India & Israel have had a strong economic, military & political relationship since 1990s despite India’s earlier vote against the UN partition plan in 1947. An Israel opened a consulate in Bombay in 1983.In July 2017,PM Modi made a historic visit to Israel upgrading the relationship and signing agreements in R & D ,water, agriculture, counter-terrorism,& defense. The second Policy Planning dialogue occurred on May 29,2023.
As the India is the Israel third largest trade partner in Asia and seventh largest globally.
The continuous conflict between Hamas militants and Israel in recent days has likely highlighted in India’s Objective to play a bigger role in global trade. The recently declared complex trade corridor linking India to the Middle East and Europe may have fallen flat before it ever pierce wings.
Indian Israel trade:
The Israel –Hamas conflict is expected to have a short term impact on Indian exporters, particularly in the gems and jewellery sector . From 2022-23, India’s exports of petroleum products to Israel jumped 3.5 times to $5.5 billion, against $1.6 billion in the previous year. This increased India’s exports by 77% compared to the previous year, and the total trade between the two countries by 37%. Also in same year, India’s merchandise trade surplus of USD 2.3 billon, resulting in merchandise trade surplus of USD 6.1 billion .key Indian exports to Israel include diesel(USD 5.5 billion) & cut polished diamonds (USD 1.2 billion) the conflict may disrupt this trade relationship temporarily.
A major channel of impact on the global economy would be via oil prices which have already risen near to $90 level. Further growth of the conflict towards other Middle Eastern nations which are key oil producers poses a bigger threat and needs a very close watch given that the global economy is currently facing a heavier interest rate scenario.
As the crude oil prices surge, the threat of high rise grab the global economy again. The United States, India, China and other major economies are big importers of oil and can see high imported rise if the oil prices remain elated.
When oil prices rise, the cost of production for various industries and energy costs for businesses and households also surge, driving high rise.
Until now, there is no immediate impact seen in India’s trade with Israel due to the conflict in West Asia. However, it can create supply-side problems if the ongoing conflict will persist .
According to many experts it has been said that, there are more than 500 companies of Israel have their businesses in India as well as some of the remarkable Indian companies as such as “Tata Consultancy Services, Infosys, Wipro, Adani Ports, State Bank of India, Larsen & Toubro, Bharat Forge and Sun Pharma ”have business operations in Israel which may lead to downfall in there shares as of until now fluctuation in most of the company share were observed .
The Israel-Hamas conflict reminds us how connected global trade stable it’s a complex task, requiring diplomacy and flexibility in our fast-changing world so, therefore India’s trade future depends on it’s ability to navigate this interwined web of trade and diplomacy.
Image Source: Flickr
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