As the conflict involving Israel, the United States and Iran intensifies in West Asia, the repercussions are beginning to manifest in Nepali industries. Plastic manufacturers are on the verge of closure due to a severe shortage of raw materials, with active plants already slashing production by 30 per cent.

Swagat Raj Pyakurel, proprietor of MM Polymers, said that heavy production cuts had become unavoidable due to procurement hurdles. His company, based in the Hetauda Industrial District, produces bottles for major beverages including Coca-Cola and Fanta. Pyakurel noted a growing scarcity of petrochemicals and polymers—essential industrial inputs for plastic goods.

While India refines crude oil sourced from third countries to export petrochemicals to Nepal, Bharat Raj Acharya, treasurer of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), warned that India itself is facing a crude oil crunch. He cautioned that if the war persists, plastic and other related industries in Nepal could face a complete shutdown.

Sangeeta Kunwar, head of the Hetauda Industrial District Management Office, confirmed that these shortages have already forced widespread production cutbacks.

The crisis has now extended to plastic granules, and the ripple effects are reaching Nepali kitchens, as the import of raw materials for soybean and sunflower oil via India has been disrupted. Industrialists in the Butwal Industrial District and the Bhairahawa–Parasi Industrial Corridor report that several units are nearing collapse.

Upendra Agrawal, president of the Butwal Industrial District Industries Association, said the plastic sector is the first to be hit. “The price of plastic raw materials has surged by up to 40 per cent,” he said. “There are fears that even at these inflated prices, materials may soon become unavailable, creating deep uncertainty.”

The shortage of granules has plunged packaging industries into crisis, directly affecting the production of water bottles, caps, construction pipes, motorcycle helmets, plastic chairs and cartons. While some factories remain operational using existing buffer stocks, Ejaz Alam, former president of the Rupandehi Industry Association and proprietor of United Plastic Industry, warned that most would shut within a week if imports do not resume. He added that Indian suppliers have stopped accepting new orders from Nepali firms.

“Logistics companies have signalled an inability to transport goods from India and third countries,” Alam said. “The price of petroleum by-products has skyrocketed; items previously costing $900 now command $1,500.”

Nepali industrialists typically source granules from Reliance Industries and the Indian Oil Corporation. In Rupandehi alone, over 500 plastic processing units employ at least 20,000 workers. These firms usually operate on 15-day Letters of Credit, but current stocks will not last ten days. Industrialist Baburam Bohara said that closure is increasingly becoming the only option.

The impact is also being felt at the border. Santosh Neupane, an officer at the Belahiya Customs Office, noted a decline in cargo over the past fortnight. “While we haven’t finalised the exact figures, there is a visible 15 to 20 per cent drop in general imports,” he said, adding that the full impact will likely be felt next week as Indian suppliers halt orders.

In Nepalgunj, Kamal Karki, managing director of Star Polypipe, described the situation as critical, noting that the flow of raw materials has been obstructed for several weeks. Chiranjibi Oli, senior vice-president of the Nepalgunj Chamber of Commerce and Industry, said India has tightened exports to prioritise its domestic market, affecting daily consumables.

However, Akshay Golyan, managing director of Reliance Spinning Mills, said that while they have not yet felt an immediate impact due to existing stocks, the inextricable link between manufacturing and crude oil prices means a prolonged war would be devastating.

The crisis has similarly reached the Sunsari–Morang Industrial Corridor. Nand Kishore Rathi, founder of Bagmati Plastic Industries, said shipments from Saudi Arabia and Qatar have ceased since the conflict escalated. Meanwhile, the High-Density Polythene Pipe Manufacturers Association of Nepal stated that the price of HDPE granules—a crude oil derivative—has risen by 62 percent, leaving many members with no stock.

The contagion is now spreading across multiple sectors. In footwear and apparel, costs are expected to rise by 20 percent, with Pashupati Dev Pandey, president of the Garment Association of Nepal, citing disruptions in the supply of zippers, buttons and yarn from China and South Korea. In the construction sector, Ravi Singh, president of the Federation of Contractors’ Association of Nepal, reported that bitumen imports have been hit, with rebar prices rising by Rs20 per kg and bitumen by Rs135.

In agriculture, Nepal relies on West Asia for urea, sulphur and ammonia—of which Iran is the world’s third-largest producer—and although the Ministry of Agriculture claims stocks will last until June, suppliers are hesitant to deliver due to price volatility in the Strait of Hormuz. In pharmaceuticals, Biplav Adhikari, president of the Association of Pharmaceutical Producers of Nepal, warned that raw material costs for medicines have risen by 30 percent, highlighting a potential crisis in the supply of plastic used for saline bottles.

Rajendra Sangroula, president of the Nepal Freight Forwarders Association, estimated that total production costs could rise by as much as 50 per cent due to surging cargo and freight rates. “If cargo from West Asia stops, we simply cannot compete internationally,” he said.