Commerce Ministry to hold stakeholders’ meeting on impact of Israel-Iran conflict

Sunil Barthwal, Commerce Secretary
| Photo Credit:
cueapi

The Commerce & Industry Ministry will hold a meeting this week with representatives from various shipping lines, container firms, departments concerned and other stakeholders on the impact of the Israel-Iran conflict on businesses and address specific concerns.

“We are watching the situation. We are also calling a meeting this week of all the shipping lines, the container organisations and the departments concerned, and stakeholders to understand from them the kind of issues they are facing and how we can sort it out,” Commerce Secretary Sunil Barthwal said at a media briefing on Monday.

The steps to be taken would depend on how the situation unfolds, the Secretary added.

Israel’s attack on Iran last Friday and counterattacks by Iran have triggered worries about possible freight rate hike and trade route disruptions amongst Indian exporters and importers.

There is apprehension that the Red Sea route, which is vital for sending shipments to Europe, parts of the US and Africa, may be affected by the conflict and if there is an escalation and the Strait of Hormuz is shut down by Iran, things may worsen.

“Any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums — triggering inflation, pressuring the rupee, and complicating India’s fiscal management,” pointed out Ajay Srivastava, Founder, Global Trade and Research Initiative (GTRI).

Trade exposure

India has significant trade exposure to both warring nations with exports in FY2025 to Iran at $1.24 billion and to Israel at $2.15 billion. Imports from Iran and Israel in FY2025 were at $441.9 million and $1.61 billion, respectively.

However, more critical is India’s reliance on the region for energy, a GTRI analysis report pointed out. “Nearly two-thirds of India’s crude oil and half of its LNG imports pass through the Strait of Hormuz, which Iran has now threatened to close. This narrow waterway, only 21 miles wide at its narrowest point, handles nearly a fifth of global oil trade and is indispensable to India, which depends on imports for over 80 per cent of its energy needs,” the report said.

Although India is not party to the conflict, it cannot afford complacency, the report cautioned. “The government must urgently review energy risk scenarios, diversify crude sourcing, and ensure strategic reserves are sufficient. Military preparedness in the Arabian Sea, especially near choke points, must be enhanced,” it said.

At the diplomatic level, India should use multilateral forums such as the G20 and the United Nations to advocate for de-escalation and the protection of global trade corridors, the report added.