West Asia conflict strains India’s auto supply chain and exports as costs rise

Subscribe to enjoy similar stories.Indian automakers are beginning to feel the operational strain of the West Asia conflict, with companies flagging supply bottlenecks, longer shipping times and rising costs, even as domestic demand remains resilient.Early signals from industry executives suggest the impact is weighing far more on supply chains than on demand, which has so far held up. The spillover is beginning to feed into production and exports, pushing up costs that companies are gradually passing on to consumers.At the centre of the strain is the Strait of Hormuz, a key maritime chokepoint that has seen vessel movement fall sharply amid repeated disruptions.

The tightening of this critical energy route is feeding into global oil and gas volatility and adding to cost pressure for industries such as automakers that depend on these inputs.Exports, in particular, are under pressure as shipments through the strait and other routes face delays and congestion. Longer transit times are compounding strain on logistics and inventory cycles.“When the shipment or ship calling schedules get disrupted, then it becomes a very big logistic nightmare.

It seems that only the state of Hormuz is affected. But there is a ripple effect,” Bajaj Auto’s executive director Rakesh Sharma told Mint in an interview.

“Then there are the transit times, which increase. Like our shipments to Mexico and Brazil, which take 50 days or so, are now taking 70 days.”Against these emerging signs of strain, India’s passenger vehicle exports rose 2.2% year-on-year to 78,922 units in March, while two-wheeler exports increased 17.5% to 428,622 units.Since the escalation began with coordinated strikes by the US and Israel on Iran on 28 February, disruptions