Rising Israel-Iran conflict, India faces growing threats to its energy security, trade routes, and commercial ties: GTRI

NEW DELHI: The Indian Government should review energy risk scenarios, diversify crude sourcing and ensure strategic reserves of oil amid the ongoing conflict between Israel and Iran, according to a report by GTRI.

The Global Trade Research Initiative (GTRI) has warned that India, though not directly involved in the Iran-Israel conflict, cannot afford to remain complacent.

The report urged the Indian government to ensure that the country’s strategic oil reserves are sufficient to handle any possible crisis.

It stated, “India, though not a party to the conflict, cannot afford complacency. The government must urgently review energy risk scenarios, diversify crude sourcing, and ensure strategic reserves are sufficient”.

It further highlighted the need for stronger military preparedness in the Arabian Sea, especially around vital sea lanes and choke points.

Diplomatically, the report recommends that India should use international platforms such as the G20 and the United Nations to push for peace, de-escalation, and protection of global trade routes.

As tensions in West Asia rise, India faces growing threats to its energy security, trade routes, and commercial ties. The report states that the intensifying Israel-Iran conflict could have serious consequences for India’s economy.

India has major trade exposure with both nations. In FY2025, India exported goods worth USD 1.24 billion to Iran and imported goods worth USD 441.9 million. Trade with Israel is even larger, with USD 2.15 billion in exports and USD 1.61 billion in imports.

However, the bigger concern of India right now is energy. Nearly two-thirds of India’s crude oil and half of its LNG imports pass through the Strait of Hormuz, a narrow waterway now threatened by Iran.

The Strait of Hormuz, just 21 miles wide at its narrowest point, handles nearly one-fifth of global oil trade.

Since India depends on imports for over 80 per cent of its energy needs, any disruption here would lead to a sharp rise in oil prices, shipping costs, and insurance premiums.

GTRI stated that this could fuel inflation, weaken the rupee, and create challenges for the government’s financial planning.

In addition, the report mentioned that nearly 30 per cent of India’s westbound exports to Europe, North Africa, and the U.S. East Coast pass through the Bab el-Mandeb Strait.

This route is now also at risk. If shipping is forced to take the longer route around the Cape of Good Hope, transit times could go up by two weeks, and freight costs would rise significantly.

This would affect Indian exports such as engineering goods, textiles, and chemicals, and raise the cost of important imports.

The recent conflict arose when Israel launched “Operation Rising Lion” on June 13. Over 200 aircraft and Mossad-led drones attacked Iran’s military and nuclear sites.

Iran also launched more than 150 ballistic missiles and drone swarms on Israeli cities like Tel Aviv and Jerusalem.

Casualties are rising, GTRI stated that now, with U.S.-Iran nuclear talks cancelled, diplomatic efforts have broken down. Regional financial markets are also under pressure. (ANI)