New Delhi: The impact of the war and the clash over Strait of Hormuz has begun to be felt across the globe, particularly in South Asia, including India. Since crude oil is mostly imported from abroad, the prices of gas oil and other items have already reached sky-high, affecting normal life across the country.
As per wrightresearch.in, the share of crude imports from Strait of Hormuz increased to 53% alone, as compared to 41-42% in prior years, after refiners in India increased purchases from Gulf producers.
Qatar accounts for 35-40% of India’s LNG imports
It may be noted that around 55–65 per cent of India’s Liquefied Natural Gas (LNG) imports pass through this waterway. Among other Gulf countries, Qatar alone accounts for 35–40 percent of India’s LNG imports, as well as 20 per cent of the country’s natural gas. The country, however, declared force majeure on LNG deliveries on March 3, following Iranian strikes on the Ras Laffan complex.
The gas marketing companies in India have already informed industrial customers that supplies may be impacted by 10–50 per cent. While Domestic LPG cylinder prices were raised, there have been reports of delays across metros and other parts of India.
Impact on fertilizers, other agricultural products
Apart from crude oil and gas, agriculture is the sector impacted by tensions related to the Strait of Hormuz. As per reports, India is heavily dependent on imports of fertilisers too, from the Gulf region, particularly nitrogen-based fertilisers, which are dependent on natural gas feedstock. The Strait of Hormuz is a critical waterway through which India imports urea and ammonia.
Importantly, India imports both raw materials and finished fertilisers from the Gulf countries, with nearly 40 million tonnes of urea used annually. While India is highly dependent on imports for phosphatic fertilisers, it was entirely dependent on imports for potash.
How auto and FMCG sectors may be affected?
The tensions in the Strait of Hormuz also affect the Fast Moving Consumer Goods (FMCG) sector. Nestle India, the company known for making country’s best-selling instant noodles, is also facing a crisis due to a shortage of packaging material. This has resulted in pile-up of Maggi in at least one of its units in the country, according to The Indian Express.
Bisleri, one of India’s mineral water brands, has increased the price of its 1-litre bottle to Rs 20 from the previous Rs 18 due to surging packaging costs . Coca Cola has also hinted that it may also increase the price.
Apart from them, several automakers like Tata Motors and Mercedes-Benz have also hinted for another price hike due to packaging cost, even as the prices were increased in January this year. Maruti Suzuki also announced that it may increase prices of its small cars due to surging commodity prices.