How will Israel-Iran conflict impact India?

The Hindu

5 hours ago

The story so far: As the latest Israel-Iran conflict crossed the one-week mark, the Indian government began to bring back Indian citizens from both countries, fearing a further escalation. In a sudden attack on June 13, Israel launched strikes on Iranian nuclear installations, assassinated top generals, and bombed several cities across the country. Iran's response has been more robust than expected, as it too has launched barrage after barrage of ballistic missiles on military targets and research facilities in Israel.
How has India reacted to the conflict?
Prime Minister Narendra Modi received a call from Israeli Prime Minister Benjamin Netanyahu on June 13, briefing him on the attack by Israel on Iran's nuclear facilities in several cities, including Tehran, where senior Iranian generals were assassinated through targeted strikes. The strikes were a clear violation of international law, Iran argued at the U.N. Security Council, as even Israel claimed they were 'pre-emptive' and not in retaliation to an attack.
In a statement, the government said Mr. Modi had 'shared India's concern and emphasised the need for early restoration of peace and stability in the region.' In a call with Iranian Foreign Minister Abbas Araghchi, External Affairs Minister S. Jaishankar expressed the 'deep concern of the international community at the turn of events,' and urged against retaliation and for diplomacy.
Mr. Jaishankar also spoke to Israeli Foreign Minister Gideon Sa'ar. The Ministry of External Affairs (MEA) statement played safe, calling for dialogue and diplomacy while making no criticism of Israel for launching the strikes. It also disassociated from a statement of the Shanghai Cooperation Organisation (SCO), which includes China, Russia, Iran, Pakistan, Belarus and Central Asian states, that had condemned Israel's 'aggression'.
Also read: India stands 'isolated' over abstention on Gaza ceasefire in the UNGA, says Congress
Last week, India had abstained in a UN resolution for a ceasefire in Gaza. Every other member of BRICS, SCO and SAARC and even all G-7 members minus the U.S. had voted in favour of the resolution critical of Israel's bombardment of Gaza. In a break from older positions, New Delhi has made it clear that India will not criticise Israel.
What about Indians caught in the conflict?
As the conflict escalated, the MEA and its embassies in Tehran and Tel Aviv put evacuation efforts, as part of what was named 'Operation Sindhu', on priority. Unlike the rest of West Asia, where nearly 10 million Indians reside, relatively fewer numbers live in Iran and Israel. There are about 10,000 students and professionals in Iran and about 25,000 workers, students and researchers in Israel, many of whom only moved recently to fill in for construction and caregiver jobs after Israel dismissed thousands of Palestinian workers in the wake of the October 7 terror attacks in 2023.
The evacuation efforts are multi-pronged and require the cooperation of both governments to help Indians cross over to bordering countries and fly back. Iran has even opened its airspace, otherwise closed due to the war, to allow chartered flights carrying Indian citizens home. While it is important to keep them safe, the government has learnt from past conflicts that it is necessary to find work and study opportunities for those coming back, or they end up returning to the conflict zones.
Apart from the loss in remittances, what's at stake for India economically?
India has had declining levels of trade with both Iran and Israel in the last few years due to tensions in the region. After India bowed to the previous Trump administration's demand to cancel oil trade or face sanctions, its trade with Iran dropped from about $14 billion in 2017 to $1.4 billion last year. Tensions in the Gulf region post-attacks as well as Israeli operations on Gaza have also sent trade with Israel down from $11 billion in 2022 to $3.75 billion last year, the Indian embassy said. However, India's defence imports from Israel have soared in the past decade, from about $5.6 million in 2015 to $128 million presently.
However, where India will feel the pinch financially, is in trade route disruptions, especially if the Strait of Hormuz is closed as a pressure tactic by Iran, or due to intensified fighting. According to thinktank GTRI, this could sharply increase oil and LNG prices, given that 40-50% of India's energy imports come through the area. Shipping costs, security, and insurance premiums would rise, leading to more costly imports, less competitive exports, and inflation.
What are the geopolitical impacts of the conflict for New Delhi to worry about?
Dealing with the Israel-Iran conflict has always meant a tricky tightrope balance for New Delhi, given its strong ties with both countries. The balance is also required in view of the two polarised parts of the world they represent. The U.S. and G-7 countries have largely backed Israel strikes as its 'right to defend itself'. In a joint statement at the summit in Canada this week, they called Iran the 'principal source of regional instability and terror' that can 'never have a nuclear weapon'.
U.S. President Donald Trump is mulling a decision to formally join the attack on Iran, but U.S. support for Israel is crucial and unquestioning, even if he doesn't. Mr. Trump's lunch invitation to Pakistan's Army chief General Asim Munir this week, and speculation that the U.S. may ask Pakistan for support in a possible operation in Iran, from logistics to overflight and refuelling to intelligence sharing, will make India's path more difficult.
Also read: Huge blow to Indian diplomacy, says Congress on Trump-Munir lunch
On the other hand, the Global South, which has been very critical of Israel's war in Gaza, has also expressed sympathies with Iran during the current crisis. After the stand India took with the SCO, all eyes will be on what position Mr. Modi takes when he travels to Brazil for the BRICS summit of emerging economies on July 6-7.
Apart from founders Brazil, Russia, India, China and South Africa, the BRICS grouping includes new members Iran, the UAE, Egypt, Ethiopia, Iran, and now Indonesia (Saudi Arabia has yet to formally join), and India will face a harder challenge in separating itself from any statement that is issued there. There's also the possible cost to India's ties with the Gulf region that has to be factored in. For India, West Asia is not just the source of 40% of its remittances but also 54% of oil imports and the region accounts for over $170 billion in trade. A perceived pro-Israel shift has a reputational impact for India, which was the first non-Arab nation to recognise the Palestinian State.
Finally, there is the impact of a prolonged Israel-Iran conflict on India's connectivity plans. Plans for the India Middle East Europe Economic Corridor had already run aground after the October 7 attacks given that it requires connectivity through Arab countries and through Israel to Haifa port. With the current crisis, India's investment in the Chabahar port project and the International North-South Transport Corridor for trade and connectivity to Afghanistan, Central Asia and Eurasia will be affected, and New Delhi's best hope is an early end to the conflict.