Impact on Indian Businesses

India’s commercial environment immediately felt the impact of the 2025 India–Pakistan conflict. Businesses faced operational, supply chain, and investor sentiment disruptions that affected both core and frontline service sectors. The crisis highlighted the urgent need for strategic risk frameworks and exposed vulnerabilities unique to certain sectors.

Aviation and Logistics Disruptions

India closed its airspace over parts of Jammu, Punjab, and Gujarat for several days due to airstrikes and retaliatory measures. Authorities cancelled over 1,100 flights, impacting domestic carriers and international routes, particularly between South Asia and Europe. Cargo movement along land borders, especially the Atari–Wagah trade corridor, halted completely, affecting logistics and port supply chains. Maritime trade experienced minor delays due to heightened security at western ports such as Mundra and Kandla.

Stock Market Volatility

Between April 23 and May 8, the Sensex and Nifty fell over 1,800 points and 450 points respectively. Defence sector stocks, including HAL and Bharat Dynamics, rose amid expectations of military orders, while hospitality, aviation, and banking stocks suffered the most. The rupee dropped to an 18-month low of ₹85.12/USD before stabilizing post-ceasefire. Foreign institutional investors withdrew more than $4.6 billion from Indian equities during the conflict.

Tourism Sector Impact

The Pahalgam attack targeted Hindu tourists, causing mass cancellations in Kashmir and neighboring states. The Ministry of Tourism reported a 62% drop in bookings for May and June. Hotels, transport providers, and local businesses suffered losses. Traveller advisories from countries such as the UK, US, and Australia further reduced foreign tourist arrivals. Religious tourism, including the Amarnath Yatra, faced delays and intensified security protocols.

Trade and Exports

Although formal trade with Pakistan was already limited, the conflict completely suspended it. Exporters in Punjab and Rajasthan reported losses due to stranded consignments, especially in textiles, pharmaceuticals, and agriculture. India’s exports to Central Asia via Pakistan were temporarily affected due to transit disruptions. Imports of chemicals and medical raw materials were rerouted, increasing freight costs.

Energy and Commodities

Conflict concerns and drone strikes near Gujarat refineries temporarily pushed Brent crude to $94/barrel. India reviewed its strategic oil reserves for readiness, which triggered speculative trading in energy markets. Power grids in Punjab and Jammu faced brief disruptions due to security measures and pre-emptive shutdowns. Commodity prices for wheat, pulses, and cotton fluctuated because of disrupted supply routes and panic buying in border states.

Water Security and Agriculture

The Indus Water Treaty came under stress as political rhetoric threatened to restrict water flows to Pakistan. Farmers in border regions of Jammu and Punjab faced dislocation, leaving standing crops unattended due to shelling and evacuation. Irrigation projects near the LoC paused, canals and water infrastructure sustained damage, and agricultural mandis near border districts remained closed for over two weeks, causing losses for small farmers.

Cybersecurity and Business Continuity

Public and private sectors reported over 700 cyber intrusion attempts during the conflict. Banking, telecom, and power companies remained on high alert after malware attacks from suspected Pakistani cyber groups. The RBI issued an advisory urging financial institutions to activate cybersecurity protocols. Several large corporates implemented Business Continuity Plans (BCPs) and renewed disaster recovery sites. The conflict marked a turning point for Indian businesses to treat cybersecurity as a strategic imperative. Institutions like the Global Risk Management Institute (GRMI) provided frameworks and resources to help professionals build resilient, risk-aware organizations.

Investor and Global Perception

Credit rating agencies such as Moody’s and S&P placed India on a “watch list” during the crisis. Global institutional investors expressed concern over regional stability, prompting calls for stronger political risk insurance. However, India’s swift conflict containment after May 10 improved investor confidence. International media praised the resilience of India’s banking and digital infrastructure. Financial hubs like GIFT City initiated dialogues to develop core risk insurance instruments and sovereign risk strategies.

Estimated Losses and Economic Indicators (April–May 2025)

The Ministry of Finance revised India’s Q2 FY25 GDP growth projection from 6.5% to 5.9%. Direct losses from the conflict reached an estimated ₹48,000 crore, including infrastructure damage, revenue loss, and capital outflows. Tourism and aviation alone reported losses of ₹12,000 crore. Industrial output in Jammu, Punjab, and parts of Gujarat contracted by 7.4% due to labour shortages and logistics disruptions.

Lessons for Indian Businesses

Diversification of Markets: Heavy reliance on specific routes and neighbouring transit nations can become a liability during geopolitical crises.

Cyber Risk Preparedness: The attacks highlighted the urgent need for enterprise-wide digital threat management and workforce awareness.

Crisis Simulation & Planning: Companies with pre-existing BCPs managed disruptions more effectively than those without tested protocols.

Insurance and Risk Finance: Businesses began exploring war risk and geopolitical covers post-May 2025.

Strategic Advisory and Research: Institutions like GRMI played a key role in training Indian managers on geopolitical risk assessment and strategic foresight.

Conclusion

The 2025 India–Pakistan crisis went beyond a military standoff—it became a real-world stress test for Indian businesses. While the economy demonstrated resilience, the disruptions exposed critical gaps in cybersecurity, logistics, and sectoral interdependencies. Businesses responded with agility, digital maturity, and structured crisis playbooks.

Organizations such as the Global Risk Management Institute (GRMI) have emerged as important collaborators in this process. They offer strategic frameworks and essential training that help Indian companies better predict, manage, and reduce complex geopolitical risks.

This episode reaffirmed that in the age of hybrid conflict, economic preparedness and strategic foresight are as vital as military strength. Institutions provide strategic frameworks and essential training that enable Indian companies to better predict, manage, and mitigate complex geopolitical risks.