The ongoing conflict between Iran and Israel presents significant risks for India’s trade with West Asian nations such as Iraq, Jordan, Lebanon, Syria, and Yemen. Experts state that previous tensions have already begun to impact trade flows. Following U.S. attacks on Iranian sites linked to Israel’s nuclear strategies, concerns over a larger regional conflict are rising, prompting fears for India’s economic interests.
The Dabble Tank Global Trade Research Initiative (GTRI) highlights that any escalation could disrupt India’s considerable trade, valued at $41.7 billion in exports and imports with these nations. Disruptions in shipping routes or financial systems could inflate costs and jeopardize supply chains. India’s exports to Iran in the fiscal year 2025 amounted to $1.24 billion, primarily consisting of Basmati rice, and imports totaled $441.8 billion. Simultaneously, trade with Israel reached $2.1 billion in exports.
The potential disruption of the Strait of Hormuz, crucial for transporting about 60 to 65 percent of India’s raw imports, poses risks to energy security, increasing oil prices and domestic inflation. The ongoing conflict, which began on October 7, 2023, has already affected freight movements through vital shipping corridors like the Red Sea, further complicating India’s trade dynamics.
