Oil, Basmati rice and even the internet: The Israel-Iran war can hit India hard
The Israel-Iran conflict is rattling the world—and for the right reasons.
The visual of the Iranian TV station being hit when its most famous woman anchor, a mother of two children, was on air was but the latest in a series of chilling images emerging from the war zone.
For India, the conflict presents a complex diplomatic tightrope: it must safeguard vital energy interests, uphold regional connectivity plans, and balance its security partnerships—all while maintaining a neutral and pragmatic international posture.
Oil and Basmati rice headaches
The growing confrontation between Israel and Iran especially carries serious economic consequences for India, particularly in terms of energy security and trade costs.
India depends on the Persian Gulf for over 80% of its crude oil imports, with significant volumes passing through the Strait of Hormuz—a narrow maritime passage bordered by Iran. Any military escalation or blockade in this zone could disrupt the flow of oil, pushing global prices up and directly affecting India's import bill.
In fact, during the 2019 tanker crisis in the Gulf, insurance premiums for ships surged by up to 20%, and oil prices temporarily spiked by 4-5%, forcing countries like India to consider costly re-routing and stockpiling strategies.
The uncertainty also complicates India's trade links with both nations.
Bilateral trade with Israel stood at $10.1 billion in FY 2023, with defence, technology, and agriculture forming core sectors. On the other hand, trade with Iran has declined due to US sanctions but still remains important for strategic items like dry fruits, fertilisers, and urea. With further instability, access to these imports could shrink or become more expensive.
Moreover, the International North-South Transport Corridor (INSTC), which connects India to Russia and Central Asia via Iran, faces delays due to fears around security and sanctions, undermining India's plan to reduce reliance on China-backed trade routes.
The growing conflict between Iran and Israel is also affecting India's Basmati rice trade, especially for exporters in Punjab and Haryana. Iran is one of the biggest buyers of Indian Basmati, having purchased over 8.55 lakh metric tonnes in 2024–25, worth nearly ₹6,374 crore. In strong trade years, Iran has made up 30 to 35% of all Basmati exports from India.
Recent tensions and older problems with delayed payments have made things difficult. Many private Iranian importers now take six to eight months to make payments, creating financial pressure for Indian traders. Even Iran's government-backed agency, the Government Trading Corporation (GTC), has taken up to 180 days to release payments. Because of this, some Indian exporters have started sending their rice to other countries, even if it means earning lower profits, just to keep their business running.
Highly sensitive stock markets
India's financial markets are not immune either. Increased volatility in West Asia often triggers a risk-off sentiment among investors. For instance, when Iran retaliated after the killing of General Qassem Soleimani in 2020, the Sensex dropped by over 700 points in a single day, and the rupee weakened due to rising crude prices. A prolonged conflict could pressure the Reserve Bank of India to intervene in the forex market and reconsider its inflation projections.
For a country trying to maintain stable growth and rein in fiscal deficits post-COVID, such external shocks can be deeply destabilising. The recent rise in conflict between Israel and Iran has shaken global financial markets, and India has not been spared.
On June 13, the BSE Sensex dropped by around 1,300 points, while the Nifty 50 fell below the 24,500 marks, following news of Israeli strikes on Iranian nuclear sites. The sharp fall mirrored global market reactions, especially in Asia. Stocks in India's oil and gas sector, including BPCL, HPCL, and Indian Oil, saw losses of nearly 3.5%, as Brent crude oil prices jumped almost 9%, driven by fears of supply disruption in the Middle East.
Earlier in the week, the Sensex had already fallen by over 800 points, with major losses seen in companies like L&T, Infosys, and ICICI Bank, as investors reacted to concerns about rising tensions and costlier crude imports. Although markets have started to recover, the episode highlights how India's stock market and inflation outlook remain highly sensitive to geopolitical instability in West Asia
Strategic Crossroads: Chabahar Port Caught in the Crossfire
India's strategic interests in Iran, especially through its long-term investment in the Chabahar Port, now face increasing uncertainty due to the deepening hostilities between Israel and Iran.
