Tensions Between US and Iran Pose $1.3 Billion Investment Risk for 800 Small Indian Businesses

Iran-UAE Conflict Affects Indian Small and Medium Enterprises (SMEs) Capex Investments

Indian SMEs with investments in the United Arab Emirates (UAE) face significant risk due to the ongoing Iran-UAE conflict. According to data compiled by Moneycontrol, 280 Indian companies have invested $400 million in the UAE in the retail and hospitality sectors over the last six months.

Impact on Indian SMEs

The conflict poses a higher risk to Indian SMEs, which have limited financial power to absorb losses. Market participants suggest that although the situation in the Middle East appears bleak in the short term, the long-term case for investments in UAE remains strong.

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Recent Investments

Several Indian companies have made recent investments in the UAE, including:

• Sub Ko Coffee, a Mumbai-based coffee roaster, which invested $210,000 in a wholly owned subsidiary
• Brahm Lifestyle Products, a lifestyle brand, which invested $2 million
• Idam Natural Wellness, a hospitality company, which invested $680,000

Risk Assessment

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Experts warn that Indian SMEs with recent exposure to the UAE are more vulnerable to disruptions in cargo movement, customer footfall, remittance timing, or local project execution. Additionally, many SMEs lack active War Insurance policies, leaving them exposed to potential losses.

Industry Response

Some companies, such as Wow! Momo, remain bullish on the Middle East market, citing a temporary impact on business due to the conflict. Oyo Proptech, a subsidiary of Oyo, has invested $11 million in the UAE, while Graviss Foods, which holds the Baskin Robbins license in India, has invested $11.4 million.

Conflict Update

The conflict began with a series of joint strikes by the US and Israel in late February, followed by Iran targeting US allies in the Middle East. The UAE has reportedly been hit by over 1,800 Iranian drones in the last three weeks, although most were successfully intercepted.