Trade Disruptions and Industrial Productivity: Economic Effects of West Asia Instability on India

Abstract

This study examines the economic consequences of trade disruptions that arises from geopolitical instability in West Asia on India’s industrial productivity. In an increasingly interconnected global economy, regional conflicts have emerged as critical disruptors of global value chains (GVCs) which affect input availability, logistics efficiency, and cost structures. The paper develops an integrated theoretical framework linking geopolitical risk industrial productivity and GVC disruptions, while incorporating adaptive capacity and sectoral heterogeneity as key moderating factors. Drawing on secondary evidence, the study demonstrates that disruptions in energy supplies, maritime routes, and intermediate goods significantly reduce productivity by increasing operational costs and idle capacity. However, the impact is uneven across sectors, with energy-intensive and import-dependent industries facing greater vulnerability. The findings highlight that strengthening adaptive capacity through diversification, inventory management, and policy support. This can mitigate adverse effects. The study offers important insights for policymakers and firms aiming to improve supply chain resilience and sustain industrial growth under geopolitical uncertainty.