As Middle East conflict drags on, ad budgets could shrink 10-15% in Q1

Escalating geopolitical tensions in West Asia are beginning to ripple through India’s marketing and export ecosystem, prompting brands across sectors including FMCG, fashion, beauty, jewellery and hospitality to reassess advertising budgets as supply chains face disruption and energy costs rise.

Even as exports from India are on hold due to shipment disruptions, overall uncertainty has pushed up crude oil prices and a surge in retail inflation which could impact the household budgets. Meanwhile, LPG supplies are facing disruptions, raising concerns that weddings and other large social celebrations could be affected in the coming days which may further impact the consumer sentiments. 

Read: Middle East conflict puts Indian businesses on watch; several ad campaigns put on hold

Leading FMCG players contemplate a price increase to mitigate the rising input costs. 

“With 90% of our crude oil imported and high reliance on Gulf remittances, instability in the region could cause supply shortages and weaken the Indian Rupee. Petrochemical-based packaging materials become more expensive. Besides, input costs are already going up for imported ingredients such as dry fruits. This may compel us to increase the cost even as there is no impact on the demand yet. If things didn’t improve, discretionary spends will be put on hold and budgets could be trimmed for the first quarter,” two FMCG majors told e4m. 

According to industry leaders, ad spendings may be slashed by 10-15% in the first quarter and the impact could be visible by April-end. 

“Brands across categories have already begun paring back or postponing marketing investments, with ad spends in certain export-linked categories expected to decline by 15–20% in the near term if uncertainty around trade flows and energy prices persists,” marketers told e4m. This includes FMCG, fashion, beauty and personal care, gems and jewellery and hospitality. 

For export-driven consumer brands, particularly those with exposure to West Asia, supply disruptions are already affecting both operations and marketing strategies.

Anurag Mehrotra, Co-founder and Chairman of Fixderma, said logistics challenges across the region have intensified. “War is never good for business. With airspace closures, disrupted sea routes and rising oil prices, operations become far more challenging for companies like ours. Logistics costs are likely to rise significantly, and shipments across the Gulf Cooperation Council (GCC) region are currently on hold because the conflict has affected the entire region.”

Fixderma exports to more than 35 countries, with GCC markets representing a key growth region.

Mehrotra said supply-chain uncertainty is forcing brands to rethink marketing investments. “When delivery timelines become uncertain, brands have to be more careful about where and how they invest in marketing. In the near term, many businesses may slow promotional campaigns and instead focus on maintaining brand visibility, managing inventory and building customer trust.”

The tyre industry is also facing rising input costs as crude-linked materials and natural rubber prices move higher. The textile sector is already witnessing sharp increases in the cost of synthetic fibres, which are derived from petrochemicals. 

Media buyers say the immediate impact is visible through rising oil prices and currency volatility, both of which influence corporate spending decisions.

Vinay Hegde, CEO, Investments at Madison World, noted that higher energy costs could affect consumer demand and corporate profitability. “The immediate impact of the tension is visible in rising oil prices and a weakening rupee. Both these factors affect costs, consumer demand and corporate profitability, which in turn dampens ad-spend confidence.”

If the conflict persists, Hegde said the broader economic outlook could also be affected. “Prolonged instability could influence corporate risk appetite and potentially slow investment flows. In such a scenario, discretionary marketing budgets may come under pressure.”

Some industry leaders, however, say the industry is not yet witnessing a widespread advertising pullback. Shrenik Gandhi, CEO and Co-founder of White Rivers Media, said, “Brands are becoming more cautious as they reassess budgets amid global uncertainty, but this is not translating into broad pullbacks. Instead, marketers are shifting toward performance-led channels, shorter campaign cycles and clearer ROI metrics, allowing greater flexibility during volatile periods.”

Ravi Kunwar, VP and CEO, HMD India and APAC echoes the sentiments, “From a supply chain perspective, feature phone (FP) availability is expected to remain relatively stable. However, smartphone (SP) supplies may face some pressure, largely due to the ongoing global memory shortage, which could affect production timelines. Overall, we are closely monitoring the situation and taking a calibrated approach to manage any potential disruptions.”

“There could be some upward movement in commodity prices for certain components used in mobile devices, along with fluctuations in foreign exchange rates and oil prices that may influence input and logistics costs,” Kunwar adds.

On marketing spends, he noted, “Since there has been no direct impact on our India business so far, we have not made any changes to our marketing or advertising budgets. Of course, we are keeping a close watch on the broader environment and will respond appropriately if the situation warrants it.”

India-Gulf trade under stress 

India’s economic exposure to the region is substantial. Trade between India and the GCC reached $178.56 billion in FY25, accounting for more than 15% of India’s total global trade. Of this, India exported about $56.9 billion worth of goods to GCC countries.

Government officials have warned that $40–50 billion worth of exports to the region could face disruption if the conflict persists, raising concerns across industries that rely heavily on Gulf markets.

While some perishables are being diverted to domestic markets, imports of dry fruits have fallen sharply. According to Dinesh Dang, Managing Director of Kandhar Traders, a prominent importer at APMC Vashi, incoming supplies of dry fruits have dropped 30–40%, pushing prices up by nearly 15%.

An FMCG marketer said, “The impact is already visible in trade flows. Shipments to Gulf countries—a key export destination that accounts for 21.8% of India’s agricultural and food exports—are facing delays just as demand typically peaks during Ramzan. Even imports of dry fruits from gulf countries are also under stress.”

Among the most exposed industries is gems and jewellery, where the Gulf region plays a central role in global trade flows.

Dubai alone accounts for $7.86 billion of India’s jewellery exports, while Surat’s diamond sector exported $10.55 billion in FY25. The city handles an estimated 400–500 export parcels daily, many routed through Dubai.

LPG disruptions add to pressure

Concerns have also surfaced around cooking gas availability in parts of India as supply bottlenecks slow shipments.

Reports of delays in LPG distribution have led to long queues at refill centres in cities such as Mumbai, Bengaluru and Pune, as households and businesses rush to secure supplies. Restaurants and small eateries in several markets have warned that shortages of commercial cylinders could disrupt operations if the situation persists.

In response, the government has invoked provisions under the Essential Commodities Act, placing LPG and CNG under priority monitoring to prevent hoarding and stabilise distribution.

Prices have also moved upward. The cost of a 14.2 kg domestic LPG cylinder has increased by ₹60, while the 19 kg commercial cylinder is now ₹144 costlier in major cities—raising operating costs for households as well as hospitality businesses.

Sectoral impact likely to vary

Industry observers say categories linked to high-value purchases typically react first during periods of economic uncertainty.

Sectors such as automobiles, real estate and consumer durables may slow or recalibrate marketing investments as consumers postpone big-ticket spending. In many cases, brands shift from large-scale brand campaigns toward targeted, performance-driven communication focused on demand generation and conversions.

In contrast, sectors tied to everyday consumption—such as telecom, e-commerce and quick commerce—are expected to remain relatively stable.