Red Sea crisis reflects on India Inc’s Q3 show

NEW DELHI : Indian companies are beginning to report early signs of the Israel-Hamas conflict’s impact on business operations, limited to those with exposures to either commodity supplies or related foreign markets.

The rise in freight costs, delays in deliveries, and shrinkage in export market size, with resultant margin recovery delays, are some of the challenges faced, informed by industry executives. However, a handful are hopeful to gain from discounted commodity supplies.

Capital goods and engineering companies like Bharat Electronics (BEL), TD Power Systems, and KEC International have noted some operational strain owing to Red Sea woes.

In a call with analysts, top executives from BEL informed that the Israel-Hamas conflict has been affecting despatches, leading to a spillover of ₹400-500 crore in the 2023-24 October December quarter, which landed in the first week of January.

Indian companies use the Red Sea route through the Suez Canal to trade with Europe, North America, North Africa, and part of West Asia. These regions accounted for 50 percent of India’s exports worth 18 trillion and 30 percent of imports worth 17 trillion in 2022-23, according to CRISIL Ratings data.