Apex business chamber FICCI has raised concerns about the early signs of stress in various sectors due to the West Asia conflict. The chamber emphasized the need for proactive measures to address immediate risks and enhance long-term resilience. FICCI’s report titled “West Asia Conflict: Implications for India and Imperatives for Industry and Government” outlines a two-pronged strategy for businesses, focusing on financial resilience and operational continuity.
The report recommends that companies secure additional funding lines and hedge currency risks to safeguard cash flows. It also calls for emergency financing for micro, small, and medium enterprises and suggests advisories to mitigate force majeure-related risks in public procurement contracts. Fast-tracking customs clearances, especially for time-sensitive imports, is deemed crucial.
Amid the uncertainty surrounding the duration and escalation of the conflict, businesses are advised to prepare for various scenarios, from short-term disruptions to prolonged instability. Companies are urged to undertake scenario-based planning by creating a “Middle East Crisis” version of their budgets to optimize sales, margins, and capital expenditure based on sector sensitivity.
To address operational disruptions, the report suggests prioritizing demand, aligning production schedules with critical inputs, and enhancing logistics through shipment consolidation. Some companies have set up cross-functional “war rooms” to manage real-time supply shortages and ensure business continuity.
In terms of energy resilience, the report recommends exploring multi-fuel options, such as biofuels and electrification, and increasing reliance on alternative sources like solar power and natural gas. Energy efficiency measures, including energy audits and AI-driven monitoring systems, are also highlighted.
The report stresses the importance of structural shifts for long-term resilience, including diversifying supply chains, reducing dependence on specific geographies, and accelerating the energy transition towards renewable sources like green hydrogen. Logistics resilience, alternative trade routes, multimodal transport, and digital technologies for real-time supply chain visibility are also emphasized.
