Only 10–15% industries running single shift:Israel-Iran war pushes raw material prices up by 30%; shutdown fears grow

The impact of the Israel-Iran war is now clearly visible on the industries of Madhya Pradesh. Raw material prices have increased by 20 to 30 per cent. At the same time, logistics costs have also become 5 times more expensive. This is directly affecting production and supply. Along with exports, the domestic market is also being affected, leading to an increase in the cost of finished goods and making products more expensive. Due to the shortage of raw materials, some industries are starting to face shutdown situations, while 10 to 15 per cent of factories are now operating in a single shift instead of two. Pharma Sector Most Affected The pharma industry has been most affected. For example, on Monday, the price of paracetamol powder was 290 rupees. The very next day, the price reached 360 rupees per kg. This means an increase of approximately 20 to 22 per cent was recorded. Similarly, the prices of other raw materials and packaging materials, such as plastic granules and PP, are also rising rapidly. If the war drags on and the supply of any essential material is disrupted, factories may face shutdowns. Currently, the situation is expected to remain normal for the next 10 to 12 days. After that, problems are likely to increase. Bulk drug and petrochemical supply halted Indore is a major industrial city. There are more than 5600 industries in Pithampur, Sanwer Road, and Palda here. Among these, pharma, chemical, metal, and plastic industries depend on the Middle East for approximately 60 percent of their raw materials. Due to the war, the supply of bulk drugs, petrochemicals, and other inputs from Bahrain, Qatar, and Saudi Arabia has been affected. Imports from China and Europe are also impacted due to issues in the Strait of Hormuz. Export of finished goods is also facing difficulties. The cost of container exports has increased by up to 5 times. Either no raw material or high cost Dr. Gautam Kothari, President of Pithampur Industrial Organization, stated that industries are facing two problems simultaneously. In some places, raw material is unavailable, while in others, it has become very expensive. Due to gas shortages, injection production in pharmaceutical companies is being affected. Many units are on the verge of closure due to the increase in the price of plastic granules. Prices up by 30%, difficult to increase cost price Raw material prices have been continuously increasing since March 7. Virgin granules used in plastic products (used in making bottles, caps, pipes, footwear) have become up to 30% more expensive. Industrialists say that despite the price increase, goods are not being received on time. In the footwear industry, costs have increased by up to 20%, while the profit is only 57%, which is increasing losses. Medicine Production Getting Costlier Shailesh Meena, associated with the pharma industry, said that the price of glycerin has increased by 64% and paracetamol by 26%. Shipping delays, container shortages, and increased freight charges are also increasing costs. Countries like UAE, Saudi Arabia, and Oman are heavily dependent on India for affordable medicines, so this situation could also affect the international market. If the war continues for another 10-15 days, the availability of essential medicines could be affected. Difficulty in sending orders in current situation According to industry organizations, 40-50% of the state’s exports are from Indore. More than 80,000 containers are sent to Kandla and JNPT every month. Currently, there are large orders for pharma, soy, and food processing from the Middle East, Africa, and Europe, but there are difficulties in sending them. Container freight has increased 45 times, and getting insurance has also become difficult. Companies are avoiding providing insurance due to the threat of sea and air attacks. Air cargo capacity is also limited. LPG shortage, increased dependence on PNG
Due to the LPG crisis, its supply to industries has been stopped. Due to the shortage of LPG, industries have to depend on PNG, but now companies have stopped credit facilities. Gas is now available on cash or immediate payment. Whereas earlier, 7 to 15 days were given. If the war prolongs, the crisis on industries will deepen According to Tarun Vyas, Secretary of the Association of Industry, raw material prices have been continuously increasing since March 7, leading to a rise in production costs. Despite demand, supply is being affected, and a shutdown situation may arise soon. Dr. Darshan Kataria of the Pharma Industry and Pithampur Industrial Organisation says that the pharma sector’s dependence is on chemicals, which mainly come from Gulf countries. Production being affected there is causing prices to rise, although the situation is expected to improve soon. According to Suber Rampurwala, former board member of FIEO, food processing and agro products are exported in large quantities from Madhya Pradesh to the Middle East. Exports are being affected due to rising sea freight and insurance difficulties.