Chabahar, located on the Gulf of Oman, is India's gateway to Afghanistan and Central Asia, bypassing Pakistan. It is central to India's larger connectivity vision, including the International North-South Transport Corridor (INSTC). With Israel's growing intelligence operations across the region and Iran's heightened readiness for retaliation, the port lies in a zone increasingly vulnerable to military escalations or covert sabotage.
In recent months, reports of drone strikes, cyber intrusions, and naval confrontations in adjacent waters have raised alarms over the security of regional infrastructure. India, having committed over $85 million in port development and operating a terminal through India Ports Global Limited (IPGL), is directly exposed to these uncertainties.
Moreover, any deterioration in Iran's regional position due to military confrontation with Israel could invite harsher Western sanctions or even affect shipping insurance, stalling the commercial viability of Chabahar. In fact, while the port was exempted from US sanctions due to its developmental role in Afghanistan, future escalations may put that exemption at risk.
The Iran–Israel rivalry also limits India's diplomatic manoeuvrability, especially as India deepens its security and defence ties with Israel. Balancing this relationship while safeguarding its interests in Iran requires deft diplomacy. As New Delhi pursues its Act West policy and aspires to emerge as a transcontinental trade facilitator, sustained instability in Iran—driven by external hostilities—could derail key infrastructure goals that have been years in the making.
Digital lifelines at risk too
As tensions between Israel and Iran escalate, the spotlight has largely remained on military strikes, nuclear rhetoric, and oil supply chains. However, one of the most understated but critical concerns emerging from this conflict is the potential disruption of undersea cable infrastructure.
Submarine cables carry nearly 95% of global internet and data traffic, and several high-capacity routes—including the Europe India Gateway (EIG), FLAG(Fiber-Optic Link Around the Globe), and SEA-ME-WE 5(South East Asia–Middle East–Western Europe 5)—run through maritime corridors near Israel, Iran, and conflict-prone zones like the Red Sea, Gulf of Oman, and the Strait of Hormuz. These routes are vital to Europe-Asia connectivity and directly affect countries like India.
Recent naval manoeuvres by Israel near Haifa and increased Iranian presence near the Strait of Hormuz heighten the risks of deliberate or accidental damage to these cables. The danger is compounded by the cyber capabilities of both countries, with the possibility of hybrid attacks on cable landing stations no longer being hypothetical.
For example, in 2024, three major cables—AAE-1, EIG, and Seacom—were disrupted in the Red Sea during regional conflict escalation, leading to latency issues across Africa, the Gulf, and South Asia. These incidents, likely linked to regional hostility involving Houthi actors aligned with Iran, forced ISPs(Internet Service Provider) in India and elsewhere to reroute traffic via longer, costlier routes.
With cable damage costing millions in economic loss per hour and affecting critical sectors such as banking and defence, the threat to this invisible infrastructure is no longer negligible.
India stands particularly vulnerable in this scenario. Its booming digital economy, which contributes over $245 billion to the national GDP, relies heavily on these cables, especially those that land in Mumbai, Chennai, and Kochi.
Over 90% of India's global data flow transits through the Middle East, meaning that any disruption near Israel or Iran could cascade into serious domestic slowdowns. The 2021 OECD (Organisation for Economic Co-operation and Development) report noted that a single cable break can reduce bandwidth by up to 70% in affected corridors, a staggering figure in the context of India's dependence on IT exports and cloud services.
To mitigate such risks, India must not only diversify its undersea cable routes but also push for regional diplomatic frameworks—such as through BIMSTEC or the Indian Ocean Rim Association—to include protection of digital infrastructure. Collaborations with tech giants like Google (which is developing the Blue-Raman cable) and Reliance Jio should be leveraged to create routes that bypass the Red Sea entirely.
Simultaneously, India's naval command and surveillance networks like the Information Management and Analysis Centre (IMAC) should monitor submarine cable zones for early warnings of sabotage. As the Israel–Iran conflict transforms into a more complex, hybrid theatre of war, undersea cables—though invisible—are likely to become a key battleground, and India cannot afford to ignore their strategic importance.
