Trade With Iran, Israel Threatened Of Disruption, Freight Rates May Go Up
As per the official trade data, in FY2025, India exported goods worth $1.24 billion to Iran and imported $441.9 million in return
CHENNAI: India’s over $5.4 billion official trade as well as indirect trade with Iran and Israel are at stake with the tensions between the countries continuing relentlessly. The shipment of crude and LNG through Strait of Hormuz is also threatened to be disrupted, while the freight rates and premiums may go up.
As per the official trade data, in FY2025, India exported goods worth $1.24 billion to Iran and imported $441.9 million in return. Indian exports to Iran stood at $5.43 billion in 2013. However, due to the US sanctions against the country, the direct exports to the country had been coming down.
“Several products are going to Iran through Dubai. Hence the actual exports should be much higher. The conflict in the region will hurt Indian exports. Engineering goods as well as metals, including steel and aluminium have significant exposure in Iran,” said Pankaj Chadha, chairman, Engineering Export Promotion Council.
Some of the other important categories shipped to Iran include cereals, animal fodder, fruits, coffee, tea and spices, machinery, and pharmaceutical products.
Similarly, trade with Israel is also substantial, with $2.15 billion in exports and $1.61 billion in imports. The items exported by India to Israel include polished diamonds, jewellery, consumer electronics and engineering goods. Arms and ammunition imported from Israel are excluded from the trade figures.
“But more critical than these bilateral flows is India’s reliance on the region for energy. Nearly two-thirds of its 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,” said Ajay Srivastava, founder. GTRI.
The disruption can disturb the supply chain of crude, LNG, and fertilizers, eventually leading to higher inflation.
Further, the freight rates will increase as ships will have to take a diversion to and from different geographies. The increased freight charges and insurance premiums will increase the price of every product shipped through and from the region.
