{"id":30336,"date":"2024-10-03T18:24:09","date_gmt":"2024-10-03T12:54:09","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=30336"},"modified":"2024-10-03T18:24:11","modified_gmt":"2024-10-03T12:54:11","slug":"how-a-direct-israel-iran-conflict-affects-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/03-10-2024\/how-a-direct-israel-iran-conflict-affects-india","title":{"rendered":"How a Direct Israel-Iran Conflict Affects India?"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/ International Relations<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rising tensions between Israel and Iran are escalating concerns about a regional crisis in the Middle East and posing significant risks to India&#8217;s economic stability.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Israel and Iran conflict has reached new heights recently with <strong>Israel\u2019s strikes on Hezbollah&#8217;s military infrastructure in Lebanon<\/strong>, culminating in the killing of key Hezbollah figures.\u00a0<\/li>\n\n\n\n<li>Hezbollah, closely aligned with Iran, retaliates on Israel, increasing the likelihood of a broader regional conflict.\u00a0<\/li>\n\n\n\n<li>The involvement of <strong>Iran-backed Houthi rebels in Yemen<\/strong> further complicates the situation, particularly for global trade routes.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Implications on India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Disruption in Trade Routes:<\/strong> A full-blown conflict could disrupt the crucial Red Sea shipping route, impacting global trade.\n<ul class=\"wp-block-list\">\n<li><strong>In August 2024, <\/strong>Indian exports fell by <strong>9%<\/strong>, largely due to the <strong>Red Sea crisis,<\/strong> with petroleum exports dropping by <strong>38%.<\/strong><\/li>\n\n\n\n<li>Indian exporters, especially in petroleum products, are facing increased shipping costs and reduced profitability, particularly in Europe, which accounts for <strong>21%<\/strong> of India\u2019s petroleum exports.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Energy Security Risks:<\/strong> India relies heavily on Middle Eastern oil and gas imports, despite increased purchases from Russia. A war could disrupt key shipping routes like the Strait of Hormuz and the Red Sea.\n<ul class=\"wp-block-list\">\n<li>The Strait of Hormuz is a critical choke point for <strong>LNG from Qatar<\/strong> and <strong>oil from Iraq and Saudi Arabia.<\/strong> Any disruption here could severely affect India&#8217;s energy flows.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Impact on Oil Prices: <\/strong>A full-scale conflict would likely drive up global crude oil prices, increasing inflation in India.\n<ul class=\"wp-block-list\">\n<li>A $10 increase in oil prices could push up India&#8217;s current account deficit by 0.3% of GDP, adding pressure on the economy.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Longer Trade Routes:<\/strong> Disruptions in the <strong>Suez Canal and the Red Sea<\/strong> have forced ships to detour around the <strong>Cape of Good Hope<\/strong>, increasing shipping costs by <strong>15-20%.<\/strong>\n<ul class=\"wp-block-list\">\n<li>This has particularly impacted labor-intensive industries such as textiles and engineering products in India, which rely on high-volume, low-margin exports.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Effect on India-Middle East-Europe Economic Corridor (IMEC):<\/strong> The conflict could hinder the development of IMEC, a critical project aimed at enhancing connectivity and trade between India and Europe.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Silver Linings<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Neutrality of GCC Countries:<\/strong> Despite the conflict, major Gulf Cooperation Council (GCC) countries like <strong>Saudi Arabia, UAE, Kuwait, and Qatar<\/strong> remain uninvolved, helping to keep trade with India relatively stable.<\/li>\n\n\n\n<li>India\u2019s trade with GCC countries increased by 17.8% between January and July 2024. Exports to Iran also <strong>grew by 15.2%<\/strong> during this period.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India needs to develop alternative trade routes and strategies to mitigate the risks posed by this conflict.\u00a0<\/li>\n\n\n\n<li>Building stronger ties with neutral players and diversifying energy imports will be crucial in maintaining economic stability during these uncertain times.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/israel-iran-conflict-red-sea-route-trade-disruption-silver-lining-india-9599299\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rising tensions between Israel and Iran are escalating concerns about a regional crisis in the Middle East and posing significant risks to India&#8217;s economic stability.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-30336","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/30336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=30336"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/30336\/revisions"}],"predecessor-version":[{"id":30337,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/30336\/revisions\/30337"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=30336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=30336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=30336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}