At the same time, the withdrawal of fuel credit and discount arrangements for commercial diesel users, reported across several states, is squeezing last-mile economics. Also, LPG shortages are delaying new fulfilment centres—turning a geopolitical shock into an operational strain on India’s digital commerce backbone.
“This directly hits unit economics on every order,” said an executive. “The industry is simultaneously facing cost inflation on the supply side and demand compression on the consumer side. That is a margin squeeze from both ends.”
Fuel surcharges on last-mile logistics are climbing, packaging costs have jumped about 30 per cent, and delays in dark-store construction are slowing capacity expansion.
Industry executives said restrictions on diesel distribution via mobile vans are disrupting the generator-dependent dark store networks that power 10-minute and same-day delivery across northern and western India.
“Beyond delivery, infrastructure buildout is slowing. LPG shortages are causing 7–10-day delays in the construction of new fulfilment centres and dark stores,” said a person.
Industry executives said packaging input costs are up 30 per cent — polybags and seals are petrochemical-derived and the supply squeeze is feeding through to prices. “The cost of logistics and packaging has started to see an impact. If diesel costs increase, transportation costs will increase," said Satish Meena, founder of ecommerce consultancy Datum Intelligence . "The impact is in some pockets of the country right now before it becomes very visible if the conflict continues. At the moment, the situation is not severe, but it is difficult. E-commerce companies are monitoring the situation over the next few weeks.”
At the same time, higher pump prices are expected to curb discretionary spending among mass-market consumers within weeks, pressuring sales of electronics, apparel, and home goods, and accelerating a shift from growth to cost discipline, according to executives.
“The lag is typically 2–3 weeks before it shows in platform data,” said a person.
In the near term, companies are already seeing pressure in segments such as cooked food, groceries, and packaged food products. Some executives said prices for certain food items could rise by as much as 25 per cent to 30 per cent if the conflict continues for the next few weeks.
“A number of food products are likely to be affected, which could lead to price increases,” an industry executive said. “Many eateries and restaurants are already facing shortages of LPG, and that disruption in retail supply will eventually ripple through the e-commerce ecosystem.”
Rising tensions in West Asia involving Iran, Israel, and the US have raised concerns about shipping through the Strait of Hormuz, a critical energy chokepoint through which roughly half of India’s crude imports and most of its LPG supplies transit, analysts say.
Restaurants and eateries in cities including Bengaluru, Mumbai, and Kolkata reported LPG shortages, panic buying, and price spikes, while gig workers and delivery partners using LPG or CNG vehicles are facing long queues for refuelling and fewer trips, according to media reports.
Executives also said some small businesses that export food products to the Middle East have already begun to see disruptions as logistics and trade routes face uncertainty.
“If petrol prices rise and the conflict persists for several months, the impact will cascade through logistics and transportation,” another industry executive said. “That would eventually push up prices across multiple product categories on e-commerce platforms.”
Higher fuel costs would ultimately be passed on to consumers, executives said, even as the government has urged small businesses and sellers not to raise prices of essential products.
Beyond margins, the cost pressure is forcing a broader rethink on workforce and capacity planning across the industry. Companies are moving from growth mode to efficiency mode faster than anyone anticipated at the start of the year.
“The companies that navigated this well will be the ones that moved early on cost discipline. Those that didn’t will show it in Q1 FY27 numbers,” said a person.
Retailers Association of India (RAI) recently urged the Ministry of Petroleum and Natural Gas and state-run fuel retailers to ensure uninterrupted supply of commercial LPG cylinders to restaurants and food-service businesses, warning that current supply curbs are disrupting operations.
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Amid fuel shortage, generator-dependant dark stores, central to 10-minute delivery, are in a fix
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Construction of new fulfilment centres and dark stores has been delayed by 7-10 days
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Packaging costs have gone up by 30 per cent
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Experts suggest, within 2-3 weeks, higher fuel price will bring a major shift in consumer behaviour
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Firms operating in packaged food segment are already feeling the heat
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