into a broader supply shock for the Indian economy". PTI RR MR