Iran-Israel war: Govt to meet stakeholders to assess trade impact

Commerce Secretary Sunil Barthwal said that the impact of the war on India's trade will depend on how the situation unfolds over a period of time

The commerce department is monitoring the Iran-Israel conflict and will meet shipping lines, container firms, and other stakeholders later this week to evaluate the impact of hostilities on trade, Commerce Secretary Sunil Barthwal said on Monday. 

 

“We are calling a meeting of all the shipping lines, container organisations, and the departments concerned to understand from them the issues they are facing and how we can sort them out,” he said, adding that there would be clarity on the impact of the conflict, depending on how the situation unfolds.

 

Exporters have flagged the issue that the conflict will result in disruption and escalate freight costs. Nearly two-thirds of India’s import of crude oil and half its inbound shipment of liquefied natural gas 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 Delhi-based think-tank Global Trade Research Initiative (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.

 

Meanwhile, Israel’s June 14-15 strike on the Houthi military leadership in Yemen has heightened tensions in the Red Sea region, where Houthi forces have attacked commercial shipping.

 

For India, this poses another risk. Nearly 30 per cent of India’s west-bound exports to Europe, North Africa, and the United States east coast travel through the Bab el-Mandeb Strait, now vulnerable to further disruption, the GTRI has said.

 

Indian export consignments gradually started moving through the Red Sea route but now again they may be impacted.  With inputs from PTI