Guwahati: Experts warn that if the war between Iran and Israel escalates further, it could severely impact India’s trade with West Asian countries such as Iraq, Jordan, Lebanon, Syria, and Yemen. The ongoing conflict is already affecting India’s exports to both Iran and Israel.
Recently, the US attacked three sites in Iran, aligning with Israel’s efforts to halt Iran’s nuclear program. This has led to concerns about an escalation of conflict in the region.
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Sharad Kumar Saraf, a Mumbai-based exporter, said this war will cause serious problems for India’s trade with West Asia. His company, which manufactures industrial products, has temporarily stopped sending shipments to Iran and Israel. He warned that the war’s effects would spread.
Another exporter added that Indian traders are already struggling due to the Israel-Hamas conflict and attacks by Yemen-backed Houthis on ships in the Red Sea. This has forced shipping companies to avoid traditional routes and take longer paths around Africa. Now, the Iran-Israel conflict threatens another key route, the Strait of Hormuz.
Saraf explained that the Strait of Hormuz is crucial for transporting oil tankers. If this route is blocked or unsafe, oil prices could rise, potentially leading to inflation in India, since higher oil costs affect many other prices.
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A think tank, the Global Trade Research Initiative (GTRI), stated that if the conflict escalates, it could significantly harm India’s trade with West Asia. India exports goods worth $8.6 billion and imports $33.1 billion from this region. Any disruption in shipping or port access will increase costs and cause supply chain problems.
These analyses and figures are based on various sources and reports.
India exported $1.24 billion worth of goods to Iran in 2024-25, including basmati rice, bananas, soya meal, chickpeas, and tea. Imports from Iran were about $441.8 million. Trade with Israel includes $2.1 billion in exports and $1.6 billion in imports.
The ongoing conflict and US strikes on Iran may result in additional challenges, including disruptions to payment channels and elevated shipping insurance costs. These issues could particularly impact exports of perishable goods such as rice, bananas, and tea.
GTRI also highlighted the importance of the Strait of Hormuz, through which 60–65% of India’s crude oil passes. Any conflict there would jeopardize India’s energy security and push oil prices higher, leading to increased inflation.
India has strong ties with Iran and views Iran’s Chabahar Port as a strategic route to Afghanistan and Central Asia. At the same time, India maintains good relations with the US, Israel, and Gulf countries, all of which are involved in the conflict.
The Strait of Hormuz is a narrow but vital waterway between Iran and Oman/UAE, handling a large share of the world’s oil and gas trade. Any closure or disruption there would increase oil prices, shipping costs, and insurance premiums, adding inflationary and economic pressure on India.
The conflict, which began with an attack on Israel on October 7, 2023, has already disrupted cargo movement in the Red Sea due to attacks on ships by Yemen-based Houthi rebels. The Bab-el-Mandeb Strait, connecting the Red Sea to the Indian Ocean, is a key shipping route for 80% of India’s trade with Europe and a large part of trade with the US.
The Red Sea route handles about 30% of global container traffic and 12% of world trade.
The World Trade Organization projects that global trade might shrink by 0.2% in 2025, partly due to these conflicts. India’s exports grew by 6% to $825 billion in 2024-25 and are expected to surpass $900 billion this year. However, exports declined by 2.17% in May 2025, mainly due to lower petroleum shipments.