India File: Iran war reverberates from farmlands to diamond vaults

GAIL (India)

10/03/2026 04:25

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March 10 - By Ira Dugal, Editor Financial News, with global Reuters staff

The Iran war’s effect on business is growing rather dramatically. From gas curbs to export delays, Indian companies are already feeling the strain. And so are financial markets, forcing a step-up in intervention from the central bank.

From fertiliser producers, to makers of ceramics to crafters of jewellery, a broad swathe of Indian companies has found itself in the cross-hairs of the war. That's our focus this week. Are there as-yet unanticipated ways in which the Middle East crisis could hit Indian firms? Write to me at ira.dugal@thomsonreuters.com.

And foreign outflows from Indian IT stocks hit a seven-month high in February. Scroll down for more on that.

THIS WEEK IN ASIA

Iran defies Trump, elevates Khamenei's son Mojtaba as successor

China says US talks vital as Trump targets Beijing's key partners

Airlines begin to hike fares due to higher fuel prices, shares stabilise

US pressing Sri Lanka not to repatriate Iranian crew and survivors from sunken ship, memo says

Vietnam eyes new 5G deals with Chinese tech firms, sources say, despite US warnings

SHORTAGES, SUPPLY DISRUPTIONS, PRICE HIKES

The U.S.-Israel war with Iran, now into its second week, is casting its shadow on businesses across the world, including India's.

The first point of impact has been higher oil prices - which rose above $110 per barrel but slid on Tuesday as U.S. President Donald Trump's comments raised hopes of an end to the war. But disruption to trade through the Strait of Hormuz and stoppage of gas supplies are also having a more immediate impact on Indian businesses.

Over the past week, GAIL GAIL.NS and IOC IOC.NS restricted gas supplies to industrial customers after Qatar halted production of liquefied natural gas and shipments were disrupted.

India, the world's fourth-largest buyer of LNG, relies heavily on the Middle East for its imports.

The gas shortages will likely hit the fertiliser sector quickly, where some manufacturers such as Gujarat Narmada Valley Fertilizers GNFC.NS have already announced planned production cuts.

Similar cuts are being seen across the region, which could potentially curb supplies just as farmers gear up for their major cereal planting season, Reuters' Naveen Thukral reported.

India imports about a third of its fertiliser needs. The government, however, was confident supplies will be adequate and added it is taking steps to diversify imports beyond the crisis-hit Middle East.

The ceramic and tiles industry has been another early casualty of fuel-supply shortages, with a number of firms planning on paring production. And restaurants have taken to social media to complain about a shortage of industrial-sized gas cylinders.

Alongside, businesses that export to the Middle East are starting to warn about delays in shipments.

India's gems and jewellery exports, as well as imports of rough diamonds from the United Arab Emirates, are being impacted because of widespread flight cancellations and airspace closures, Reuters' Rajendra Jadhav reported.

Jindal Stainless JIST.NS, India's biggest stainless steel producer, has warned of shipment delays.

India is not alone in feeling the impact, with many global businesses under pressure. Read here for an assessment of the global impact.

Prices are starting to be impacted as well, with India raising cooking gas prices, even though the government has ruled out a hike in retail costs of petrol and diesel for now.

The one silver lining is that interest rates may not rise immediately as production cuts due to shortages of fuel-based raw material and disruptions to exports may mean a quicker hit to India's growth than to inflation.

Read that analysis here.

In a scenario where oil prices average $120 per barrel in financial year 2026-27, inflation may rise to 4.8% while growth may slip to 6.2% from a currently estimated 7%, said Soumya Kanti Ghosh, chief economist at State Bank of India, the country's largest bank.

STEPPING UP INTERVENTION

With no quick resolution in sight and financial markets jittery, India's central bank has stepped up intervention.

It sold about $12 billion from its foreign exchange reserves to steady the rupee, which fell to a record low below 92 against the dollar this week.

It also bought bonds via the secondary markets and announced purchases of another 1 trillion rupees over the next week, to keep liquidity comfortable and interest rates in check.

The government too has activated contingency measures at ports to ensure additional storage facilities for exports bound for the Middle East that may be stuck or returning midway due to a lack of safe transit.

"Risk-off sentiments will keep the Indian rupee under pressure, while the RBI intervenes judiciously, balancing pressures on FX reserves and the need to maintain banking system liquidity," Kotak Institutional Equities said in a note.

MARKET MATTERS

Indian IT stocks fell the most in February since the global financial crisis as foreign selling hit its highest in seven months on concerns about the impact artificial intelligence models will have on the software business, data released on Friday showed.

Foreign portfolio investors sold IT stocks worth 169.49 billion rupees ($1.85 billion) last month, triggering a 19.5% drop in the IT index .NIFTYIT, its worst monthly performance since September 2008, when the global financial crisis upended equity markets.

Read here for more.

THIS WEEK'S MUST-READ

The southern Indian state of Karnataka, home to the tech hub of Bengaluru, banned on Friday the use of social media by those under the age of 16.

Read here for more on the decision.

Karnataka became the first Indian state to implement a ban even though a wider debate in the country kicked off after an annual economic document from the government's chief economic adviser earlier this year said that India should draft policies on age-based access limits to tackle "digital addiction".

FPI outflows from Indian IT stocks climb to 7-month high in February 2026 https://reut.rs/4b9tLbh

 (Reporting by Ira Dugal; Editing by Muralikumar Anantharaman)

 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))