Iran-Israel war escalation to impact India' s trade with West Asia, say experts

Any further escalation of the ongoing war between
Iran
and Israel will have wider implications for
India
's trade with West Asian countries, including Iraq, Jordan, Lebanon, Syria, and Yemen, say experts.
They said that the war has already started impacting India's exports to Iran and Israel.
The US attacked three sites in Iran early Sunday, inserting itself into Israel's war aimed at destroying the country's nuclear programme in a risky gambit to weaken a longtime foe that prompted fears of a wider regional conflict as Tehran accused Washington of launching "a dangerous war".
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Many Are Watching Tariffs - Few Are Watching What Nvidia Just Launched
Seeking Alpha
Read Now
Undo
"We are in for big trouble now because of this war. It will have a cascading effect on India's trade with West Asian countries," Mumbai-based exporter and founder chairman of
Technocraft Industries India
Sharad Kumar Saraf said.
Saraf said that his company is also holding back consignments to both these countries.
Technocraft Industries
manufactures drum closures, nylon and plastic plugs, capseal closures, and clamps.
Live Events
"There will be a cascading effect of this war," he added.
Another exporter said that the Indian traders community is already reeling under the impact of the Israel-Hamas conflict and involvement of Yemen-backed Houthis' attack on shipping vessels in the Red Sea. Due to that, shipping lines from India were taking consignments from the Cape of Good Hope, encircling the African continent.
Now, because of the Iran-Israel war, another key trading route - the Strait of Hormuz - is getting affected.
"This route will hit the movement of oil tankers. I have a feeling that oil tankers will find new routes but that will push crude oil prices. It will have implications on inflation as crude oil prices are the mother of all prices," Saraf said.
Think tank
Global Trade Research Initiative
(GTRI) said that a wider regional escalation could threaten India's much larger trade with the broader West Asian region, including Iraq, Jordan, Lebanon, Syria, and Yemen, where Indian exports total USD 8.6 billion and imports stand at USD 33.1 billion.
"Any disruption to shipping lanes, port access, or financial systems in this corridor would severely impact India's trade flows, inflate freight and insurance costs, and introduce fresh supply chain risks for Indian businesses," GTRI Founder Ajay Srivastava said.
India's exports to Iran stood at USD 1.24 billion in FY2025, with key items including Basmati rice (USD 753.2 million), banana (USD 53.2 million), soya meal (USD 70.6 million), Bengal gram (USD 27.9 million), and tea (USD 25.5 million). Imports stood at USD 441.8 billion last fiscal.
With Israel, India's exports stood at USD 2.1 billion and USD 1.6 billion in imports in 2024-25.
He said that the ongoing US-Israel strikes on Iran and the threat of wider conflict could significantly disrupt this trade.
Payment channels already strained by US sanctions may face further blockages, while heightened shipping risks in the Gulf could drive up insurance costs and delay shipments.
"Perishable exports like rice, bananas, and tea are especially vulnerable. A prolonged conflict could dampen Iranian demand and squeeze Indian exporters, particularly in the agricultural sector," Srivastava said.
GTRI said that a key concern is the potential disruption to the Strait of Hormuz, through which roughly 60-65 per cent of India's crude imports transit.
"Any blockade or military escalation in this vital maritime corridor would severely impact India's energy security, drive up oil prices, and trigger inflationary pressures at home," it added.
India enjoys deep historical, cultural, and economic ties with Iran, once a major crude oil supplier and views Iran's Chabahar Port as a strategic gateway to Afghanistan and Central Asia, providing crucial connectivity while bypassing Pakistan.
Yet India also maintains robust relations with the US, Israel, and Gulf Arab states, each now directly or indirectly involved in the unfolding confrontation, Srivastava said.
India's crude oil and half of its LNG imports pass through the Strait of Hormuz, which Iran has threatened to close. This narrow waterway, only 21 miles wide at its narrowest point, handles nearly a fifth of global oil trade and is indispensable to India, which depends on imports for over 80 per cent of its energy needs.
The Strait of Hormuz, which lies between Iran to the north and Oman and the United Arab Emirates to the south, serves as the main route for oil exports from Saudi Arabia, Iran, Iraq, Kuwait, and the UAE. Many liquefied natural gas (LNG) shipments, especially from Qatar, also pass through the strait.
According to the Delhi-based economic think tank, any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums, triggering inflation, pressuring the rupee, and complicating India's fiscal management.
The present conflict that began with an attack on Israel on October 7, 2023, has brought cargo movement through Red Sea routes to a halt due to attacks by
Houthi
rebels on commercial shipping.
Last year, the situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, escalated due to attacks by Yemen-based Houthi militants.
Around 80 per cent of India's merchandise trade with Europe passes through the Red Sea, and substantial trade with the US also takes this route. Both these geographies account for 34 per cent of the country's total exports.
The
Red Sea Strait
is vital for 30 per cent of global container traffic and 12 per cent of world trade.
Based on the tariff war impact, the
World Trade Organisation
(
WTO
) has already said that global trade will contract 0.2 per cent in 2025 as against the earlier projection of 2.7 per cent expansion.
India's overall exports had grown 6 per cent on year to USD 825 billion in 2024-25. This year it is expected to cross USD 900 billion.
Snapping the two-month rising trend, India's exports declined by 2.17 per cent year-on-year to USD 38.73 billion in May due to a fall in petroleum goods' shipments.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Indian Express

