Indian companies that export tea and rice to the Middle East saw their stock prices plummet on fears that rising geopolitical tensions would cause logistical problems and drive up costs.
Ambareesh Baliga, an independent market analyst, stated: "Higher costs and delay in orders are the biggest worries for these companies now."
He went on to say that if the war were to spread, it might impact the whole supply chain, leading to the Middle East.
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Supply Chain Delays May Increase Delivery and Reinsurance Costs
Investors are concerned that South Asian manufacturers might face higher delivery and reinsurance costs as a result of supply chain interruptions caused by Iran's recent strikes on Israel. One of India's most important markets for basmati rice is Iran.
According to Bloomberg, rice producers Kohinoor Foods and Chaman Lal Setia Exports both had steep drops, as much as 8.3% and 13%, respectively, before reversing course. Shares of Goodricke Group and Jayshree Tea & Industries, two tea makers, also fell.
According to official statistics, the amount of basmati rice exported from India increased by 35% in 2022 and 2023 over the previous period. The product's top three destinations are Saudi Arabia, Iraq, and Iran.
Meanwhile, India's External Affairs Minister, S Jaishankar, emphasized the importance of maintaining communication with both Israel and Iran amidst the ongoing tensions between the two countries.
In a significant escalation of tensions, Iran carried out a retaliatory strike on Israel in the early hours of Sunday. The attack involved the firing of numerous drones and missiles, resulting in a substantial impact.
The motive behind this action is believed to be a suspected attack on Iran's consulate in Damascus on April 1, which resulted in the tragic loss of seven Iranian Islamic Revolutionary Guards, including two high-ranking generals.
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