India's manufacturing sector is on alert as the Iran war threatens to choke critical shipping routes. The worsening fallout has sent automakers and component makers racing to assess exposure to Gulf-linked supply chains.

Consumer goods and electronics exporters are already reporting direct hits-halting shipments and shutting production lines as war-risk surcharges wipe out margins. Industry bodies have begun seeking emergency government support to secure industrial fuel supplies.

Major car and two-wheeler makers have issued advisories to vendors, asking them to map exposure across key inputs such as aluminium alloys, copper, petrochemical derivatives, PVC resins, lubricants, adhesives and electronic components routed through Gulf ports.

Emails to Tata Motors, Mahindra & Mahindra, Maruti Suzuki, He?? MotoCorp, Hyundai Motor India and Toyota Kirloskar remained unanswered. Kia India said it was "closely monitoring the evolving geopolitical situation" and staying in touch with suppliers. At least one automaker has set up a crisis management team, evoking the supply-chain war rooms created during the pandemic.

On the ground in Pune, suppliers say automakers are calling constantly. "We are getting hundreds of calls every day," said a Pune-based supplier serving Mahindra, Skoda Auto Volkswagen India and Tata Motors. "They are not panicking yet, but want to be fully prepared if the situation worsens."

City gas distributor Adani Total Gas has asked commercial and industrial users to curb natural gas consumption to 40 per cent of contracted volumes, warning that usage beyond the limit will be charged at higher spot market rates. Contracted rates are about 40 per standard cubic metre, while spot LNG prices are close to ?120.

Last week, Gujarat Gas invoked force majeure on gas supply agreements as regasified LNG supplies tightened sharply. Indian Oil Corp has halted propane supply- a move with serious implications for the ceramics sector, where 70-80 per cent of manufacturers depend on propane.

The energy squeeze is hitting automakers and ancillary units, including foundries, forging shops and paint lines, hard. Reverting to oil from gas requires capital expenditure, regulatory approvals and time that smaller units often lack.

In a March 9 letter to the Ministry of Heavy Industries, the Automotive Component Manufacturers Association of India-representing over 1,100 component makers -sought at least a month of continued gas supply to allow an orderly transition, along with export credit support and additional working capital.

Consumer goods manufacturers have begun cutting export-linked production after halting shipments to the Gulf and some European markets. AWL Agri Business executive deputy chairman Angshu Mallick said exports had to be stopped as war surcharges would erase margins.

Electronics contract manufacturers have also paused export-focused lines. "We have stopped production lines for ACs meant for West Asia," said Ajay DD Singhania, CEO at Epack Durable Exports. Godrej Appliances and Haier Appliances India have similarly adjusted production plans. FMCG companies including Parle Products, Emami and Marico, which have operations in the Gulf, are also feeling the impact.

For the factories - deeply tied to raw material flows, energy routes and shipping lanes running through volatile regions - the situation is a cautious wait-and-watch.

Source: ET Infra. Com 

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