Mumbai: The ongoing conflict between Iran and Israel is beginning to show a ripple effect on the Indian economy, with a noticeable rise in prices of essential commodities, travel, and exports.
According to Shankar Thakkar, National Secretary of the Confederation of All India Traders (CAIT) and President of the All India Edible Oil Traders Federation, the geopolitical tensions have already caused a 7% to 8% hike in edible oil prices across the country. The rise in crude oil prices is a major contributor to this inflation, affecting both imported and domestic oil markets.
“Palm oil has jumped from ₹1,110 to ₹1,180 per 10 kg, soybean oil from ₹1,130 to ₹1,200, and sunflower oil from ₹1,300 to ₹1,350. Domestic oils like groundnut and mustard have also seen sharp increases,”said Thakkar.
Air Travel Disrupted, Fares Up by 20%
The war has also severely disrupted international air travel. With multiple countries — including Iran, Iraq, Israel, Jordan, and Syria — closing their airspace, flight paths have been rerouted, leading to flight durations increasing by 2 to 4 hours. As a result, airfares have risen by 15% to 20% on key international routes, with some sectors already witnessing a 12% to 15% increase prior to this.
Shipping and Trade Routes Under Stress
The maritime sector is facing similar challenges. Sea freight rates have surged by up to 50%, with additional concerns over rising insurance costs. Exporters fear a sharp decline in outbound trade, especially to Europe and Russia. India conducts 80% of its European trade via the Red Sea and 34% of its total exports through the Red Sea and Strait of Hormuz, both of which are now at risk.
If the conflict persists, crucial trade routes like the Hormuz Strait and Red Sea may become highly volatile, potentially delaying shipments by 15–20 days and inflating costs.
Basmati, Tea Exports in Trouble
India’s Basmati rice exports to Iran, which were valued at ₹6,734 crore last year, are now in limbo. With the standoff intensifying, exporters have halted shipments, and domestic Basmati prices may drop by 10% to 15%. The tea industry also anticipates setbacks in the coming weeks.
Government Monitoring Situation
The Indian government is assessing the evolving situation and is holding discussions to protect export sectors. Priority is being given to safeguarding trade with the UAE, Saudi Arabia, Qatar, Kuwait, Oman, and Israel.
As global tensions escalate, the economic impact is beginning to weigh heavily on Indian markets, with prices, logistics, and international trade all feeling the heat of the distant war.