West Asia conflict may hit ₹13.75 lakh crore of India Inc revenue: SBI

A prolonged conflict in West Asia could put ₹13.75 lakh crore worth of India Inc revenue at risk, as rising energy prices and global instability weigh on corporate earnings, according to a report by SBI Research.

The report estimates that sectors accounting for nearly 40% of listed corporate revenues face significant downside risks from elevated crude prices, supply chain disruptions and logistics bottlenecks. In a severe scenario, revenue losses could reach ₹2.75 lakh crore, or about 0.8% of GDP.

At the centre of the pressure is oil. India’s crude basket averaged $119.3 per barrel in March 2026 and could rise to $125–137 per barrel if hostilities persist, sharply increasing input costs across industries, SBI Research noted.

Even under a moderated outlook, prices are expected to remain elevated at $109–112 per barrel, suggesting sustained pressure on corporate margins.

The impact is already visible across sectors. Energy-intensive industries such as textiles, paper and construction are likely to see sharp margin compression, while shipping and logistics face both rising costs and demand disruptions. Some segments, including capital goods and aviation, may see limited gains, but the broader earnings outlook remains fragile.

The risks extend beyond corporate balance sheets. SBI Research highlighted that macroeconomic spillovers are compounding the stress.

India’s import bill is highly sensitive to oil prices, with every $1 increase adding $1.5–2 billion. As a result, the current account deficit is projected at 1.3–1.5% of GDP in FY27, or around $60 billion, assuming oil stabilises near $100 per barrel.

Capital flows are also turning adverse. Foreign institutional investors have withdrawn about $14.3 billion in FY26, with March alone seeing outflows of roughly $11.8 billion, potentially one of the worst monthly exits on record.

These outflows are putting pressure on the currency. The rupee has weakened past 93 per US dollar and is nearing 94, with SBI Research warning it could slide further towards 96 if geopolitical tensions persist.

For corporates, this presents a mixed picture. Export-oriented firms may benefit from currency depreciation, but import-dependent businesses face rising raw material costs and margin erosion. Banks, meanwhile, could see some gains from foreign currency assets and increased trade finance activity.

Liquidity conditions are tightening as well. Core system liquidity may fall below ₹1 lakh crore in early FY27, while the 10-year government bond yield has risen to 6.84%, signalling higher borrowing costs for companies.

Separate industry insights suggest a preparedness gap. According to a report by Tata AIG General Insurance and Dun & Bradstreet, 63% of businesses expect global conflicts to disrupt operations, yet only 19% conduct regular geopolitical risk assessments, underscoring a disconnect between awareness and readiness.

Despite these headwinds, domestic demand and remittance inflows offer some buffer. India is expected to receive $137–140 billion in remittances in FY26, though prolonged conflict could threaten employment in Gulf economies and future inflows.

The outlook, however, remains uncertain. With oil prices, currency movements and capital flows all under pressure, India Inc faces a multi-front challenge that could reshape earnings in the months ahead.