Govt meets stakeholders to assess impact of Iran-Israel conflict on trade; monitoring situation
The participants informed that the situation in the Strait of Hormuz is currently stable and a ship reporting system is in place to monitor any incidents.
New Delhi, Jun 20 (PTI) The commerce ministry on Friday held consultations with key stakeholders, including shipping lines, exporters, container firms, and other departments, to assess the impact of the Iran-Israel conflict on India's overseas trade, an official said.
The freight and insurance rates are also being closely monitored, the official said.
The commerce secretary emphasised the need to assess the evolving situation and its impact on Indian trade, the official said.
He highlighted the importance of exploring all possible alternatives in response to the situation.
Exporters have stated that the war, if escalated further, would impact world trade and push both air and sea freight rates.
They have expressed apprehensions that the conflict may impact the movement of merchant ships from the Strait of Hormuz and the Red Sea.
Nearly two-thirds of India's crude oil and half of its LNG imports pass through the Strait of Hormuz, which Iran has now 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.
According to think tank GTRI, 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 had 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.
India's exports to Israel have fallen sharply to USD 2.1 billion in 2024-25 from USD 4.5 billion in 2023-24. Imports from Israel came down to USD 1.6 billion in the last fiscal from USD 2.0 billion in 2023-24.
Similarly, exports to Iran, amounting to USD 1.4 billion, which were at the same level in 2024-25 as well as in 2023-24, could also suffer. India's imports from Iran were at USD 441 million in FY25 as against USD 625 million in the previous year. The conflict adds to the pressure that the world trade was under after the US President Donald Trump announced high tariffs.
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. PTI RR HVA
This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
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