West Asian Conflict Disrupts $11.8 Billion in Indian Exports

A military conflict involving the United States, Israel, and Iran is disrupting Indian trade flows, particularly through the Strait of Hormuz. The crisis began on February 28 with a joint U.S.-Israel strike on Iranian territory that killed Supreme Leader Ayatollah Ali Khamenei, prompting Iranian retaliatory drone and missile attacks across several Arab countries.

The instability threatens 11.8 billion dollars of India's agricultural exports, according to the Global Trade and Research Initiative. High-dependence sectors include sheep and goat meat, fresh beef, and bananas. While non-basmati rice exports remain stable due to African demand, premium basmati rice is heavily exposed to the Gulf. The Indian Rice Exporters Federation has advised exporters to shift from Cost, Insurance and Freight (CIF) contracts to Free on Board (FOB) arrangements to manage rising insurance and freight costs.

Industrial sectors in Gujarat are also facing severe bottlenecks. In Surat, 70 percent of diamond shipments typically pass through Dubai, and ceramics hubs in Morbi warn of potential shutdowns if fuel supplies are severed. Additionally, handicraft exporters report a total halt in orders and payments. These disruptions affect trade not only in the Gulf but also extending to Europe and Singapore, threatening the livelihoods of thousands of workers across states including Punjab, Haryana, and Uttar Pradesh.