The Commerce Ministry on Monday said it is too early to fully assess the impact of the escalating Iran-Israel conflict on India’s trade. Officials indicated they will closely monitor the situation and hold consultations this week with shipping lines, container associations and relevant ministries.
“Currently, reports suggest issues in the Strait of Hormuz and Red Sea,” ministry official noted, adding that long-term freight contracts might hold steady in the short term but could be impacted if tensions continue.
Exporters are bracing for a rise in freight rates and disruptions in trade with Europe and Russia as a direct fallout of the conflict. The Federation of Indian Export Organisations (FIEO) warned on Sunday that the war could aggravate global economic uncertainties and sharply increase air and sea freight charges.
“Movement of merchant ships will be impacted in the Red Sea and Strait of Hormuz,” FIEO said, pointing out that longer conflict duration could also trigger higher insurance costs and commodity price fluctuations.
GTRI calls for energy risk review
The Global Trade Research Initiative (GTRI) has urged the Indian government to prioritise reviewing energy risk scenarios in light of the worsening situation in West Asia. The think tank said India should diversify its crude oil sources and ensure adequate strategic reserves to offset potential supply shocks.
“Preferential duty access and certificate of origin usage will decide the pace of FTA traction in these uncertain times,” an official said, underlining India’s twin strategy of hedging risk and expanding preferential trade routes.