Rising tensions in the Middle East could also impact India’s economy. Significant concerns have emerged regarding energy, trade, and maritime routes, which could impact the common man.
ईरान से आता था सूखे मेवे, सेब और कीवी, चावल से तेल तक जंग की वजह से होगा महंगा
What does India buy from Iran? The impact of rising tensions in the Middle East is not limited to that region, but is felt throughout the global economy. Iran’s retaliatory actions following Israeli and US attacks have exacerbated the situation. Following the death of Iran’s Supreme Leader in these actions, the situation has steadily deteriorated. Therefore, it is important for India to understand what it imports from Iran and which commodities could face price increases in the event of war.
Why is Iran important for India?
India and Iran have a long-standing relationship. The two countries established formal diplomatic relations in 1950. Trade relations strengthened further after the 1970s. Despite US sanctions, the two countries have repeatedly adopted alternative payment systems, including the rupee-rial system.
Iran is a vital country for India in terms of energy, maritime trade routes, and access to Central Asia. Consequently, India has invested in Iran’s Chabahar port, a strategic route for transporting goods to Afghanistan and Central Asia.
What does India import from Iran?
- Crude Oil
Iran was once a major oil supplier to India. Imports decreased after US sanctions, but disruptions in Iranian supplies to the global market could lead to a rise in international oil prices. This directly impacts India’s petrol and diesel prices.
- Petrochemicals and Chemical Products
India also imports certain petrochemicals and industrial chemicals from Iran. These are used in the plastics, fertilizers, pharmaceuticals, and manufacturing sectors. A disruption in supply could increase production costs.
- Dried Fruits and Fruits
Pistachios, dates, saffron, and some other dried fruits are imported from Iran. Fruits like apples and kiwis are also imported. These prices could rise if the supply chain is disrupted due to the war.
- Glass and Other Industrial Goods
Certain glassware and industrial products also come to India from Iran. While the impact may be limited, the rise in prices could impact small industries.
Oil Supply and the Threat of the Strait of Hormuz
A significant portion of India’s energy security is linked to the Gulf region. The Strait of Hormuz is one of the world’s most important oil routes. A significant portion of India’s crude oil imports come through it. Analysts estimate that disruptions to this sea route could impact up to 50% of India’s monthly imports. This could increase the price of oil in the international market and India’s import bill.
Increased Shipping and Insurance Costs
Increased tensions in the Middle East increase risks in the Red Sea Corridor and surrounding maritime routes. Ship insurance becomes more expensive, and freight costs increase. This impacts not only oil but also other imports and exports. Rising logistics costs could make India’s exports more expensive, impacting its competitiveness in the global market.
Direct Impact on Common People
If the tensions persist, they could impact prices of petrol and diesel, cooking gas, airfare, transportation costs, edible oils, packaged goods, dried fruits, and imported fruits. Energy costs increase costs in almost every sector, potentially leading to inflation.
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