The Israel-Iran conflict threatens to disrupt India's plan to upgrade the Chabahar port in Iran.
India signed a 10-year contract with Iran in May to develop the Shahid-Behesti terminal at the port, which provides an alternative route for goods to reach Iran, Afghanistan and Central Asia, bypassing the Karachi and Gwadar ports in Pakistan.
However, the escalating conflict raises concerns about the port's security and operational viability.
Any disruption to the port's operations could have significant economic and geopolitical consequences for India.
In addition to the potential impact on Chabahar, the conflict has also led to a surge in crude oil prices.
As a major importer of oil, India is particularly vulnerable to price increases. Higher oil prices could impact various sectors of the Indian economy.
Biswajit Dhar, acting president and distinguished professor, Council for Social Development, said “in any conflict strategic interest areas are bombed and with Iran joining the issue, India should be closely monitor the development in Chabahar port. It is a significant gateway for India’s exports and would help in garnering less tapped market in the Central Asian Republics.”
“The Modi government, given its strategic and humanitarian interest in the West Asian region, could play a larger role in de-escalating tensions and let diplomacy do the talking than war-heads.”
Ram Singh professor, and head, Indian Institute of Foreign Trade, said: “The escalation in conflict in the region would have five immediate impacts — a spike in crude prices which would impact the Indian economy, disruption in trade and logistics costs going up, airspace diversion adding to the risk and cost and Indian products becoming costlier and losing its competitiveness and Chabahar Port and its impact needs to closely follow.”
“The Iran-Israel conflict has the potential to significantly impact world trade and the global economy . Iran is a significant player in the oil market. Any escalation in conflict could disrupt oil supplies, leading to higher prices, which would impact global economies, especially those reliant on oil imports," the director-general of Federation of Indian Exports Organisations (Fieo) said.
"Oil prices already moved up by $4 per barrels, raising our oil bill. Disruptions could lead to higher shipping costs and delays compounding the logistics challenges for exports."