India-West Asia trade is, however, being affected by the increased tension between Iran and Israel. Exporters are experiencing delays, and some goods are already on hold due to the persistent insecurity. Another significant issue is the Strait of Hormuz, a narrow waterway through which 60 to 65 percent of India's crude oil imports pass. As the U.S. attacks Iran's facilities, namely through air attacks, its nuclear program, the security in this critical route has become of high risk.
The Global Trade Research Initiative (GTRI) believes that any additional escalation in the region around the Strait of Hormuz will pose a risk to India's energy supply. The use of higher shipping costs, higher insurance premiums, and longer delivery times would put pressure on both exporters and importers. The security situation is also affecting trade between India and other countries in West Asia, including Iraq, Syria, Jordan, and Yemen.
India exported to Iran to the extent of $ 1.24 billion in FY25. Some of the most traded products include Basmati rice, tea, soy meal, bananas, and Bengal gram. Iranian imports reached a level of $ 441.8 million. Traders, however, are now hesitant to place new orders due to the instability. In the same way, the export of India to Israel was at 2.1 billion, and the import to Israel was ($1.6 billion). Companies that have continuous shipments are reviewing their risk exposure.
The war threatens perishables such as fruits and tea, which are products susceptible to shipping delays and rerouting. According to GTRI, exporters of agricultural products may experience losses if transportation routes are unreliable or expensive.
Besides the Hormuz threats, the human rebels of Houthi have also wreaked havoc in their strikes in the Red Sea area already. Commercial vessels accessible to this channel have been under threat since the end of 2023, particularly those bound for Europe and the United States. Approximately 30 percent of the world's total container traffic is handled in the Red Sea, providing further evidence of its significant impact.
In West Asia, India's exports total approximately $ 8.6 billion, while imports amount to $ 33.1 billion. The growth in Indian trade remains uncertain, as shipping routes worldwide are already strained. Global economic integration is moving in reverse gear, and the World Trade Organisation recently revised its forecasts on world trade to a 0.2 percent decline in 2025. The increase in geopolitical tension and congestion of logistic corridors can also reduce the pace of India's recovery in exports and energy security.