What An India At War May Imply

Since 1948 and that stupid partition line, India and Pakistan have faced ongoing tensions primarily over the disputed region of Kashmir. The two nations have fought three major wars (1947, 1965, 1971) and a limited conflict in Kargil in 1999. Pakistan supports separatist movements in Kashmir, while India accuses Pakistan of sponsoring terrorism. 

Tensions escalated again. On April 22nd 2025, an attack by 5 Pakistani terrorists killed 26 Indians and injured 20 more. Following that attack, tensions rose and daily skirmishes occurred with Indian and Pakistani armed forces exchanging fire across the border. On May 6th 2025, India launched its "Operation Sindoor," conducting air and missile strikes on nine locations in Pakistan, targeting terrorist training camps and logistical hubs. Pakistan called the airstrikes an act of war and during the raid, Pakistani forces allegedly shot down 5  Indian Air Force jets. 

At this stage, the consensus is that a full-fledged war between the two countries will be avoided, notably because both countries have nuclear weapons, implying restraint. 

Yet there is a distinct possibility that Pakistan and India will engage in a conventional war (similar to what happened with Ukraine and Russia). 

In such an instance, we believe there is a variety of potential impacts for Western companies worth exploring: 

- Companies that use Indian workforce in their day to day operations (be that in IT and Tech or in support services) 

- Companies that manufacture in India or Pakistan for external markets 

- Companies that sell a substantial part of their products in India and Pakistan 

- Companies for which their supply chain rely at least partially on India 

Furthermore, in a worsening scenario, excess retaliation by India could also lead to UN sanctions, limiting capability for western companies to work with either Indian or Pakistani companies. Because in the latter case, the impact would be more marginal, we have focused our speculative analysis on studying the impact from the Indian standpoint. 

For a start, we have listed the following European companies within our coverage as potentially impacted: 

IT Services: companies like Capgemini rely on offshoring to keep the lid on the cost of their services. As a reminder, Capgemini has more workforce in India than in France.  They could therefore be significantly impacted should part of their workforce be drafted, or prevented in any way from working as usual. 

Engineering: Siemens has a significant presence in India with R&D teams and manufacturing presence. 

Banks: Many banks have a significant presence in India as the country is one of their key hubs for IT, operation services and HR. A large part of the back office and middle office is offshored to India, but India is also key for banking innovation through R&D in AI, cybersecurity and fintech integration. There is no alternative option should those resources be cut.

HSBC has c 42k employees in India out of 221k i.e. c 19% of its total head count, 

UBS has c 24k staff in India out of 110k i.e. 16%,

Deutsche bank: c22k out of 90k i.e. 25% of its staff,

Barclays: c19k out of 93k i.e. c 20% of the staff. 

Pharma: India plays a critically important role in the global pharmaceutical supply chain—especially for active pharmaceutical ingredients (APIs), generics, and bulk drugs. It is often referred to as "the pharmacy of the world". 

All major pharma players rely on Indian producers for API. Novartis, operates a large global services center in Hyderabad for R&D finance and supply chain; Sanofi manufactures APIs and distributes generics via Indian partnerships, GSK and Roche have had longstanding relationships with Indian CDMOs ….

The French Defence industry has been successful of late as Dassault Aviation booked two tranches of Rafale sales to the Indian defence with a total of 62 aircraft, including 22 marine versions for the Indian Navy. As India has been considering ordering even more under a broad manufacturing sharing agreement, the cooperation may get deeper. That involves Thales (electronics), Safran (engines) and missile suppliers (MBDA). One or more Indian Rafale may have be downed by the Pakistani Airforce (Chinese equipped).

Gujarat is the Western province that is next to the Pakistani border and is absolutely strategic for India. First, Gujarat has a coastline of 1600kms on the Arabian Sea and holds key ports with three of the 5 largest ports in India, notably Mundra, the largest commercial port and the LNG terminals of Hazira and Dahej, that are vital for India’s gas supply. Second, Gujarat is home to a lot of Indian industries and is sometimes referred to as the “Growth Engine of India”.  It notably houses the world’s largest oil refinery complex with multiple petrochemicals plants and chemical complexes (bulk, specialty and agrochemical factories). There are also pharmaceuticals and textile plants as well as a very significant part (15%-20%) of the car production. 

Because it is directly located on the Pakistani border and because it is crucial to the Indian industry, it would be an obvious target for Pakistani forces should a conventional war occur. 

Among European corporates that would be directly impacted by significant disruption in Gujarat we can mention:

Automotive: Stellantis, Renault, and Volkswagen either have direct sourcing from Gujarat (Stellantis and Renault) or have key tier 2 suppliers. Furthermore, most of them export their cars from the Mundra port to Europe and Africa.

Chemicals: BASF and Clariant operate production facilities in Dahej and Ankleshwar.

Engineering and Capital Goods: ABB has a major switchgear and transformer factory in Vadodara. Siemens also runs factories in Gujarat, while Alstom sources rail and signaling components there.

Logistics: Maersk extensively use the ports of Mundra and Pipapav (operated by Maersk) for freight on its European and African routes.

Textile: We believe that a significant part of Zara/Inditex and H&M sourcing in India comes from Gujarat, which is a key production center for synthetic fabric and cotton processing. 

In all, the number of European companies affected by potential disruptions in India is quite large. We have identified 28 names that are likely to be impacted in various sectors, but Pharmaceuticals in general, part of the Banking sector and IT Services are likely to be the most impacted initially.