Iran-Israel war: Businesses that are expected to see second order hit in coming few days

The ongoing tensions in the Middle East have already impacted crude oil and gas supplies across the world. The global prices of crude oil and liquefied petroleum gas (LPG) have skyrocketed as the US-Israel war on Iran is affecting the supply chain from the Middle East.

Indian companies have increased the prices of LPG gas cylinders. Eateries in Maharashtra and Karnataka are dealing with a sudden shortage of commercial LPG cylinders, with several restaurants having shut their operations due to the unavailability of the cylinders. There are 5 ways in which the Indian economy is getting hit because of the Iran War and about 15 types of businesses that could get directly affected.

Higher Crude Oil Prices which is leading to inflation
Freight and Insurance get costlier for international trade which compresses margins
Rupee is expected to fall more against the USD because of more expensive imports
Expect a lot more flight cancellations, so direct impact on the economy because of reduced business travel
Spike in inward remittances from NRIs, but reduced household consumption

However, there are a few businesses that are expected to see a second order hit in the coming few days. Here is the list:

Rice: Iran is the single largest buyer of our Basmati Rice, followed by Iraq, such that the GCC countries take more than 50% of India’s Basmati export. Right now, more than 200,000 tonnes of Basmati is stuck in ships that can’t move. This means, we could see the domestic market be flooded by a lot of rice which can’t be exported and rice prices could come down
Gems, Jewellery and Diamonds: More than half of India’s gold and rough diamond imports flow in from Dubai which is disrupted at the moment. This will reduce exports from Surat and because of reduced inflow of gold, gold prices could go up. Surat is hit yet again because of its polyester yarn based fabric becomes more expensive to procure, squeezing margins, and exporting ready orders for garment manufacturers becomes more expensive and so people in the business of garment manufacture and export could be hit soon.
Paints, Tyres, Chemicals industries: These industries are directly hit because of rising raw material cost, so we could see prices go up there
Agriculturists could be majorly hit as almost 70% of India’s (sulphur) fertilizer imports come from the Gulf directly impact food costs for the upcoming sowing season in June
International Travel may take a hit, so agents should start pushing domestic destinations.

Source link