Iran-Israel conflict can threaten India’s trade momentum, but exporters express hope to stay resilient amid rising costs

The Federation of Indian Export Organisations (FIEO) is anticipating a short-term impact on demand and logistics due to the ongoing Israel–Iran conflict. The government and industry are jointly monitoring developments to ensure minimal disruption, says S. C. Ralhan, President, FIEO.

“While geopolitical tensions in the Middle East, including the ongoing Iran–Israel conflict, pose certain challenges to global trade dynamics, India’s export sector remains resilient and adaptive. Our trade with both Iran and Israel, while important, constitutes a small share of our overall export–import basket,” he said.

FIEO expects some short-term impact on demand and logistics—particularly in the Gulf region, which serves as a crucial hub for Indian exports. The apex body of Indian exporters foresees increased shipping costs, longer transit times, and rising marine insurance premiums adding pressure, especially in price-sensitive sectors due to the conflict.

According to Ralhan, Indian exporters have time and again demonstrated agility in re-routing shipments, diversifying markets, and managing financial exposures. The robust base of MSMEs and large-scale exporters, coupled with strong government support mechanisms, will help cushion any near-term shocks, he said.

While crude oil price volatility can influence both inflation and logistics costs, FIEO relies on India’s diversified energy procurement strategy and the Reserve Bank’s proactive stance to help maintain liquidity and macroeconomic stability.

“Overall, while there are temporary headwinds, we see this as an opportunity for Indian exporters to explore alternate routes, strengthen regional partnerships, and consolidate India’s role as a reliable trade partner in uncertain times. FIEO is committed to supporting exporters with timely guidance, market intelligence, and policy advocacy to ensure continued momentum in our global trade journey,” Ralhan said.

Meanwhile, Delhi-based think tank Global Trade Research Initiative (GTRI) points out that while the immediate impact on bilateral trade with Iran and Israel amounts to $1.2 billion in exports and $441.8 million in imports with Iran, and $2.1 billion in exports and $1.6 billion in imports with Israel, 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.