India Remains Resilient To Middle East Uncertainty, But Sectoral Risks Loom If Crisis Escalates: Crisil

(MENAFN- KNN India) New Delhi, Jun 21 (KNN) India's global trade has, so far, remained largely insulated from the ongoing geopolitical uncertainties in the Middle East, according to ratings agency Crisil.

While direct trade with the conflict-affected nations - Israel and Iran - constitutes less than 1 percent of India's total trade, the agency cautioned that prolonged escalation could expose key sectors to indirect risks such as rising crude oil prices, supply chain disruptions, and higher freight and insurance costs.

In a recent media release, Crisil noted that India's engineering exports and industrial performance continue to show resilience.

However, sectors such as basmati rice, fertilisers, and diamonds - which have limited but concentrated exposure to the region - may require closer monitoring.

The uncertainties have already influenced global oil markets.

Brent crude has climbed to USD 73–76 per barrel over the past week, up from an average of USD 65 per barrel in April–May 2025.

Although still below the FY25 average of USD 78, Crisil warned that any disruption to energy supply chains could push prices higher and potentially squeeze corporate margins.

Crisil highlighted that while upstream oil companies may benefit from elevated prices due to fixed cost structures, downstream refiners could see their operating margins shrink if they are unable to fully pass on higher input costs to consumers.

Crisil concluded that the immediate fallout of Middle East tensions on India Inc remains limited, supported by strong balance sheets and relatively low capex intensity.

Nonetheless, it cautioned that a prolonged crisis could magnify risks, particularly through higher oil prices and logistical disruptions, which may fuel inflationary pressures and weigh on profitability across sectors.

(KNN Bureau)

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