War impact on India Inc’s energy costs to be sector specific

The rising geopolitical tensions in the Middle East have raised concerns over their impact on corporate India’s energy costs. Although the share of energy costs in total expenses at the aggregate level is just over 4% and has softened over the past three years, it has risen from 2.5% a decade ago. In addition, the sectoral impact is far from uniform. Companies from the sectors including cement, glass and ceramics, transportation and logistics, and power generation show a higher proportion of energy related costs in total costs, which makes them prone to higher volatility in global energy prices. Given this, while the impact may be limited at the aggregate level, select sectors could face margin pressures if the geopolitical crisis escalates.

Energy costs are captured under the subhead of power and fuel expenses in the profit and loss statement of companies. A quarterly trend analysis carried out by ETIG for a sample of companies excluding those form banking and finance, and oil and gas sectors reveals that though the share of power and fuel costs has remained in low-to-mid single digits over the past 10 years, it has gradually climbed up compared with the decade-ago level. In addition, while the share has softened to 4.3% in the December 2025 quarter from 6% in the December 2022 quarter, the latest geopolitical development may affect the trend. Exclusion of lending companies from the sample helps in shifting the focus on manufacturing companies while the oil and gas sector companies tend to skew the data given their large business sies and hence are excluded.

The share of power and fuel costs is the highest for the power generation sector at around 60% in the December 2025 quarter. It is followed by sectors including cement (25% share), transportation (18%), and glass and ceramics (15%). These sectors are particularly vulnerable to volatility in global energy prices. To be sure, coal prices often tend to move in tandem with crude oil prices though may not be in the same proportion. This may raise the cost for companies which use coal as a fuel source. For other sectors such as chemicals, fertilisers, paper, and metals, the exposure to energy costs between 5% and 10% is lesser but significant.


“Energy-intensive industries, including aviation, logistics, paints, and chemicals, are likely to experience margin compression due to rising input costs,” Infomerics Ratings mentioned in a note, adding that upstream oil producers could benefit from higher crude prices.