Indian companies are aggressively building buffer stocks of imported parts and raw materials as renewed West Asia tensions threaten to disrupt supply chains during the critical festive season, according to a report by Industries. The festive period, starting with Onam in Kerala and Ganesh Chaturthi in Maharashtra and peaking from Navratri in October through Diwali in November, contributes as much as 30% of annual sales in several categories, making uninterrupted production a top priority for manufacturers.
How Companies Are Responding
To minimise production disruptions, companies are advancing shipments from China and increasing buffer stocks of petrochemical-based packaging materials and other imported components by up to 20%, the report stated. Executives noted that the latest escalation came just as factories began ramping up festive season production.
Parle Products has ordered a 10-15% higher buffer of plastic packaging material and is creating an 8-10% additional buffer of finished goods to ensure no stock-outs if production is disrupted due to a fresh shortage of LPG or other factors, said Mayank Shah, vice president at the biscuit maker.
Zydus Wellness, which markets Complan and Glucon-D, plans to build an additional 1-2 month inventory of plastics. The fresh round of tension was completely unexpected, the company said, noting that plastic prices had started stabilising but the sudden escalation has again pushed up prices.
Super Plastronics, which manufactures and sells televisions under the Blaupunkt, Kodak and Thomson brands, recently received a consignment shipped from China's Shenzhen Port on May 11 that was delayed because the vessel was diverted to Karachi before returning to Gujarat's Mundra Port due to congestion—stretching the journey well beyond the normal 22-30 days. CEO Avneet Singh Marwah said the company has asked component suppliers to immediately dispatch 15-20% additional stock. "Things have become extremely chaotic, making advance planning essential to avoid shortages during the festive season," he said.
Quantified Impact
The West Asia crisis that erupted in February due to the US-Iran war had already disrupted supply chains, triggered industrial LPG shortages, raised prices of petrochemical-based raw materials and freight, and delayed shipments due to the closure of the Strait of Hormuz. A ceasefire in mid-June briefly eased pressure before the latest escalation. Following renewed tensions and closure of the strait, shipping lines have warned of longer transit times, crude oil prices spiralled to their highest level in four weeks, and the rupee weakened past 96 against the US dollar.
Industry executives said Indian companies sourcing materials from China are particularly vulnerable because disruptions around the strait often cause congestion at alternative ports, delaying vessel schedules and extending delivery lead times. Many ships serving India continue onward to ports in the Middle East or Europe after unloading cargo.
Buffer Stock Increase by Company
| Company | Product Category | Buffer Stock Increase | Remarks |
|---|---|---|---|
| Parle Products | Plastic packaging, finished goods | 10-15% (plastic), 8-10% (finished goods) | To avoid stock-outs from LPG shortage |
| Zydus Wellness | Plastics | 1-2 months additional inventory | Plastic prices rose again after escalation |
| Super Plastronics | Television components | 15-20% additional stock | Recent shipment took longer due to port congestion |
What This Means for Procurement Teams
For procurement directors and supply chain officers, the message is clear: advance planning and buffer stock are essential to navigate the current volatility. The disruption around the Strait of Hormuz and the resulting congestion at alternative ports like Karachi are extending lead times unpredictably. Companies should tighten communication with suppliers, especially those in China, to expedite shipments where possible. The cost of holding additional inventory may be preferable to the revenue loss from stock-outs during the festive season, which drives up to 30% of annual sales in some categories. Monitoring geopolitical developments, particularly US-Iran relations and shipping route diversions, will be critical for the next several months.
Forward Outlook
As the festive season approaches, the situation remains fluid. The Industries report highlighted that shipping lines continue to warn of longer transit times, and crude oil prices remain elevated. The rupee's weakness past 96 against the US dollar adds further cost pressure on imported raw materials. Companies that have built buffers now may have a competitive advantage, but ongoing monitoring and contingency planning are necessary to avoid shortages. The key variable will be the duration of the current escalation and whether the Strait of Hormuz reopens to normal traffic. Procurement teams should also explore alternative sourcing routes and consider diversifying suppliers to reduce dependency on single-source regions.
