Israel-Iran war to have limited impact on Indian economy:Iranian imports to India down 25x in 7 years

Rising conflict in West Asia has forced India to consider many factors as to how the war is going to impact its economy. While, there is no doubt that trade has already been impacted in the Middle East region, but, considering the fact that the share of Israel and Iran in India’s total global trade is less than 1%, the impact of US-Israel-Iran war will not be much on the Indian economy, at least for now. Albeit, experts say that while the ongoing conflict in the Middle East might not immediately cripple India’s foreign trade, there are serious risks to watch out for. A retired economics professor from Magadh University, Qamar Ahsan, points out that trade between India and Iran is already low due to existing sanctions. It’s only a tiny fraction (0.15%) of India’s total foreign trade, mainly involving agricultural goods. So, the direct impact of the war itself might be limited. Key Oil Route at Risk However, the big worry is the Strait of Hormuz. This is a crucial sea route through which India gets most of its oil. If this route is blocked, India could face major problems getting the oil it needs. Air Traffic and Trust Issues The conflict has also disrupted air travel in the region, affecting revenue of airline companies. Furthermore, India risks losing its trusted position among Middle Eastern countries, which could harm future partnerships and trade deals. Remittances and Energy Prices Could Take a Hit Professor Venkatesh Athreya from Bharathidasan University adds that while the direct trade impact might be small, disruptions to air and sea traffic will hurt. If the situation remains unstable, money sent home by Indian workers in the Middle East could decrease. Also, rising global energy prices due to the war will negatively impact the Indian economy. In short, while the immediate trade impact might be manageable, India needs to be prepared for potential disruptions to oil supplies, air travel, and financial flows due to the escalating Middle East conflict. What India imports from Iran? India’s imports from Iran have shifted significantly in recent years. While historically a major supplier of crude oil, India’s imports today are dominated by organic chemicals, petroleum products, and agricultural goods. What India exports to Iran? India’s exports to Iran are dominated by agricultural products, particularly basmati rice, which accounts for roughly 60% of its total export value to the country. India-Iran Total Trade Has Fallen 8 Times After Trump Imposed Sanctions In 2018-19 India’s exports to Iran more than halved after Trump imposed sanctions in 2018-19 India’s exports to war-torn Iran more than halved from 2018-19 to 2024-25. The US President Donald Trump imposed sanctions on Iran during his first presidential term in 2018-19. During this 7-year period exports fell 57% to ₹10,497.54 crore in FY25 from ₹24,460.96 crore in FY19. Iranian imports have fallen 25 times since FY19 While, imports reduced even more drastically by a massive 25 times from ₹94,112.97 crore in 2018-19 to ₹3,747.32 crore in 2024-25. India-Israel trade size shrink 43% YoY in FY25 as compared to the previous year Aggregate trade between India and Israel fell over 43% Year-On-Year (YoY) to ₹30,711.33 crore in FY25 from ₹54,081.05 crore in FY24. Tel Aviv accounted for 0.31% of India’s total global trade of ₹98,01,621.90 crore in fiscal 2025. This share has also shrinked consecutively in last two years. Trade size shrinks in last 5 years: The size of bilateral movement of goods and services between the countries has also shrinked during the 5-year period from FY21 to FY25. India has positive trade balance with Israel Nevertheless, New Delhi has a positive trade balance with Tel Aviv. Former being net exporter of goods from the latter. India’s exports to Israel exceeds imports. The Jewish country is one of those nations, with which India has a positive trade balance. New Delhi’s exports to the Jewish country halve in FY25 as compared to previous year India’s exports to Israel halved to ₹18,169.79 crore in FY25 from ₹37,482.05 crore in FY24. The latter accounted for a 0.49% share in the former’s total exports of ₹37,03,412.02 crore in fiscal 2025. Exports of goods and services from New Delhi to the Jewish country have also largely reduced in the last five years. India’s imports from Israel fall 24% YoY in FY25 New Delhi’s imports from Tel Aviv fell 24% YoY to ₹12,541.54 crore in FY25 from ₹16,599.00 crore in FY24. Out of the former’s total imports of ₹6,098,209.88 crore, the latter’s share stood at 0.21% in FY25. Share of Israeli imports to India’s total trade has continuosly fallen in last five years. What India exports to Israel? India’s primary exports to Israel are led by polished diamonds, precious stones, refined petroleum, electronics, and machinery. Other significant exports include organic chemicals, textiles, agricultural products (spices, tea), and defence equipment/components What New Delhi imports from Tel Aviv? India primarily imports high-tech electronics, defence equipment, agricultural fertilizers, and rough diamonds from Israel. Key imports include advanced defense systems, communication devices, medical apparatus, and chemicals. Israel serves as a critical supplier of military hardware and technology for India’s defence and agricultural sectors.