US, Israel-Iran Conflict Will Affect Different Sectors In India, Claims New Delhi-Based Thinktank
The Climate Trends said 40% of the total crude oil consumption of India, China, Japan, and South Korea affects energy consumption in these countries.
Published : March 2, 2026 at 9:01 PM IST
New Delhi: Amid the joint attack on Iran by the United States and Israel, a New Delhi based thinktank has claimed that the ongoing situation will have impacts in different sectors in India.
Climate Trends is a research-based consulting and capacity building initiative that aims to bring greater focus on issues of environment, climate change and sustainable development. It said, "US and Israel attacks on Iran, and subsequent counter-attacks have exposed a new wave of geopolitical risks. India, with its close ties with Israel and its historical relationship with Iran, is in a keenly watched situation".
"Given the impacts on the movement of ships across the Strait of Hormuz, the implications are quite stark if gas and oil supplies get hampered. Insurance pricing of shipping has risen by 50 per cent overnight. With oil price inflation, shipping insurance rise, and geopolitical risks looming, this is a clear period of shock and uncertainty," it said.
Mentioning the Strait of Hormuz, the Climate Trends said, "One of the world's most strategically critical maritime oil corridors, this passage links Middle Eastern oil exporters to global markets, a majority of them in Southeast Asia, and lies largely within Iranian territorial waters. 20-25 per cent of global crude oil supply runs through this crucial maritime passageway."
It said 40 per cent of the total crude oil consumption of India, China, Japan, and South Korea through the Strait of Hormuz, affecting energy consumption in these countries. According to reports, Iran has been relaying messages on VHF radio, warning ships that they will not be allowed to pass.
"India imports around 90 per cent of crude oil, and the conflict has put India at risk. After US pressure, restricting India from buying Russian Oil, India has tried to diversify its imports and pivoted more towards Gulf countries, exposing it to Hormuz-lined risks. India also imports crude from over 40 countries, helping it to change the mix of oil imports depending on prices," it said.
India 2.5-2.7 mbpd of India's crude oil imports, sourced largely from Kuwait, Saudi Arabia, Iraq and the United Arab Emirates, transit through this crucial passageway. The impact on India would be more price-driven and not volume-driven, it said. If Iran's 3.3 million bpd of production is disrupted, prices could rise by 9-15 per cent, pushing crude from a base of $70 per barrel to roughly $76-81, it said.
Supply chains of renewable energy and e-mobility materials are likely to be hampered since significant shipping traffic flows through the Strait of Hormuz, it added. Elevated oil costs also raise demand for dollars, which typically puts downward pressure on the rupee, it said.
The Climate Trends further said the impact then filters into domestic inflation, as costlier fuel drives up transportation, logistics and eventually food prices.
"Iranian Importers had placed orders for large quantities of basmati rice from India in the past two months before the war began. One-fourth, or 25 per cent, of India's total basmati rice exports to Iran, while 20 per cent go to Iraq, together amounting to over 2 million tonnes of basmati rice, valued at over 52 billion. Last year, India exported a total of $1.2 billion worth of basmati rice to Iran," it said.
It added, "The uncertainty surrounding the war in Iran will impact rice exports throughout Central Asia. There is a possibility that tea exports from India to Iran will also take a hit. In 2024-25, tea worth approximately Rs 7 billion was exported from India to the country."
In addition to that, it will impact on India's trade with the Middle East. "Countries in the Middle East that include Iran, Bahrain, Kuwait, Qatar and the United Arab Emirates) account for bilateral trade worth about $117.32 bon, with the UAE accounting for a major share of $100 billion," it said.
What experts say?
Dr A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC), has written to the Secretary, Ministry of Civil Aviation, Government of India, on the pressing problem arising out of the situation prevailing in the Middle East and West Asia due to the ongoing Iran-US conflict. Sakthivel has requested the waiver of demurrage charges on export cargo due to flight disruptions arising from the ongoing West Asian crisis.
In his representation to the Secretary, Ministry of Civil Aviation, he noted that "the prevailing situation has significantly disrupted international flight operations, resulting in route restrictions, airspace closures, flight diversions, schedule irregularities, and operational constraints at certain overseas airports".
"These unforeseen developments have directly impacted the timely movement of export cargo from Indian airports to various international destinations. As a consequence, export consignments are currently stranded at multiple airport cargo terminals across India. The delays are solely attributable to external and unforeseen factors beyond the control of exporters, customs brokers, freight forwarders, or air cargo agents," he added.
Under the existing tariff structure of Cargo Terminal Operators (CTOs), demurrage charges become applicable when cargo remains in terminal facilities beyond the stipulated free period. However, the present circumstances constitute an exceptional and unavoidable disruption in the global air logistics chain. Imposition of demurrage in such cases would place an undue financial burden on exporters who are already facing shipment delays, contractual uncertainties, and market-related challenges, he noted.
Dr Sakthivel has urged the Directorate General of Civil Aviation (DGCA) to consider issuing suitable instructions to Cargo Terminal Operators to grant a waiver of demurrage charges on export consignments that could not be lifted due to flight disruptions, airspace restrictions, or related operational constraints arising from the ongoing international developments.
He added that such an intervention would provide much-needed relief to the exporting community and help sustain confidence and continuity in India's air cargo trade during this challenging phase.
Pankaj Chadha, Chairman, Engineering Export Promotion Council of India (EEPC), India, said, "The ongoing war involving the US-Israel and Iran is quite worrying for the exporting community. As far as engineering goods are concerned, Saudi Arabia and the UAE are among our key markets. Moreover, they act as a gateway to our exports to the WANA region. It seems the war is escalating, which could not only disrupt engineering exports to this region but may also affect some of the trade routes."
"As has been indicated by many experts in geopolitics, the Strait of Hormuz, through which 20% of global oil flows, could be blocked. This will not only lead to a spike in energy prices but also push up freight costs significantly. We have already been reeling under tariff pressure from the US and the after-effects of the Russia-Ukraine war. The latest development adds to our concerns and may affect our exports badly," he said.
Chadha added, "The reports over the last two days show that the war is widening and could potentially cover the entire West Asia and the Middle East. In case the current situation prolongs, it will have a huge negative impact on the engineering sector. It threatens to erode our competitiveness as a result of logistics and insurance costs going up. The overall situation seems very volatile. Trade disruptions to this region, especially the UAE and Saudi Arabia, mean a substantial impact on our shipments."
He said all the factors combined are set to increase input cost, thus putting further strain on our revenue and profitability. S C Ralhan, President Federation of Indian Export Organisations (FIEO) asserted that the ongoing conflict has already begun to disrupt established global logistics channels.
"Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces heightened uncertainty. If diversions become prolonged, shipments may increasingly have to reroute via the Cape of Good Hope, adding an estimated 15–20 days to transit time for Europe and the United States," said Ralhan, President FIEO. "This will inevitably raise freight costs and stretch supply chains," he said.
Ralhan added, "In addition, heightened geopolitical risk typically results in higher marine insurance premiums, further adding to transaction costs for exporters. A prolonged disruption could also exert upward pressure on global energy prices, with consequential implications for input costs and currency stability, including pressure on the Rupee."
He opined that while Indian exporters have demonstrated resilience in navigating past disruptions, sustained instability in these critical trade corridors would warrant close monitoring and calibrated policy support to maintain competitiveness.
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