If the Strait of Hormuz is shut down by Iran, as is being feared, things may worsen and India’s oil supplies, too, will be hit.
| Photo Credit:
Hamad I Mohammed
With the US entering the Israel-Iran war with its strikes on Iran’s key nuclear sites, Indian exporters and importers have turned more jittery as retaliation by Tehran could increase transit risks in the region and destabilise global trade further.
The Commerce & Industry Ministry is continuing to closely watch the situation as it develops and is in touch with stakeholders to take appropriate action when required, especially if there is a wider regional escalation, a source tracking the matter said.
“For India, this is a moment of high stakes—demanding its most delicate diplomatic balancing act yet to safeguard core interests and steer clear of entanglement in a spiralling global conflict,” pointed out Ajay Srivastava from GTRI.
Geopolitical developments, such as the US strikes on Iran, have the potential to create uncertainty in global trade, particularly in terms of logistics, insurance costs, and regional supply chain disruptions, said Ajay Sahai, Director General, Federation of Indian Export Organisations.
“While it’s too early to assess the full impact, such tensions often lead to increased volatility in oil prices, currency movements, and shipping routes—all of which are relevant to exports,” Sahai told businessline.
Developing situation
The Commerce Department, held a meeting with stakeholders, including shipping lines and air cargo operators, on Friday.
“It is a fast developing situation. Things have become more volatile after the US entered the war. One doesn’t know what Iran will do in retaliation and how things will pan out. The government is keenly watching the developments and is in touch with all stakeholders,” the source said.
At the moment, there is not much the government could do in terms of addressing the situation, said Pankaj Chadha, Chairman, EEPC India. “We are all just hoping that the war does not expand,” he added.
Exporters and importers are apprehensive that the Red Sea route, which is used for connecting with Europe, many African countries and parts of the US, may be affected by the conflict. If the Strait of Hormuz is shut down by Iran, as is being feared, things may worsen and India’s oil supplies, too, will be hit.
While India’s trade with Iran has gone down to about $1.7 billion over the years due to the US sanctions on oil and is not a very significant part of the country’s total trade, New Delhi’s main worry is about protecting its investment in the Chabahar port. The port, once fully developed, would provide connectivity to Afghanistan and Central Asia, bypassing Pakistan, and help India develop its ties with the region.
A wider regional escalation could threaten India’s much larger trade with the broader West Asian region — including Iraq, Jordan, Lebanon, Syria, and Yemen — where Indian exports total $8.6 billion and imports stand at $33.1 billion, said Srivastava.
“Any disruption to shipping lanes, port access, or financial systems in this corridor would severely impact India’s trade flows, inflate freight and insurance costs, and introduce fresh supply chain risks for Indian businesses,” he added.
Published on June 22, 2025