West Asia war escalation may push logistics cost; disrupt, oil, electronics agri trade: Exporters

War effects: escalation of conflict in West Asian region is expected to push alrey high logistics costs besides hurting tre in sectors such as oil, electronics, and agriculture, according to exporters.

y said that insurance costs for exports to countries directly involved in war could also go up, which would impact Indian exporters' working capital.

Think tank Global Tre Research Initiative (GTRI) stated that conflict is alrey hurting India's tre with countries like Israel, Jordan, and Lebanon.

Federation of Indian Export Organisations (FIEO) said Iran-Israel conflict has potential to significantly impact world tre and global economy in several ways.

"Iran is a key player in oil market. Any escalation in conflict could disrupt oil supplies, leing to higher prices, which would impact global economies, especially those reliant on oil imports. Oil prices have alrey moved up by USD 4 per barrel," FIEO DG Ajay Sahai said.

Expressing concerns, he said increased tensions could destabilize Middle East, affecting tre routes like Strait of Hormuz, through which a significant portion of world's oil passes.

"Disruptions could le to higher shipping costs and delays. Many global supply chains depend on stability of Middle East. Conflict could disrupt transportation and logistics, affecting industries ranging from electronics to agriculture," Sahai said.

Furr, if Western world would put sanctions or tre restrictions, it would complicate global tre dynamics, he said ding "Overall, conflict could le to increased volatility in global markets".

Hand Tool Association Chairman S C Ralhan said orders to se countries will be on hold and grually it will be "very risky and difficult" to do tre in this region. "Insurance costs will go up or even we may not get any insurance cover in that region," Ralhan said. During January-July 2024, India's tre with countries directly impacted by conflict has faced significant challenges.

"Exports to Israel dropped sharply by 63.5 per cent, Jordan saw a 38.5 per cent decline due to spillover effects, and Lebanon experienced a 6.8 per cent decrease," GTRI Founder Ajay Srivastava has said.

Israel-Hamas war, which erupted in October 2023, has now extended to Lebanon, and Syria, and is indirectly impacting Jordan and Iran.

Key regional players like Saudi Arabia, UAE, Kuwait, and Qatar have thus far remained uninvolved in conflict. India's exports to Israel stood at USD 639 million during April-July this fiscal. It was $4.52 billion in 2023-24. Imports from Israel were USD 469.44 million during first four months of this fiscal. It was $ 2 billion in 2023-24.

India's exports to Iran stood at $538.57 million during April-July this fiscal. It was $1.22 billion in 2023-24. Imports from Iran were $140.69 million during first four months of this fiscal. It was $625.14 million in 2023-24. Similarly, country's exports to Jordan stood at $228.56 million during April-July this fiscal. It was $1.46 billion in 2023-24. Imports from Jordan were $699.28 million during first four months of this fiscal. It was $1.4 billion in 2023-24.

India's exports to Lebanon stood at $116.86 million during April-July this fiscal. It was $344.91 million in 2023-24. Imports from that country were USD 39 million during first four months of this fiscal. It was USD 113 million in 2023-24. India's major items of exports to West Asian countries include basmati rice, man-me yarn, fabrics, gems and jewellery, cotton yarn, and fabrics.

India is Israel's second-largest tring partner in Asia. Though bilateral merchandise tre is dominated mainly by diamonds, petroleum products, and chemicals, recent years have witnessed an increase in tre in areas such as electronic machinery and high-tech products, communications systems, and medical equipment.