No longer a distant regional issue
In short, the Israel–Iran conflict isn't a distant regional issue—it has significant implications for India's economy, connectivity, trade, and strategic autonomy. From rising crude prices and delayed Basmati rice payments to risks facing the Chabahar Port and undersea data cables, the crisis is touching multiple facets of India's national interest.
As global volatility deepens, New Delhi must respond with foresight and balance—strengthening its resilience in energy and digital infrastructure, protecting its trade corridors, and engaging all sides diplomatically without compromising on long-term goals.
In an increasingly interconnected world, India's ability to navigate such external shocks will define not just its foreign policy success, but also its economic stability and strategic relevance.
(Dr Anil Kumar P is Associate Professor, Department of International Relations, Central University of Kerala, Capital Centre.)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
16 minutes ago
- Time of India
Putin Leaves Trump Red-Faced On Mediating Iran-Israel War: 'Never Sought That Role'
Russian President Vladimir Putin clarified that he was not seeking a role as a mediator in Iran-Israel conflict, but was only suggesting ideas to friends on how to resolve the crisis. His statement came after U.S. President Donald Trump opposed the idea of Putin being a mediator last week, by claiming that he should focus on Russia-Ukraine war first. Watch for more details. Read More
The Hindu
16 minutes ago
- The Hindu
Iran-Israel fighting distorted by tech-fuelled misinformation
AI deepfakes, video game footage passed off as real combat, and chatbot-generated falsehoods; such tech-enabled misinformation is distorting the Israel-Iran conflict, fuelling a war of narratives across social media. The information warfare unfolding alongside ground combat, sparked by Israel's strikes on Iran's nuclear facilities and military leadership, underscores a digital crisis in the age of rapidly advancing AI tools that have blurred the lines between truth and fabrication. The surge in wartime misinformation has exposed an urgent need for stronger detection tools, experts say, as major tech platforms have largely weakened safeguards by scaling back content moderation and reducing reliance on human fact-checkers. After Iran struck Israel with barrages of missiles last week, AI-generated videos falsely claimed to show damage inflicted on Tel Aviv and Ben Gurion Airport. The videos were widely shared across Facebook, Instagram and X. Using a reverse image search, AFP's fact-checkers found that the clips were originally posted by a TikTok account that produces AI-generated content. There has been a "surge in generative AI misinformation, specifically related to the Iran-Israel conflict," Ken Jon Miyachi, founder of the Austin-based firm BitMindAI, told AFP. "These tools are being leveraged to manipulate public perception, often amplifying divisive or misleading narratives with unprecedented scale and sophistication." GetReal Security, a U.S. company focused on detecting manipulated media including AI deepfakes, also identified a wave of fabricated videos related to the Israel-Iran conflict. The company linked the visually compelling videos, depicting apocalyptic scenes of war-damaged Israeli aircraft and buildings as well as Iranian missiles mounted on a trailer, to Google's Veo 3 AI generator, known for hyper-realistic visuals. The Veo watermark is visible at the bottom of an online video posted by the news outlet Tehran Times, which claims to show "the moment an Iranian missile" struck Tel Aviv. "It is no surprise that as generative-AI tools continue to improve in photo-realism, they are being misused to spread misinformation and sow confusion," said Hany Farid, the co-founder of GetReal Security and a professor at the University of California, Berkeley. Farid offered one tip to spot such deepfakes: the Veo 3 videos were normally eight seconds in length or a combination of clips of a similar duration. "This eight-second limit obviously doesn't prove a video is fake, but should be a good reason to give you pause and fact-check before you re-share," he said. The falsehoods are not confined to social media. Disinformation watchdog NewsGuard has identified 51 websites that have advanced more than a dozen false claims ranging from AI-generated photos purporting to show mass destruction in Tel Aviv to fabricated reports of Iran capturing Israeli pilots. Sources spreading these false narratives include Iranian military-linked Telegram channels and state media sources affiliated with the Islamic Republic of Iran Broadcasting (IRIB), sanctioned by the US Treasury Department, NewsGuard said. "We're