Escalation in tensions between India and Pakistan over the past three days has begun to hamper businesses in border regions. Industry executives and experts interviewed by TNIE reported a fall in customer inquiries and footfall, as consumers prioritise spending on essential goods. Sectors ranging from automobiles, travel & tourism, and retail to real estate fear severe repercussions if hostilities between the two countries intensify further.
“If the current conflict broadens, residential absorption in Delhi-NCR and other parts of north India may see a short-term dip of between 5–10%. Luxury housing buyers tend to delay purchases in periods of uncertainty. Demand for mid-income housing will be the first to recover once normalcy is restored,” said Prashant Thakur, regional director & head – research, ANAROCK Group.
A realty developer who has a strong presence in Punjab said enquiry level for their listed properties has come down to 70-80% in the past three days as there is a fear among consumers that the two countries may go to war. “In case of war, we will have difficulty in completing projects as this would result in shortage of labourers and make raw materials dearer,” he said, requesting anonymity.
Tensions have peaked in the region after Pakistan’s missile strikes targeting several Indian cities. The missiles were intercepted by Indian air defence units, but the escalation triggered blackouts in border towns and heightened fears of a full-scale war.
Tours & travel sector, which took a hit from attack in Pahalgam last month and subsequent closure of Pakistan airspace, is expecting additional hurdles in the near future. Operations remain suspended till May 15 at many airports, including major hubs like Leh, Chandigarh, Amritsar, and Jodhpur. This has resulted in cancellation of about 430 flights alone on Friday.
Rikant Pittie, CEO and co-founder, EaseMyTrip, said traveller sentiment remains cautious, with concerns around safety and uncertainty. “Several airlines have cut or suspended operations, leading to a rise in cancellations and rescheduling across travel services,” adeed Pittie. Karan Agarwal, director at Cox & Kings, said they have paused all new travel offerings to Azerbaijan, Uzbekistan, and Turkey. “We advise Indian travellers to avoid any non-essential travel to these destinations until there is greater clarity and alignment in broader geopolitical environment,” added Agarwal.
An aviation industry executive said the four leading airlines are losing millions of dollars daily due to cancellations and closure of Pakistan airspace. “We are hopeful that the government will acknowledge the losses and provide support when situation eases,” added the executive.
Air India recently told the government that it is expecting $600 million in additional costs if Pakistan airspace ban lasts for a year.
Auto companies are seeing a fall in footfall at showrooms across northern region. “Sales in Jammu & Kashmir have been dismal since the Pahalgam attack, and the last three days have seen minimal deliveries in several cities across Punjab and Rajasthan. Until situation de-escalates, we expect consumers to hold back on big-ticket purchases,” said a sales and marketing head of a car company.
The trend extends beyond automobiles. A CEO of a pan-India retail company said demand for peak summer products like air conditioners and refrigerators has dipped in many northern cities. “During such times, consumers prioritise essentials and cut back on non-essential spending,” the CEO said requesting anonymity. A spokesperson from a large FMCG firm said they have not faced major supply chain issues as of now, and that they are ‘good to go’ till about a week.
Ajay Sahai, director general & CEO, Federation of Indian Export Organisation (FIEO), said there has been no major disruption in shipment of goods from India except that air freight has increased by 5% due to an elongated air route.