India Inc feels the heat from oil shock, asks govt for relief and faster action

India Inc is seeking targeted relief measures such as moratoriums for stressed firms and faster trade interventions as it grapples with the fallout of the West Asia energy shock, Chandrajit Banerjee, Director General of the Confederation of Indian Industry, told CNBC-TV18.

With oil prices rising above $100 a barrel amid continued geopolitical tensions and uncertainty over Iran, industry leaders flagged growing risks to growth, inflation and trade balances, even as policymakers weigh their response.

Banerjee said the industry’s demands are evolving but emphasised that support measures should avoid straining government finances. “One key measure is something that does not stress the fisc—for instance, a moratorium for small and mid-sized companies facing challenges,” he said, adding that supply chain diversification through government-to-government engagement and partnerships in transition areas such as ethanol blending are also critical.

He also called for quicker and more calibrated trade action. “Trade measures like anti-dumping need to be implemented faster where required, while in some sectors we may need to allow imports. It requires careful calibration,” Banerjee said, while highlighting the need to dynamically manage Quality Control Orders to support domestic industry.

As the energy shock ripples through the economy, industry leaders said the shift has been both sharp and disruptive. Vinayak Chatterjee, Founder & Managing Trustee at The Infravision Foundation described the rapid change in macro conditions, noting, “We have transitioned from what I call the ‘Goldilocks moment’ of low inflation and high growth to what I call the ‘Red Riding Hood moment’ in just 45 days.”

Chatterjee outlined a set of responses emerging from industry-government discussions, including a push to move from LPG to PNG and electric cooking, scenario planning for oil at $100, $150 and even $200 per barrel, and renewed focus on upstream oil and gas exploration. He added that weekly fuel supply schedules from the government would give companies better visibility for planning. He also suggested that allowing flexibility in corporate social responsibility spending could help firms support vulnerable sections such as contract and gig workers facing inflationary stress.

The stress is already visible in parts of the logistics ecosystem. Akshay Gulati, Co-Founder of Shiprocket, said exporters—particularly small and medium businesses—are facing sharp cost escalations. “Air freight costs have gone up anywhere from 30-70%, depending on which day you want to ship,” he said, describing the situation as a “double whammy” of rising input costs and fuel-related disruptions.

He noted that while domestic logistics remain relatively stable, with only marginal cost increases and minimal delays, international shipments have been hit hard. “With air freight at 30–40%, a lot of exports are just on hold. Inventory is piling up, waiting to be shipped out,” Gulati said.

Banerjee added that liquidity pressures are intensifying for smaller firms, underlining the need for faster payments across supply chains. “MSMEs obviously face hardship on cash, so timely payment by larger industry to smaller industry is critical,” he said, while flagging tightening working capital conditions.

On the agriculture front, Ajay S. Shriram, Chairman and Senior Managing Director of DCM Shriram Limited, said fertiliser availability remains a concern due to disruptions in global gas supplies. However, he struck a relatively reassuring note for the near term. “I don’t see any shortage of urea for the kharif season,” Shriram said, citing existing inventory of nearly 6 million tonnes and steady domestic production, though he cautioned that the long-term outlook remains uncertain if the conflict persists.

Meanwhile, the crisis is also being seen as an opportunity in certain sectors. Puneet Kaura, Managing Director and CEO of Samtel Avionics Ltd, said the situation could accelerate India’s push towards self-reliance in defence manufacturing. He stressed the need to deepen the ecosystem beyond large manufacturers. “We need to ask whether we are focused enough on Atmanirbharta—creating opportunities not only for final OEMs but also for tier-one and tier-two suppliers,” Kaura said, adding that the current disruption could be leveraged to build globally competitive capabilities.

With the West Asia conflict keeping markets on edge and energy prices elevated, India Inc’s message is clear: targeted relief, faster policy execution and a coordinated transition strategy will be key to navigating the unfolding shock while preserving growth momentum.

Also Read | Supply chain, logistics stress builds as West Asia tensions rise: Rajiv Memani

Below is the excerpt of the discussion.

Q: We have seen diversification in crude sourcing, and crude itself is not the biggest issue right now—it is LPG. But Chandrajit Banerjee, what are the key measures you are asking of the government?

