CII Asks Govt For Immediate Support As Middle East Conflict Disrupts Indian Supply Chains

On Sunday, 5 April 2026, the Confederation of Indian Industry (CII) issued a statement urging the government to take immediate measures in order to safeguard Indian companies from the negative effects of the unrest in the Middle East.

The industry body said the impact of the conflict is now starting to show on India’s economy.

The Reserve Bank of India (RBI) had managed to keep conditions stable in the early phase. But with the conflict dragging on, pressure is building. CII has flagged signs of “extreme stress” emerging across sectors.

Chandrajit Banerjee, the head of CII, pointed out that energy costs and trade routes are under massive pressure. He noted that micro, small and mid-sized enterprises (MSMEs) and exporters are currently the hardest hit by these global shocks.

The Push For "Targeted Liquidity"

The CII has provided multiple recommendations to protect domestic firms from soaring global costs.

• No-Collateral Loans: A proposed credit guarantee scheme to offer working capital to MSMEs and gas-dependent sectors without additional security.

• Payment Holidays: A three-month "moratorium" on loan repayments to give exporters and small businesses some breathing room.

• Stopping "Default" Labels: A defined deferment for classifying non-performing assets (NPAs). This would stop banks from labelling struggling businesses as defaulters too quickly.

• Cutting Slack on Contracts: The government should extend deadlines for Public Sector Undertaking (PSU) projects by up to four months without charging late fees or penalties.

Fighting Rising Energy Costs

With the war pushing up the price of fuel, the CII believes the government needs to lower the cost of production. They are pushing for:

• Tax Cuts on Gas: A temporary waiver of the 2.5% customs duty on liquefied natural gas (LNG) imports to help power-hungry factories.

• Lower Power Bills: Temporary relief or subsidies on electricity tariffs for industrial users.

• Cheaper Credit: A special RBI facility to make sure banks can keep lending to productive sectors at low interest rates.

Why Small Businesses Matter The Most?

The CII’s focus on MSMEs is a warning for the entire economy. Since large factories rely on small suppliers for raw materials and parts, a crisis in the small-scale sector could eventually shut down India’s biggest assembly lines.

Currently, MSMEs are the backbone of the nation:

• They produce about 36% of India's total manufacturing output.

• They are responsible for 45% of all Indian exports.

• They are the biggest employer in the country after agriculture.

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The Bottom Line For Investors

For those watching the markets, the CII’s message is clear: corporate profits are under threat. If the government agrees to these duty cuts and loan pauses, it could save many mid-cap and small-cap companies from a total collapse. However, until these policies are actually signed into law, the "supply chain shock" will continue to be a major drag on Indian stocks.

Sources:

Livemint

Business Standard