Centre Readies Relief Blueprint To Shield Key Sectors From West Asia Crisis

New Delhi: The Centre is mulling a slew of pre-emptive steps to mitigate the war-hit sectors in the country amid the ongoing West Asia conflict. The government is mostly focussing on manufacturing, energy and export sectors, among others to provide some 'temporary' relief to these sectors. Apart from the government's inter-ministerial set-up, both the finance ministry and commerce ministry are working separately on some new measures, including more production-linked incentive or PLI schemes for the war-affected sectors, and will announce them within a fortnight, a source privy to development said on Friday.

Besides, the source said, Bharat protection and indemnity (P&I) fund, a war risk pool, is one of the key measures under the finance ministry’s consideration to safeguard national trade logistics and strengthen the Indian shipping industry. “The targetted measures considered by both the ministries are expected to be taken up in the next cabinet meeting, and will be announced thereafter. A blueprint has been prepared by them in this regard,” the source added.

The move of these ministries came after Prime Minister Narendra Modi directed the ministries to take urgent steps to safeguard essential supplies and protect citizens of the country in a special review meeting on the impact of the West Asia war on Wednesday. He also discussed all the aspects relating to key sectors like energy, agriculture, fertilisers, aviation, shipping, logistics, which have been more or less impacted due to the war.

“Union Finance Minister Nirmala Sitharaman has also outlined steps spanning customs duty cuts for key raw materials, export incentives, fuel price controls, and financial support mechanisms, with a focus on ensuring stability across key sectors. A war risk pool or Bharat P&I fund is under consideration by the Department of Financial Services to mitigate shipping and trade risks. This fund will protect Indian ship owners from risks that standard marine insurance does not cover, particularly in times of war, or any geopolitical sanctions that might disrupt access to foreign insurers,” it said.

In line with PM Modi’s direction, Commerce and Industry Minister Piyush Goyal on Friday met the secretaries of energy and trade ministries, and discussed the future course of action related to war measures. He also encouraged companies to ramp up production to meet the country’s demand. On Thursday, he also indicated that some more measures are on the anvil. "The commerce ministry has already taken some decisions on relief measures and some more decisions are under consideration at different levels and at different ministries," he said.

Meanwhile, the government also held discussions on several measures in the oil sector to meet demands, mostly on fuel and cooking gas or LPG for common man. It has encouraged companies to ramp up production of induction heaters and compatible utensils amid rising demand for these products due to concerns over LPG availability following the West Asia crisis, which has disrupted the movement of ships carrying oil and gas through the Strait of Hormuz, raising concerns over cooking gas supplies.

“We have discussed how we can speed up and increase the production of induction heaters and vessels that go on those heaters (utensils like an induction cooker, etc.). We are told that sales of induction cook-tops and electric kettles have surged in the wake of cooking gas supply concerns due to the war in West Asia. So the demand for these goods is increasing, and they are being sold as hot cakes,” a government official said.

In this week itself, the government has announced a series of relief measures to protect industry and consumers from economic disruptions caused by the Iran war. Key steps include reduced customs duties on SEZ sales and critical petrochemicals, excise cuts on petrol and diesel, limiting aviation fuel price pass-through etc.