West Asia conflict: How ongoing war casts a shadow on Pune's shop floors

The West Asia conflict exposes fragile supply chains, rattling labour, fuel access, and MSME stability across Maharashtra

In March 2020, the pandemic lockdown brought India’s industrial economy to an abrupt halt. 

Exactly six years later, a sultry March stirs those memories across the industrial belts of Chakan, Bhosari, and Pimpri-Chinchwad in Pune district. A war thousands of miles away is beginning to register in tightening supply lines, cautious production, and a workforce once again uncertain about staying put. 

When Tehran first came under fire at the end of February, few here expected the first shocks to land in office kitchens, canteens, and shop floors. 

“Early in March, the canteen supervisor cut down one extra curry, citing potential shortages. Closer to the end of the month, workers complained that small liquefied petroleum gas (LPG) cylinders were being hoarded and threatened to return home as affordability became an issue,” an executive at a micro-enterprise said. 

For the workforce, even a hint of disruption revives uneasy memories of the pandemic, when many were forced back to their hometowns in Uttar Pradesh, Bihar, and Assam. 

Unsurprisingly, executives told Business Standard that between 25 per cent and 40 per cent of the industrial belt’s labour force had either left or were considering doing so. 

For micro, small and medium enterprise (MSME) promoters, the priority is instinctive: steady the workforce first before turning to the arithmetic of supply chain strain, rising input costs or slipping targets.

 

Santosh Sudam Medankar, director at Movetech Conveyors, said one of the earliest priorities was to step up hiring to offset potential attrition if the situation worsens.

 

“There are labour exits across the industry, not just at my unit, due to concerns over access to cooking gas. This has reduced the number of workers available for quarter-end (2025–26) activities such as stock-taking and dispatch. The idea is to add about 10 per cent extra capacity to cover attrition, but that naturally raises costs,” he said.

 

Data shows that MSMEs in Pune alone have generated employment for over 5.3 million people in the past six years.

 

Despite industry concerns, the Ministry of Petroleum and Natural Gas has clarified that there has been no disruption in LPG supply affecting migrants and that supplies remain stable.

 

It added that states may consider targeted distribution of 5-kilogram free-trade LPG cylinders, based on local requirements, in coordination with oil-marketing companies.

 

A slow strangling of supply

 

Pune’s industrial belt is among India’s most important manufacturing hubs, spanning automobiles and components, farm equipment, pharmaceuticals, electronics, and heavy engineering.

 

The region serves as a base for companies such as Bajaj Auto, Tata Motors, Mahindra & Mahindra, Volkswagen Group, and Mercedes-Benz India.

 

At its core sits a dense MSME network supporting larger enterprises: over 1.3 million units registered in the past six years, the majority of them micro-enterprises.

 

These are ancillary manufacturers operating in segments such as automobile components, agricultural equipment, fabrication, heating systems, and powder coating.

 

The impact of labour attrition is being felt across these units, regardless of sector, particularly in industrial clusters like Chakan, Bhosari, and Pimpri-Chinchwad. Many of these firms form part of the supply chain for large original equipment manufacturers.

 

“Core manufacturing steps — metal cutting, hardening and powder coating — have slowed due to a shortage of gas. Raw material costs such as steel and polymers have risen by 10-15 per cent,” said Jaidev Akkalkote, managing director, Sahyadri Industries.

 

Akkalkote is also the president of the Chakan MIDC (Maharashtra Industrial Development Corporation) Industrial Association.

 

“Original equipment manufacturers are still resisting price pass-throughs due to existing contractual arrangements. That is compressing margins rather than allowing costs to be passed down,” he added.

 

Others said final dispatches have shrunk by about 20 per cent due to raw material price increases, supply-chain disruptions, and workforce instability.

 

For Medankar at Movetech, a critical high-grade gear is sourced from Germany and routed through an Indian unit for assembly before reaching his factory.

 

With shipping disruptions mounting, such components have become harder to secure, pushing the company to rely on interim fixes while stepping up investment in innovation and research and development to future-proof supply.

 

Meanwhile, despite the squeeze on margins, a director at an agricultural components maker said raising prices remains off the table: farmers would simply defer purchases, especially if the monsoon is delayed.

 

The person, who requested anonymity, added that the firm had shifted to electricity and diesel-based heating amid shortages of commercial gas.

 

“Electricity comes with its own challenges. Input costs rise. Voltage fluctuations can bring the entire unit to a standstill. It is not easy to diversify energy sources overnight,” he said.

 

The central government has already increased commercial LPG allocations to states by 20 per cent, raising the quota to 70 per cent of pre-war demand to meet industrial requirements, including in sectors such as steel and automotive.

 

After the tremor, the test of nerve

 

Many units in the region also export components to Southeast Asia and Africa.

 

For now, those plans are on hold, even as firms had been looking to diversify their client base and improve margins through overseas expansion.

 

Executives called for diversification of energy sources, urging a reassessment of the security of India’s current energy mix and a faster, scaled shift towards non-conventional sources in the face of recurring geopolitical disruptions.

 

Many are also pushing for local development of critical manufacturing components to reduce import dependence and lower the country’s import bill, backed by targeted policy measures and financial incentives.