Iran-Israel tension: The government will assess the impact of the West Asia conflict on trade; meeting with stakeholders
The indian government has called a meeting with shipping and container companies this week to assess the impact on foreign trade due to the Iran-Israel conflict. According to the think tank GTRI, the threat to important sea routes like Hormuz and Bab-al-Mandeb can increase oil prices, shipping costs, and inflation. This can affect India's trade and economic situation. The indian government is closely monitoring the situation of the Iran-Israel conflict. A top official of the Commerce Ministry said on monday that a meeting will be held this week with shipping companies, container firms, and other stakeholders to assess the impact of West Asia tension on the country's foreign trade and resolve any issues.
Commerce Secretary sunil Barthwal said that the impact of the conflict on India's trade will depend on how the situation develops further. He said we are keeping an eye on the situation. We are calling a meeting of all shipping companies, container organizations, concerned departments, and stakeholders this week to understand the problems they are facing and how they can be resolved. Exporters say that if the war intensifies, it will affect global trade and this will increase air and sea freight rates. They expressed concern that the conflict could affect the movement of merchant ships through the Strait of Hormuz and the red sea route. About two-thirds of India's crude oil and more than half of its liquefied natural gas (LNG) imports come through the Strait of Hormuz, which iran has threatened to close.
The strait is only 21 miles wide at its narrowest point and about a fifth of the global oil trade passes through it. This route is very important for india as India meets more than 80 percent of its energy needs through imports. According to the think tank GTRI, if the Strait of Hormuz is closed or there is a military confrontation here, it will lead to a huge increase in oil prices, shipping costs, and insurance premiums. This will affect inflation in india, the position of the rupee, and the financial management of the government. Meanwhile, the attack on Yemen's Houthi rebels by israel on june 14-15 has further increased tension in the red Region. Houthi rebels in the red sea are already attacking commercial ships. About 30 percent of India's exports to europe, North Africa, and the east coast of America go through the Bab al-Mandeb Strait, which is now in danger. Recently, India's cargo ships started running through the red sea route, saving 15-20 days in travel to America and Europe, but now this route may be disrupted again.
Israel was attacked in october 2023
This conflict, which started with the attack on israel on 7 october 2023, had earlier also halted cargo movement in the red sea route due to attacks by Houthi rebels. These attacks stopped after US intervention and attacks on the rebels. Last year, the situation became serious around the Bab-el-Mandeb Strait, which is an important sea route connecting the red sea and the Mediterranean sea to the indian Ocean. The area was threatened by attacks by Houthi rebels in Yemen.
80 percent of India's trade with europe passes through the red Sea
About 80 percent of India's trade in goods with europe passes through the red Sea and a large part of it with the US also travels through this route. These two regions account for 34 percent of India's total exports. This strait of the red sea carries 30 percent of global container traffic and 12 percent of the world's total trade.
India's trade with israel and iran decreased.
India's exports to Israel have come down from $4.5 billion in 2023-24 to $2.1 billion in 2024-25. At the same time, India's imports from israel have also come down from $2.0 billion to $1.6 billion. Similarly, India's exports to iran have been around $1.4 billion in both the years 2023-24 and 2024-25, but this may also be affected due to the crisis. At the same time, India's imports from iran have come down from $625 million in 2023-24 to $441 million in 2024-25.
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