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,” a 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.
“With over 80% of crude imported, India is at increasing risk of collateral economic fallout from the Iran-Israel war,” said GTRI founder Ajay Srivastava. He added that energy security and commercial trade interests in the region now face “growing uncertainty”.
Daily oil monitoring, volatility persists
Petroleum Minister Hardeep Singh Puri said India is reviewing the global oil supply situation daily. “We have sufficient stocks,” he stated, amid growing anxiety over oil’s safe passage through the Strait of Hormuz—one of the world’s most crucial energy corridors.
The day Israel launched airstrikes on Iran, Brent crude surged 7%, briefly spiking over $4 per barrel before retreating. As of early Monday, Brent futures were up 0.86% at $74.87 per barrel, while WTI rose 1.04% to $73.74, reflecting continued volatility.
FTA push amid uncertainty
Despite the geopolitical headwinds, the Commerce Ministry said it is working to ensure higher Free Trade Agreement (FTA) utilisation rates. The UAE FTA, in particular, has already seen a strong uptake. Territorial divisions have been tasked with identifying gaps and improving utilisation metrics.
“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.
