Journal of African Development

ISSN (Print): 1060-6076
Original Article | Volume 7 Issue 1 (None, 2026) | Pages 1091 - 1095
Asymmetric Effects of War-Driven Oil Price Volatility on India's Manufacturing Sector: An Empirical Analysis
 ,
1
Ph.D. Research Scholar, GLS University, Ahmedabad, Gujarat, India.
2
Assistant Professor, GLS University, Ahmedabad, Gujarat, India.
Abstract

This study investigates the non-linear and asymmetric impacts of war-driven crude oil price volatility on India’s manufacturing sector. Using monthly empirical data spanning from April 2012 to March 2026, we capture major geopolitical disruptions including the 2022 Russia-Ukraine conflict and the subsequent 2023–2024 Middle East escalations. Employing a Nonlinear Autoregressive Distributed Lag (NARDL) framework, we decompose international Brent crude oil price fluctuations into partial sum processes of positive and negative changes. The empirical results reveal a pronounced long-run cointegration between oil price shocks, the Index of Industrial Production (IIP) for manufacturing, the Wholesale Price Index (WPI), and the INR/USD exchange rate. Critically, the Wald test confirms structural asymmetry: positive war-induced oil shocks exert a statistically significant, severe contractionary effect on manufacturing output, whereas negative oil price corrections fail to trigger a proportional industrial expansion. This asymmetric pass-through is transmitted primarily through a cost-push inflation squeeze and severe supply chain frictions. Indian factory floors remain highly vulnerable to sudden geopolitical supply-side shocks. Our insights challenge conventional symmetric policy frameworks, emphasizing the urgent need for targeted strategic fuel reserves, currency-oil hedging mechanisms, and rapid structural diversification toward renewable industrial energy architectures..

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