ICRA’s analysis in this report focusses on the macroeconomic and sectoral implications arising from the visible second-order impacts of the US-Israel-Iran conflict. The sectoral impact in India appears uneven so far. Airlines, chemicals, fertilisers, and refining & marketing face the highest pressure from elevated fuel costs and rerouting. Several sectors including auto components, commercial vehicles, textiles (man-made fibre [MMF] and exports), tyres, quick service restaurants (QSR), and retail apparel may see a moderate impact owing to cost pressure and demand sensitivity. In contrast, cotton textiles, hospitality, pharmaceuticals are relatively insulated with limited direct exposure to trade disruptions.

Exhibit: ICRA’s macroeconomic projections across crude oil prices at $95/barrel and $105/barrel

Source: ICRA Research; CPI/WPI: Consumer/Wholesale price index; CAD: Current Account Deficit; bbl – Barrel