35 minutes ago

• Indian Express

‘Midnight Hammer' to Strait of Hormuz: 10 new developments after US bombs Iran's nuclear facilities

Tensions between the United States, Iran, and Israel escalated dramatically on Sunday after US airstrikes on Iran's nuclear facilities, which President Donald Trump claimed had 'completely and fully obliterated' key sites. The attacks have triggered a deadly wave of retaliatory strikes, international condemnation, and fears of a wider regional war. On Saturday night, US President Donald Trump confirmed that the US military had struck three of Iran's nuclear sites—Fordow, Natanz, and Isfahan. Trump declared the facilities 'completely and fully obliterated." Senior Pentagon officials on Sunday detailed a highly secretive and coordinated military operation against Iran, calling it a demonstration of American air and naval power at its most effective. Defense Secretary Pete Hegseth and Gen. Dan Caine, chairman of the Joint Chiefs of Staff, both spoke publicly, though neither could confirm whether Iran retained the ability to produce a nuclear weapon. Hegseth reiterated President Trump's claim from the previous night that the nuclear sites had been 'obliterated.' General Caine did not. Caine said a final battle damage assessment was still pending, but initial reports indicated that all three targeted Iranian nuclear sites had sustained 'severe damage and destruction.' A US official has confirmed that B-2 bombers flew non-stop for 37 hours from Missouri to carry out the strikes. The global nuclear watchdog, International Atomic Energy Agency (IAEA), has said that there has been 'no radiation leak' from any nuclear facility in Pakistan after the escalated military engagement with India. The Vienna-based global nuclear watchdog's reply, to a query from The Indian Express, ties in with the earlier response by the Indian Air Force that India has not hit any target in Pakistan's Kirana Hills, which is reported to house some nuclear installations. Iran's Foreign Minister Abbas Araghchi announced on Sunday that he will travel to Moscow later in the day to meet Russian President Vladimir Putin on Monday morning. In a post on X, Araghchi condemned the United States, accusing it of a grave violation of the UN Charter, international law, and the Nuclear Non-Proliferation Treaty (NPT) by attacking Iran's nuclear facilities. A representative of Iran's Supreme Leader said it is now Iran's turn to respond. He called for missile strikes on US naval forces in Bahrain and closure of the Strait of Hormuz to Western vessels. Foreign Minister Abbas Araghchi warned, 'They crossed a very big red line… We have to respond based on our legitimate right for self-defence." Several areas in central and northern Israel, including Nes Ziona, Rishon Lezion, Haifa, and a neighbourhood in Tel Aviv, were struck by Iranian missiles, according to Israeli state media and Fars News Agency. Videos show significant destruction in Tel Aviv. Iran's Islamic Revolutionary Guard Corps warned the US to 'expect regrettable responses' in response to its strikes on Tehran's nuclear sites, state TV reported. Israeli PM Benjamin Netanyahu praised Trump, calling the strike 'a pivot of history.' UN Secretary-General António Guterres warned of 'a dangerous escalation,' and Pakistan condemned the US strike. Oman, previously mediating talks, called the attack a 'serious violation of international law. Iran's ambassador to the UN, Amir Saeid Iravani, has also called for an emergency Security Council meeting. In a letter to the UN, he described the US strikes as 'heinous attacks and illegal use of force.' Russia has "strongly condemned" bombings, calling the attacks "irresponsible" and a "gross violation of international law". Iran's Parliament has approved the closing of the Strait of Hormuz, though the final decision will be taken by the Supreme National Security Council, Iran's Press TV reported. The Strait is in the territorial waters of Iran and Oman, and accounts for a big bulk of the world's oil trade. Iran has in the past threatened to close the Strait of Hormuz on multiple occasions, but has never actually done it. The heightened risk of the closure is bound to raise concerns globally, including in India, particularly with regard to oil and gas supply security, and could lead to a jump in energy prices. India is the world's third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. Israel closed its airspace as a precaution after the US strikes, though land crossings into Egypt and Jordan remain open, according to the Israel Airports Authority. Trump, speaking Sunday, said no military 'could have done what the US military has done.' He warned Iran of 'far greater' future attacks if it does not choose peace. 'There will either be peace or tragedy for Iran,' he said, adding that he acted 'as a team' with Netanyahu. The 'bunker buster' MOP is designed to attack 'deeply-buried facilities and hardened bunkers and tunnels' and is meant to destroy targets in well-protected facilities. Israel, or any country other than the US, does not have any non-nuclear weapon systems that can penetrate a site as deep as Fordow. A never-before-used American bomb — the GBU-57 Massive Ordnance Penetrator, or MOP — which is extremely heavy and can only be dropped using the B-2 Spirit stealth bomber aircraft of the US Air Force was used for the bombing. The latest strike seems to have achieved that target, even though the extent of damage at Fordow is still under speculation, primarily because of the depth of the enrichment site.

