West Asia Tensions Disrupt MSME Operations In Delhi NCR, Trigger Cost Pressures

Rajesh Sharma, Joint Secretary of the Faridabad IMT Industrial Association, said raw material prices have surged sharply, increasing by 25 to 75 percent, significantly raising production costs and compressing margins. Production Hit by Fuel and Supply Constraints Industrialists highlighted that fuel shortages have emerged as a key concern, affecting factory operations and slowing production across multiple units. India’s dependence on imported fuel has further intensified these challenges. Logistical disruptions and higher transportation costs have also added to operational pressures, increasing the cost of both domestic and export-oriented manufacturing. Demand Impact and Export Challenges Rising input and freight costs have begun to affect demand, with some buyers reportedly cancelling orders due to higher prices. Export competitiveness has also weakened amid escalating shipping costs and supply chain disruptions. Animesh Saxena, Managing Director, Neetee Apparel LLP, Gurgaon, said MSMEs catering to the domestic market are facing sharp increases in raw material prices, particularly polyester-based inputs. He added that workers, largely from migrant backgrounds, are struggling with rising cooking gas costs, which have increased three to four times, making it unaffordable and contributing to labour migration. Labour availability has emerged as another major concern, with workers returning to their hometowns amid uncertainty and rising living costs. Industry estimates suggest that MSMEs have already lost 20–30 percent of their workforce, with the situation likely to worsen if the crisis persists. Saxena noted that seasonal factors, including the harvest period in workers’ native regions, have also contributed to the outflow. Export-oriented MSMEs are facing additional challenges, with both air and sea freight costs rising sharply. Shipments to Gulf countries have been disrupted, while exports to European markets have become more expensive due to higher logistics costs. Girish Kumar, MD, Sai Electricals, Meerut, said export activity has been affected across MSMEs, while sectors such as plastics and transformer manufacturing are facing raw material shortages. He added that while these may be short-term disruptions, there is a need for MSMEs to explore alternatives to petroleum-based inputs in the long run. Rising Input Costs and Inflationary Pressures Industrialists indicated that inflationary pressures have intensified, particularly due to rising petroleum-linked input costs, which are affecting multiple stages of production, including packaging and transportation. Businesses reported that overall product costs have increased significantly, while margins have narrowed, leaving limited scope for profitability. (KNN Bureau)