Banerjee: From the government side, the asks will evolve continuously. One key measure is something that does not stress the fisc—for instance, a moratorium for small and mid-sized companies facing challenges. Second, partnership in transition areas like ethanol blending. Third, supply chain diversification through government-to-government discussions.

This is not just about today—we must not miss tomorrow. Another area is trade measures like anti-dumping, which need to be implemented faster where required, while in some sectors we may need to allow imports. It requires careful calibration. Quality Control Orders are also important, and we must navigate them dynamically to support Indian businesses.

Q: Vinayak, what are your key takeaways from these discussions with the government?

Chatterjee: One stark realisation is the speed at which we have transitioned—from what I call the “Goldilocks moment” of low inflation and high growth to what I call the “Red Riding Hood moment” in just 45 days.

On the energy front, I have four takeaways. First, the rapid push towards transitioning from LPG to PNG and electric cooking. Second, the need for scenario planning—oil at $100, $150, and $200—with contingency plans. Third, a renewed focus on upstream oil and gas exploration. Fourth, the petroleum secretary has agreed to provide weekly schedules, giving industry seven-day visibility for planning.

One additional point: while industry has many asks, we must also contribute. One idea discussed was flexibility in CSR spending. Currently, CSR is 2% of profits after tax, but if flexibility is allowed, industry could directly support vulnerable sections—contract workers, gig workers, and daily wage labourers—who may face stress due to inflation and livelihood challenges.

Q: Let me come to you, Akshay. From Shiprocket’s perspective, you’ve got an insider’s view on what’s happening as far as the entire logistics supply chain business is concerned. How bad are things at this point in time? Where are you feeling the most pain? What is happening to cost?

Gulati: So I think from a logistics perspective, on the domestic side, the government has done a fantastic job in calibrating the prices of petrol and diesel, so we’re not seeing crazy increases. But on the international air freight side, I think exporters, especially SMBs, have been hit with a double whammy. You have air freight costs, which have gone up anywhere from 30 to 70%, depending on which day you want to ship. You can send a shipment on Friday and, by Monday, your cost will be 40% higher.

For SMBs, this is actual torture. It’s a double whammy—rising input costs and availability of LPG for a lot of these industries, especially industries like dyeing. You have plants that are shut down. So I think from a logistics perspective, air freight exports are the big concern.

Domestically, we’re not seeing that much of an impact—maybe a 1–2% price increase passed on, and SMBs are able to absorb that. But with air freight at 30–40%, a lot of exports are just on hold. Inventory is piling up, waiting to be shipped out.

From a domestic logistics perspective, supply chains are working very efficiently. So far, we’ve seen a 1–2% increase in costs and less than a 24-hour delay.

Q: CB, you want to come in on that?

Banerjee: Yes. One point that has been mentioned is what industry can do. MSMEs obviously face hardship on cash, so timely payment by larger industry to smaller industry is critical. That is something we are strongly emphasising. Second is working capital, which is becoming very tight. Some issues on how we look at moratoriums are something we will work on with the government.

Q: Mr. Shriram, agriculture is another area where, on account of what we’re seeing with fertiliser prices as well as supply chain disruptions, what is the likely impact?

Shriram: Fertilisers are a matter of deep concern because they are so critical for the agriculture sector in India. Because of the Middle East situation and the Iran issue, production of urea has come down dramatically due to lack of availability of natural gas.

Fortunately, we had an opening stock before the kharif season. At the moment, we have a stock of almost 6 million tonnes. Industry is working at between 80–85%. By the time May comes, we will have enough stock. I don’t see any shortage of urea for the kharif season.

The long-term view is still open because we don’t know how long the war will last. But the way the government is moving to source more widely is a very positive sign.

Q: Puneet, one sector that is, sadly, a beneficiary of what is happening today is the defence sector. How are you seeing this?

Kaura: I have a slightly different perspective. We need to ask whether we are focused enough on Atmanirbharta—creating opportunities not only for final OEMs but also for tier-one and tier-two suppliers.

We need to go back to creating an ecosystem driven by innovation. This is an opportunity where we can convert crisis into real opportunity. India is now at a point where we can export technologies globally. If we don’t use this opportunity now, we may never reach where we want to go.