EDITALK

Move On….With Challenging Time!

Immediately prior to the start of the West Asia conflict on February 28, 2026, India was the world’s 6th largest economy by GDP terms (valued at approximately $4.15 trillion) and the 3rd largest by Purchasing Power Parity (PPP). It was globally recognised as the fastest-growing major economy, clocking an annual growth rate exceeding 7.6%. Globally, India’s economic standing at that time broke down as follows: • GDP ranked 6th globally, trailing slightly behind the United Kingdom and Japan due to currency fluctuations against the US Dollar and a statistical rebasing of its GDP calculations • Purchasing Power Parity (PPP) maintained a stronger 3rd place position worldwide, reflecting the size and strength of its domestic consumer base • Growth Rate expanded by 7.6% in the 2025-2026 fiscal year, outperforming most developed economies by a significant margin. But, how will this present ongoing conflict likely affect India’s growth projections, its manufacturing sectors, or its energy and trade markets, needs to be explored a little. Escalating attacks on energy and logistics facilities and the closure of the Strait of Hormuz, a vital global trade route, have increased fears of supply disruptions. Any disturbance in this region could therefore affect multiple Indian industries, way beyond the energy sector. The global economy is under pressure right now. According to the latest World Economic Outlook report by the International Monetary Fund, growth has been “thrown off course” because of the war in the Middle East. The US-Israel-Iran War, which started on February 28, has raised oil prices and disrupted supply chains. As a result, global growth is expected to slow to about 3.1 per cent in 2026, lower than earlier estimates. At the same time, inflation is rising. The IMF projects global inflation to increase to 4.4 per cent in 2026 before easing to 3.7 per cent in 2027, with higher energy prices driving this. If the war continues — or worse, exacerbates — global growth could fall further to 2.5 per cent or even close to 2 per cent, with inflation rising to as high as 5.4 per cent. Is India going to be affected similarly, is the big question? However, as per reports, despite the situation now existing in West Asia, India nevertheless stands out. India’s economy grew at a growth rate of 7.6 per cent in 2025, and is still expected to grow 6.5 per cent in 2026, should all go well. According to the IMF, optimistically speaking, this pace is likely to continue over the next two years. As per these projections, India is growing almost twice to thrice faster than most developed economies. Hence, India still looks to be in a better position, than most other developed nations. Now, when we look at the horological industry of India, it was definitely on a very good wicket in the first three months of this calendar year, well until March this year, with most watch and clock manufacturing companies as well as trade and ancillaries having fared well, but the effects of the conflict began to show to some extent from April onwards, as sales numbers took a slight dip particularly at the retail counters, while threatening to nosedive should the situation worsen. The West Asia conflict can impact the Indian watch and clock industry by escalating manufacturing and transportation costs, compressing profit margins, and squeezing liquidity. Because the industry remains deeply reliant on imported components, these geopolitical disruptions are likely to cause significant operational bottlenecks. The key effects on the industry will be caused by: • Surging Freight and Logistics Costs - Shipping reroutes will add 15–20 days to delivery times, due to which, freight rates for exporters will as a result, likely surge by around 40% to 50% • Imported Inflation - With crude oil prices frequently spiking (at times even breaching the $110/barrel mark), the cost of producing, packaging, and transporting timepieces will soar, while the declining Indian Rupee versus the US Dollar will only worsen the situation and add to the woes • Working Capital Stress - Delayed shipments can tie up capital for extended periods, severely restricting the cash flow especially of Micro, Small, and Medium Enterprises (MSMEs) that dominate India's regional clock manufacturing hubs (such as Morbi in Gujarat) • Softened Demand - General market uncertainty and rising retail inflation coupled with the onset of the monsoon period which is generally regarded as a lean period in India for customer footfalls could perhaps end up reducing consumer discretionary spending, which will then temper the domestic demand for lifestyle and luxury watches. Hence, as India rises on the global stage, a stable and cooperative West Asia will most definitely be vital to its journey, especially, so far as the horological sector is concerned. Alongside, in more recent times the foreign luxury watch brands had also aggressively shifted their focus onto India as a strategic hedge against cooling demand in China and the broader expected impacts of the West Asia conflict. With the total market projected to reach up to $2.9 billion, the region has quickly emerged as the fastest-growing market globally for Swiss timepieces. At the same time, even the Indian watch and clock making companies, were doing extremely well, with many of them having even moved swiftly into premiumisation. So, while the Government of India headed by Prime Minister Narendra Modi, is already working hard on damage control and to ensure that India continues its journey forward on the path of Economic Growth, which it has pursued vehemently thus far, the Indian horological sector too, has to now strongly think out-of-the-box to mitigate and seriously try to lessen the negative impacts of the West Asia Conflict on their ongoing businesses (if any), by remaining vigilant, hyperactive and continue to move ahead. As a comparative example, if we look at jewellery, Indian jewellery chains have mitigated anticipated sales drops, by strongly relying on robust domestic Indian demand. They offset the expected downward dip that might be caused by the situation existing in West Asia and the higher duties raised recently by the Indian Government, through key strategies such as: aggressive rural expansion in Tier-II/III Cities, targeted lightweight jewellery lines, and attractive gold exchange programs that insulate consumers from high import duties. Chains like Tanishq, Kalyan Jewellers, Malabar Gold and Joyalukkas etc. have tried to maintain this stability despite the geopolitical disruptions in West Asia. India is known to have always been a very resilient nation. And so has been its horological industry and trade, historically. They have both had the inert and an equally strong ability to adapt, recover, and "bounce back" from adversity, trauma, or even significant stress. Rather than just enduring hardship without breaking, it involves the flexibility to adjust to challenges, process emotions, and move forward—often emerging stronger or wiser, as has been in the past. So yes, although, a challenging period does lie ahead for all of us engaged in this sector, depending on how the West Asia conflict finally plays out, it’s for each and all of us unitedly, not to lose hope at all, and continue to move into the future, regardless. We have to be futuristic in our outlook, continue the good work we have done so far, be cautious at the same time, and leave the rest to time as it unfolds. One can spiral into fear and worry during challenging times, or we can use the situation to strengthen ourselves instead. Difficult seasons are inevitable in business and life, but these seasons don’t have to be roadblocks. Let’s keep our fingers crossed and hope that the worst gets over! As once stated by Theodore Roosevelt, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” So, let’s together do the best thing, which is the right thing!

Hemal M. Kharod