West Asia Conflict: FICCI Details A Two-Pronged Strategy To Shield Indian Industry
Industry body FICCI has urged the government to bring petroleum products under the GST. This is part of a new roadmap to protect the Indian economy from the West Asia conflict. In its latest report, FICCI warned that the crisis is already putting stress on sectors like manufacturing and logistics.
Industry body FICCI has called for a shift in India's fiscal policy to counter the economic fallout of the West Asia conflict. In an extensive report released on Thursday, the chamber urged the government to explore bringing petroleum products under the GST regime and providing emergency liquidity for small businesses. The report warned that "early signs of stress" are appearing in manufacturing and logistics. It outlined a roadmap to build long-term resilience as global energy supply chains remain volatile.
GST for Energy Security
A primary recommendation in the FICCI report is the inclusion of petroleum under the Goods and Services Tax (GST). Currently, fuel is taxed by both the Centre and States through excise and VAT. Bringing petroleum into the GST fold would allow businesses to claim input tax credits. FICCI argues this would significantly reduce cost burdens and make Indian exports more competitive as global oil prices hover near the $97 per barrel mark.
The report highlights that Micro, Small, and Medium Enterprises (MSMEs) are the most vulnerable to supply chain shocks. FICCI has requested:
- Emergency Financing: Specialized credit lines to help MSMEs manage sudden spikes in raw material costs.
- Force Majeure Protection: The government should issue advisories for public contracts. This would prevent small firms from being penalized for shipping delays in the Strait of Hormuz.
- Customs Fast-Tracking: Prioritizing clearances for time-sensitive imports to prevent production halts.
For the private sector, FICCI recommends a "two-pronged strategy" focused on financial health and operational continuity. It urges companies to move beyond standard contingency plans.
"Firms should develop a ‘Middle East Crisis’ version of their budgets," the report stated. These budgets would track how sensitive a company's margins are to oil price hikes. Additionally, FICCI suggests setting up “War Rooms," cross-functional teams that monitor supply shortages and find alternative trade routes in real-time.
Long-Term Strategy
The report emphasizes that India must reduce its dependence on specific geographies. With 90% of India's crude currently passing through the Strait of Hormuz, FICCI proposes:
- Signing long-term oil and gas agreements with multiple countries outside of West Asia.
- Rapidly expanding India’s Strategic Petroleum Reserves (SPR) capacity.
- Setting up local cells to monitor vulnerabilities and trigger contingency protocols.
The report concludes that while the crisis is a challenge, it is an opportunity for India to accelerate its shift toward green hydrogen, solar power, and biofuels to ensure a self-reliant future.
Published By : Shourya Jha
Published On: 9 April 2026 at 17:51 IST