The ongoing conflict in the West Asia , confined mainly to the Gaza region now, has caused only negligible disruption in India’s trade so far, according to Crisil Ratings.

“Some sectors, such as fertilisers and diamonds — both cut and polished — may see a slight, but manageable, impact, while for most others, the impact will be insignificant. But the conflict has driven up the prices of gold and crude oil. Their trajectories will bear watching, especially crude oil, given India’s high dependence on its imports,” Crisil said in a report.

Cascading impact

Also, elevated crude oil prices have a cascading impact on a host of other sectors that consume the oil itself or linked raw materials. India’s trade with Israel is relatively low, accounting for 1.9 per cent of total exports and 0.3 per cent of total imports last fiscal. The merchandise exports mainly comprise polished diamonds and petroleum products, including refined hydrocarbons, while the imports largely comprise industrial equipment, fertilisers, rough diamonds, and precious stones.

For domestic diamond polishers, Israel is primarily a trading hub. Exports to the country were 5 per cent of total diamond exports from India last fiscal. Additionally, 2 per cent of all roughs imported are from Israel. Polishers also have alternative trading hubs, such as Belgium and the United Arab Emirates, with ultimate customers based in the US and Europe. Israel is a major global producer of muriate of potash (MoP) and among the top three countries that India imports from, accounting for ~25% of all MoP imports last fiscal.

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