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#16 – India vs Pakistan vs Supply Chain, Energy Crisis, and Defense Procurement
May 15, 2025
Edoardo Arbizzi
🌎 Global Outlook
⚔️India–Pakistan Conflict Threatens the Global Supply Chain
In April 2025, an attack in Kashmir reignited tensions between India and Pakistan, two countries that are strategic for the global supply chain. India is a global hub for generic pharmaceuticals, textiles, agri-food, electronics, and digital services. Pakistan plays a key role in cotton textiles, rice production, and the pharmaceutical industry.
Mutual retaliations – including border closures, trade restrictions, and treaty suspensions – have disrupted crucial land and air routes. Goods are now being rerouted through third countries, increasing timeframes, costs, and risks. War risk insurance premiums have surged to as much as 1% of a vessel's value.
This instability has had immediate effects: higher transportation costs, delays in Indian pharmaceutical exports, and fluctuations in rice and sugar prices. As a result, many companies are shifting their supply chains to more stable countries in Southeast Asia, Africa, and Latin America. Foreign investments in the region are declining.
To respond to the crisis, businesses are adopting strategies such as geographic diversification, multi-sourcing, the use of real-time visibility technologies, and predictive risk analytics. Countries like Vietnam, Indonesia, Singapore, Ethiopia, and Mexico are emerging as new alternatives.
Without lasting political stability, South Asia risks losing competitiveness in the global supply chain, as companies increasingly prioritize operational resilience over pure cost efficiency.
⛽ Energy Under Pressure: Crude, Fuels, and Coal Slow Down
In 2025, global energy trade is experiencing a sharp slowdown, hit by new U.S. tariffs and economic uncertainty. Exports of crude oil, refined fuels, and coal are declining, while only liquefied natural gas (LNG) and chemicals are showing signs of resilience.
In the first four months, global crude exports stood at 4.93 billion barrels (-1.3% compared to 2024). China leads the contraction (-9%), followed by the United States, South Korea, Italy, and the Netherlands. India, Japan, and Taiwan, on the other hand, are increasing their imports. East Asia's share of global imports has dropped to 37%, the lowest in six years.
Refined fuels are also down: gasoline fell by 5%, impacted by electrification, while diesel declined by 3% due to reduced freight transport in France, Turkey, and Mexico. Only Singapore and Pakistan increased purchases.
Thermal coal dropped by 6.7% due to lower demand in China, India, and Japan, but rose in Vietnam, Turkey, and North Africa, driven by the need for low-cost energy.
LNG rose by 1%, but faces a potential slowdown due to high prices and coal competition. Chemicals grew by 4%, driven by India, Brazil, and South Korea, but remain exposed to possible industrial slowdowns.
For procurement managers, increasing volatility demands supplier diversification and stronger risk management, especially in energy-intensive or chemically dependent sectors.
🖼️ Meme of the Day
🎙️ Podcast
In the latest episode of Compri Bene, we interviewed Giacinto Carullo, Chief Procurement & Supply Chain Officer at Leonardo. Giacinto has built a career that began in production and, twenty years later, has led him to head procurement for one of Europe’s most strategic industrial groups.
🎯 Three Key Takeaways:
📦 A Non-Pyramidal Supply Chain – Leonardo works with over 12,000 suppliers, but the real anomaly is the absence of a classic tier 1, 2, 3 structure: most are SMEs that work directly with the company. “This gives us resilience, but it requires a great deal in terms of management, vision, and coordination between engineering and procurement.”
⚙️ Digitizing to Synchronize – “Our dream? A synchronous supply chain where demand flows smoothly.” To make it happen, Leonardo has integrated collaborative planning systems with 2,000 suppliers. Digital technology becomes the enabler of speed and responsiveness: no more silos, only supply chains that think as one unified system.
📈 AI in SMEs: A Visible, Non-Optional Lever – In large corporations, artificial intelligence is embedded in systems. But it's in SMEs where adoption has an immediate impact: “Where resources are scarce, every technological boost is felt more strongly.” The real challenge? Accessing sustainable tools and turning them into a structural competitive advantage.
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