NEW DELHI: The West Asia conflict could adversely impact India’s automotive sector even as the industry wrapped up FY2025-26 on a high note with robust sales. Shailesh Chandra, President of Society of Indian Automobile Manufacturers (SIAM) and managing director of Tata Motors Passenger Vehicles (TMPV) stated that the evolving geopolitical tensions could disrupt automotive production and curb demand by driving up commodity and fuel prices among other headwinds facing the industry.
“Development arising from West Asia is posing certain risks. Supply disruptions have led to a shortage of propane and ethylene, which are critical inputs for manufacturing operations. Additionally, pressures are emerging from shortages and cost escalation across select petrochemical and other key commodities. Global logistical conditions have also become more volatile with rising shipping costs and longer routes,” said Chandra on Tuesday while highlighting the auto industry’s performance in FY26.
India’s automobile sales surged sharply in FY2025-26, with all major vehicle segments posting their highest annual sales in seven years. According to Society of Indian Automobile Manufacturers (SIAM) data, total domestic vehicle sales rose 10.4% year-on-year to 2.83 crore units, with passenger vehicles, two-wheelers, three-wheelers and commercial vehicles recording their best annual performance in recent years.
Giving a glimpse of the current situation, Chandra stated that while enquiries remain strong, conversions are getting delayed. He added that if fuel prices rise in a sustained manner over the coming weeks, it could also weigh on demand. “We will have to closely watch consumer behaviour if fuel prices move up,” he said.
Industry executives expect retail fuel prices to go up once the elections in different states are over by the end of this month. So far, India has not seen any increase even as Brent crude prices have soared above $100/barrel, well above $70/barrel before war broke out in West Asia on February 28.
The positive takeaway from the emerging situation is a sharp surge in demand for electric vehicles (EVs). Chandra said that at Tata Motors Passenger Vehicles they have seen a 20-25% jump in EV demand due to the West Asia war in March. “If fuel prices increase, I think there will be an uptick in electric vehicle demand. We are already seeing that,” he added.