The ongoing crisis in West Asia has thrown the manufacturing sector into disarray and created significant operational bottlenecks that show no signs of easing. This situation affects the operation of ports, shipping activities, the transport of containers and the supply of energy – especially liquefied petroleum gas (LPG). Those disruptions are driving up costs, industry players say, and they fear a much bleaker future if conditions don’t improve.
Kamal Bali, President and CEO of Volvo Group, noted that geopolitical disruptions and the resulting volatility in the fuel and shipping markets are pushing up freight charges and product costs. “We are also seeing cost escalations from higher oil prices, along with longer delivery times and higher logistics costs due to container shortages, port congestion and extended transit cycles,” he said.
“We are optimizing routing and inventory where possible and making contingency plans,” Mr Bali added. He also said the operating environment is unpredictable, with the potential for growth and inflationary shocks, although the current situation may appear manageable.
According to Prashant Gokhale, president of the Bangalore Chamber of Industry and Commerce (BCIC), the continued tension will not only increase input prices but also lead to critical shortages that will affect production schedules and supply chain continuity.
Mr. Gokhale further noted that the impacts would be felt deeply in sectors such as manufacturing, automotive and engineering, where the cost of importing essential materials — from metals to electronic components — is bound to rise sharply. “This cost increase, along with longer lead times and the need for alternative sourcing strategies, will put enormous pressure on operational efficiency and profitability,” he added.
The impact is most pronounced for SMEs, which contribute nearly 30% to India’s GDP and about 45% of manufacturing output. With limited pricing power, rising LPG prices – critical for foundries, thermal processing and manufacturing – are directly squeezing margins. The general engineering sector faces rising input costs and extended lead times, while aerospace and precision manufacturing, though less energy intensive, remain sensitive to supply chain reliability, says G. Prakash, Chairman, Manufacturing Expert Committee, BCIC.
DR Subramanyam, co-founder and managing director of SLN Technologies, a city-based electronics design and manufacturing company specializing in strategic electronics for aerospace, defense and industry, said the shortage of LPG has severely affected manufacturers and suppliers of mechanical enclosures for all kinds of electronic equipment, equipment and racks for network equipment.
“Most of these suppliers rely on LPG for heating processes which include surface coating, painting, powder coating of enclosures used for electronic equipment and products in various industries. The equipment and appliances have to be housed somewhere, we cannot sell them naked. As a result, the delay has more than doubled,” Mr Subramanyam said.
Mr. Prakash who is also a Director at ACE Designers Ltd. – Division of Turning Centers, he further stated that the most immediate disruption was visible in logistics; fuel shortages and sharp price spikes led to 5 to 10% delays in shipping cycles in certain industrial corridors, affecting both inbound material flow and outbound shipments.
He also added that while the current phase reflects early stress rather than systemic disruption, a long-term conflict could increase inflation, dampen growth in the Index of Industrial Production (IIP) and moderate momentum in the Purchasing Managers’ Index (PMI).
“The situation underscores a clear strategic imperative: energy diversification, supply chain localization and operational efficiency must accelerate. In an increasingly volatile global environment, resilience will define the next phase of India’s manufacturing competitiveness,” Prakash said.
Published – 07 Apr 2026 23:05 IST
