Iran-Israel conflict disrupts pharma, chemical sectors:Drug raw material costs surge 50–200%; Indore confectionery output drops, half of units shut

The ongoing Iran–Israel conflict has pushed the chemical, pharmaceutical and energy industries into a deep crisis, severely disrupting supply chains and escalating production costs. A key chemical, ‘Penta’, widely used in manufacturing LPG, antacids and cough syrups, is now in short supply. Prices of essential raw materials have surged by 50% to 200%, significantly affecting the production and availability of everyday medicines. Heavy dependence on imports worsens supply disruptions The pharma, chemical and energy sectors rely on imports for 75–80% of their raw materials, primarily from the Middle East, China and the United States. Under normal circumstances, shipments would arrive within 30–45 days. However, delivery timelines have now extended to 60–90 days. Shipping costs have also increased sharply, rising three to four times compared to usual rates. According to Darshan Kataria, a member of the Drug Manufacturing Association, restrictions on payments to banks in the Middle East have further complicated procurement. As a result, previously processed payments are now stuck, adding to the financial strain on businesses. LPG prioritisation creates shortage for medicines Intermediate chemicals such as Penta and Propylene Glycol are used in both LPG production and pharmaceutical manufacturing. Industry stakeholders report that government prioritisation of LPG supply has reduced the availability of these materials for drug production. This has led to growing difficulties in supplying essential medicines, including those used for diabetes, blood pressure and other basic health conditions. JP Mulchandani, President of the Basic Drug Dealers Association (Madhya Pradesh), confirmed that raw material availability has been severely affected. He noted that the government has responded by reducing import duties to zero in an attempt to ease the crisis. Indore confectionery cluster hit by gas and raw material shortage The shortage of raw materials and gas has also severely impacted the confectionery cluster in Indore. Nearly half of the factories in the cluster have shut down, and layoffs have begun. Industry representatives Sunil Chimnani, Surendra Singh Panwar, Sanjay Dingwani and Prakash Sewani stated that daily supplies from the cluster, which previously amounted to ₹50 lakh, have now dropped to just ₹20–22 lakh. Production has declined to 35–40% of normal levels. Out of 30 units in the cluster, eight operate on gas. Of these, six have completely shut down. Disruptions in the supply chain have also halted the movement of finished goods to markets. State government seeks report amid growing concerns In response to declining industrial output and rising unemployment, the state government has sought detailed reports from industrial bodies. The Pithampur Industrial Organisation highlighted that the imbalance in payments has created a liquidity crisis. Companies are now required to make advance payments for raw materials, gas and other essential supplies, further straining their working capital. Workers face dual crisis of job loss and expensive LPG The crisis has also had a direct impact on workers. With LPG supplies disrupted, cooking gas has become more expensive and harder to access. Vishal Yaduvanshi, a labour contractor, said workers are struggling to afford even a ₹300 gas refill due to delayed or halted wages. Manoj Verma, an employee at a pharmaceutical company, reported that factory operations have been suspended for the past five days due to a lack of raw materials. Workers have been laid off temporarily, and many are now considering returning to their villages once they receive pending wages. Administrative processes temporarily halted Amid the gas shortage, administrative processes related to LPG connections have also been affected. Mohanlal Maru, an official from the Food and Civil Supplies Department, confirmed that e-KYC procedures and new gas connection approvals have been temporarily suspended. The cascading impact of the Iran–Israel conflict has exposed the vulnerability of import-dependent industries. With rising costs, delayed shipments, financial bottlenecks and prioritisation conflicts, both industrial output and public access to essential goods, including medicines and cooking gas, are under significant pressure.