Indian businesses are grappling with a significant economic shift, as the impact of rising crude oil prices increasingly manifests through industrial raw material costs rather than at the petrol pump. A report released on October 3, 2026, highlights that while retail fuel prices remain largely stable, manufacturers are contending with sharp increases in essential input materials, putting pressure on operating margins.
Industrial Inputs See Sharp Price Hikes
Data from IndiaMART's September 2026 Marketplace Insights reveals a substantial uptick in the median quoted prices of several key industrial inputs. Polypropylene (PP) granules, a petrochemical product derived from crude oil, saw the steepest rise, jumping 32% to ₹125 per kilogram from ₹95 per kilogram between July and September.
- PP Granules: +32% (₹95/kg to ₹125/kg)
- TMT Steel Bars: +13% (₹48,975/tonne to ₹55,362/tonne)
- MS Pipes: +8% (₹63/kg to ₹68/kg)
- Stretch Film: +8% (₹158/kg to ₹170/kg)
This data, based on seller quotations on IndiaMART, serves as a strong indicator of the mounting input-cost pressures faced by businesses across various sectors.
Crude Price Surge Impacts Manufacturing Supply Chains
The increase in polypropylene prices is particularly notable due to its direct link to crude oil and natural gas feedstocks. Higher crude costs translate directly into increased expenses for plastics, packaging, and other manufacturing segments that rely on petrochemical derivatives. Dinesh Agarwal, founder and CEO of IndiaMART, observed that the 'oil shock' has directly impacted Indian businesses, with significant inflation concentrated within the plastics supply chain that traces back to crude, as well as steel.
However, this cost increase isn't uniform across all products. While PP granules surged, prices for PET bottles remained unchanged at ₹44 per piece. Conversely, cotton fabric prices actually declined by 8% to ₹65 per meter, suggesting a divergence in how upstream costs are translating into finished product prices across different industries.
Retail Fuel Prices Remain Stable
The impact on businesses contrasts sharply with the stability seen at retail fuel stations. Despite India's crude import basket reaching approximately $117 a barrel by September 21, petrol and diesel prices have remained largely insulated. This suggests that oil companies have absorbed an estimated ₹8-9 per liter, amounting to around ₹530 crore daily, preventing an immediate pass-through to consumers at the pump.
Consequently, the immediate effects of higher crude prices are being felt differently across the economy. While consumers may not see direct increases at fuel stations, manufacturers reliant on petroleum-linked inputs face higher procurement costs, potentially squeezing operating margins.
Potential for Broader Economic Impact
IndiaMART's findings also highlight broader industrial price pressures, with increases noted in chemicals, rubber, and other plastics. A critical concern for manufacturers is their ability to pass these elevated input costs on to customers. If finished-product prices remain stable while raw material costs climb, companies could experience significant pressure on profitability.
Ultimately, this situation could have implications for consumer inflation if businesses are compelled to pass higher costs through their product prices. The report underscores a less visible but impactful channel of oil price transmission: the shock doesn't have to appear at the petrol pump to affect the economy; it can travel through raw materials, manufacturing costs, and supply chains, reaching businesses and, eventually, consumers.