seeing a flood of false claims and ordinary Iranians appear to be the core targeted audience," McKenzie Sadeghi, a researcher with NewsGuard, told AFP. Sadeghi described Iranian citizens as "trapped in a sealed information environment," where state media outlets dominate in a chaotic attempt to "control the narrative." Iran itself claimed to be a victim of tech manipulation, with local media reporting that Israel briefly hacked a state television broadcast, airing footage of women's protests and urging people to take to the streets. Adding to the information chaos were online clips lifted from war-themed video games. AFP's fact-checkers identified one such clip posted on X, which falsely claimed to show an Israeli jet being shot down by Iran. The footage bore striking similarities to the military simulation game Arma 3. Israel's military has rejected Iranian media reports claiming its fighter jets were downed over Iran as "fake news." Chatbots such as xAI's Grok, which online users are increasingly turning to for instant fact-checking, falsely identified some of the manipulated visuals as real, researchers said. "This highlights a broader crisis in today's online information landscape: the erosion of trust in digital content," BitMindAI's Miyachi said. "There is an urgent need for better detection tools, media literacy, and platform accountability to safeguard the integrity of public discourse."
Mint
16 minutes ago
- Mint
Book excerpt: How the global story of caste activism began in Marathwada
CASTE BOOK , SURAJ YENGDE , SURAJ MILIND YENGDE , NEW BOOK , NONFICTION , INDIAN WRITING , INDIAN NONFICTION : Nanded, my hometown in Marathwada, has been home to one of the most radical forms of Dalit politics for over a hundred years. The Arya Samaj, the Hindu reform movement, established one of its earliest centres in Marathwada. Fearing Muslim influence on the subaltern castes, the Arya Samaj started to reconvert the latter by offering janeu, the sacred thread. However, this was not looked upon favourably by non-Dalit villagers, who by way of punishment forcibly tattooed Dalit converts with hot iron rods. Marathwada has also seen a significant presence of Sikhs, Nanded being an important holy place for the Sikh religion. The radical message of mystics and spiritual teachers like Kabir, Raidas, Nanak and Gobind was carried by practitioners of the Sikh faith. In particular, the vision of society that Kabir and Raidas preached found especial resonance among the Dalits of Marathwada. Also read: 'Something like Truth': Staging four monologues around truth and justice Following in this tradition, Marathwada Dalits carved out for themselves a political space, whose potential for mobilization and receptivity to radical ideas were noticed by B.R. Ambedkar. Issues around land, education and sovereignty were all highly politicized in Marathwada. Those who rejected their oppression as lower castes looked for ways of fighting back. To them, Ambedkar-led politics seemed like a promising avenue. In particular, Mahars (a caste of Dalits) in my region gave their allegiance to Ambedkar. Though Ambedkar was yet to visit them, they had heard about him and his voluminous writings. He came from their caste-community and had a national as well as international appeal. Dalit leaders from the wider Telugu-, Marathi- and Kannada-speaking regions, such as Bhagya Reddy Varma, B.S. Venkat Rao and B. Shyam Sundar, eventually joined Ambedkar and worked under his leadership. My district and region were one of many centres of radical politics. Nanded's representative to India's independent parliament in 1957 belonged to a crop of radical Dalit politicians: Harihar Rao Sonule was our statement of our collective belief in constitutional promise. He was one of the early batch of Dalit MPs from the All India Scheduled Caste Federation who were intent on gaining rights for Dalits in the newly independent country. In our house in Janta Colony, Ambedkar Nagar, Nanded, my father listened to the morning Marathi news on DD Sahyadri—a government-owned satellite TV station. We had a black-and-white 14-inch television set made by a Videocon company. Each morning the same ritual was followed as I prepared for school. One day in 1997 my father held me and made me watch the TV: Kofi Annan was being elected as the secretary general of the United Nations Organization. My father called it Oono—UNO. He wanted me to register that a Black man had ascended to the topmost position of an inter-governmental body, never mind that Annan originally came from the crop of Ghanaian elites. My father perhaps wanted me to see that the UN and other international bodies could not only be accessible to native elites the world over, but could be a space even of Dalit