Israel’s war in Gaza with Hamas, the Palestinian militant group, is unlikely to have any impact on its trade with India unless the situation escalates, industry sources said.
“Currently, we can see no impact in India’s trade due to the eruption of the conflict in Israel. However, if it escalates, there may be problems,” Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO) said on Tuesday.
In case of escalation Sahai said there could be an impact on logistics due to increased freight costs and insurance, which could make trading difficult especially for smaller firms.
There are also concerns that prolonged conflict could result in a stronger US dollar, which could be detrimental to trade.
Trade ties between India and Israel have been rising over the past decade, with a spike in 2022 when Israel became India’s fourth-largest destination for export of auto fuel.
India’s merchandise exports to Israel stood at $8.4bn while imports were $2.3bn in financial year 2022-23, as per official data.
India’s major exports to Israel include automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textile and apparel, transport equipment, and agricultural products.
India primarily imports defence machinery, fertilisers, electrical equipment and transport equipment.
While India’s merchandise trade with Israel happens mainly through the Eilat port on the Red Sea, trade may be seriously impacted if operations at the three largest ports in Israel are disrupted due to the conflict.
Currently, the ports of Haifa, Ashdod and Eilat handle shipments in agricultural products, chemicals, machinery, vehicles and the like.
The Haifa port which is operated by Adani Ports is one of Israel’s major seaports and is responsible for most of the country’s imports and exports.
The company is closely monitoring the action on the ground, Adani Ports said in a statement on 9 October.
“We are closely monitoring the action on ground which is concentrated in south Israel, whereas Haifa port is situated in the north. We have taken measures to ensure the safety of our employees and all of them are safe. We remain fully alert and prepared with a business continuity plan that will enable us to respond effectively to any eventuality,” it added.
Activities at Haifa port contribute around 3% of the total cargo volume of Adani Ports operations, it said, adding that in the first two quarters of the current financial year, the company’s total cargo volume at all its ports was close to 203m tonnes, of which Haifa’s share was around 6m tonnes.
“For the current financial year, we have guided for Haifa cargo volumes range of 10-12m tonnes and Adani Ports’ total cargo volume guidance is of 370-390m tonnes,” it added.