Time of India

40 minutes ago

• Time of India

Can Iran still get nuclear warheads? Russia's Dmitriy Medvedev says US strikes may backfire as Iran may now begin nuclear weapons production

After US strikes on Iran's nuclear facilities, Russia claimed the actions have led to increased support for Iran's nuclear program. Dmitriy Medvedev said multiple countries are now ready to assist Iran with nuclear warheads. Medvedev Reacts to US Strikes Dmitriy Medvedev posted on social media that the US attacks on Iranian nuclear sites may have failed to meet their intended goal. He said instead of stopping Iran's nuclear plans, the strikes could cause the program to grow. Medvedev claimed Iran will continue enriching nuclear material and may now begin nuclear weapons production. He also said several countries are prepared to supply Iran with nuclear warheads. Medvedev shared that Iran's leadership has become more unified and stronger since the strikes. He added that citizens who had once opposed the government are now supporting its spiritual leadership. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Cardiologist Reveals: The Simple Morning Habit for a Flatter Belly After 50! Lulutox Undo Also Read: What to Watch This Weekend: Here's the complete list Russia Condemns Military Action Russia's Foreign Ministry issued a statement condemning the US strikes. The ministry said that bombing another sovereign state's territory violates international law. It referred to the United Nations Charter and Security Council resolutions to support its claim. Live Events Russia also called the US actions irresponsible. The statement urged an immediate end to aggression. It asked world powers to return the issue to political and diplomatic discussions. Medvedev Comments on Iran's Stability Medvedev said the Iranian government has remained in control. He also said the leadership has gained wider public support. According to him, people in Iran are uniting around their spiritual leaders. This includes those who previously did not support the government. Medvedev currently serves as Deputy Chairman of Russia's Security Council. He served as president of Russia from 2008 to 2012. Also Read: Will US strikes on Iran's nuclear sites trigger oil prices rise? Here's how markets may react US and Russia Plan Discussion Later in the day, reports said US President Donald Trump was planning to speak with Russian President Vladimir Putin. The phone call was expected to take place after the strikes on Iranian soil. FAQs Why did Medvedev say Iran would get nuclear warheads? Medvedev said US strikes caused other countries to support Iran. He claimed some are ready to give Iran nuclear warheads , which may strengthen its nuclear program. What was Russia's response to the US attacks? Russia condemned the strikes as illegal. It said they violated international law and called for the situation to return to diplomacy.

India.com

41 minutes ago

• India.com

Kaliganj Election Result 2025 Live: Counting Begins At 8 AM; TMCs Alifa Ahmed, BJPs Ashish Ghosh In Fray

LIVE Blog West Bengal's Kaliganj Assembly Seat Result 2025 LIVE Updates: The Election Commission of India (ECI) is all set to begin the counting of votes for the Kaliganj Assembly by-election in West Bengal at 8 a.m. on Monday, June 23. The bypoll was held on Thursday, concluded peacefully, with polling progressing smoothly throughout the day. By 5 p.m., voter turnout had reached 60.32%. Although the official polling time ended at 6 p.m., voting continued in several booths where voters were still in the queue. The by-election in Kaliganj was necessitated following the sudden demise of sitting Trinamool Congress MLA Nasiruddin Ahmed in February this year at the age of 70. Kaliganj is among five Assembly constituencies across four Indian states where bypolls were conducted on June 20. In Kaliganj, the All India Trinamool Congress (AITC) has fielded Alifa Ahmed, the Bharatiya Janata Party (BJP) has nominated Ashish Ghosh, and the Congress has fielded Kabil Uddin Shaikh. Stay Tuned With Zee News For Live Updates Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in india news and world News on Zee News.