politics. When the Taliban blew up statues of the Buddha, he and his associates protested by petitioning the UN—in a letter written in Marathi. Years later, when I was an intern at the UN's human rights office in Geneva, I was dismayed by its sheer inability to provide nonpolitical solutions to issues of the day…. In the United States, the Dalit cause was taken up by the coordinated efforts of professional class Dalits who had settled there. Their activism began with protests against atrocities within India and led to attempts to hold the Indian state accountable by placing the issue of caste on the agendas of US political and policy circles. Later, activists like Laxmi Berwa and Yogesh Varhade took the UN route that their predecessors like B.R. Ambedkar, N. Rajbhoj and Bhagwan Das had followed. Solidarity represents one way of connecting the Dalit movement with a larger cause. But the desire for international solidarity did not significantly influence the activities of Dalits in India. Their work evolved in response to the radical shifts of Cold War-era politics. The movement was split between left and right. Some aligned with a nativist theory of liberation, while others drew on the left's internationalism. One faction was led by Namdeo Dhasal, the well-known leftist Panther. Left-wing savarna scholars wrote extensively about Dhasal and promoted his image. Raja Dhale, on the other hand, who led the other faction, was primarily known to circles of academics and writers because of his distance from leftist politics. Later he became so disillusioned with the Panthers' leadership that he left and pursued a career in a political party run by Ambedkar's grandson, only to end up dismayed by it. A vast number of Dalit Mahars who identified with Ambedkar and Buddhism embraced Dhale. My father was an associate of his in Nanded and was particularly interested in Dhale's literary activities. They remained friends. My name Surudhay—kindhearted—was given me by Dhale. However, because it was often mispronounced, I shortened the name to Suraj. When I was a student leader in Nanded, I invited Dhale to visit the university and deliver a lecture. He came and the old cadres packed the hall. He spoke but it wasn't an impressive speech. When my father passed away, Dhale paid a visit to my home. I was in South Africa; I rang him to thank him for the visit. In his usual way, Dhale said that he had not done anything extraordinary. 'Milind was my associate, and I paid a visit" was his response. Dhale was known to call a spade a spade. He restricted himself to the activism of literature. He read many books. Whenever my father visited Mumbai, he would seek an audience with Dhale. I recall once we spent an entire day in Vikhroli, the area where Dhale lived. Years later when I was studying to become a scholar, I sought an audience with Dhale. He refused. He said that, like me, he had little time available; it was better that we should not impose ourselves on each other's time. His response made me feel he had become rude and bitter as an old man. A few years later when I spent about eight months in India, I realized why he had spoken in this way. In India, a meeting can easily last several hours. Dhale was also in a hurry to finish what he was writing—as he indicated to me. Also read: A new anthology of writings from south Asia celebrates marginalised voices Over the years, as my name became known in academic and literary circles, reports about me must have come to the attention of Dhale, for he commented to my cousin Nitin that 'Suraj has now become an important person". When Dhale died, the national media reached out to me to write an obituary. I was on the way to deliver a series of talks in Kolhapur. But I asked people to send me some books on Dhale and some of his original writings. I wrote the article on my journey from Aurangabad to Kolhapur, two sites driven by Ambedkar's politics. Dhale was widely read. He was among the first Dalits in the movement to actively pursue Black literature. In his young days, he dabbled in translating Black poets into Marathi. There are many such anecdotes about my father—who was my primary interlocutor to this history—and Dhale that touch my thinking and practice. The global story of caste or the story of global castes thus begins with my experience of growing up as a Dalit. It's also a story of Marathwada, India, which had the audacity to connect with the larger world. That is why the Dalit-Black nexus, which started as an investigation of literature and experience in Marathwada, became a precursor to the formation of an active political solidarity. Excerpted from 'Caste: A Global Story' with permission from Penguin Random House India. The book will be available around 30 June.
