Israel-Hamas War: India's Trade Unlikely To Be Impacted

India's merchandise trade with Israel is limited, and the war with Hamas is unlikely to have an impact unless it escalates.

India enjoys a positive balance of trade with Israel. Between April and June, exports to Israel amounted to $1.4 billion, making up 1% of all merchandise exports. In the last financial year, exports to Israel were at $8.5 billion, making up 1.9% of merchandise exports.

In the April–June period, merchandise imports from Israel were at $0.9 billion, or 0.5% of all merchandise imports. In the last fiscal, imports were at $2.3 billion, accounting for 0.3% of India's merchandise imports.

India is Israel's second-largest trading partner in Asia and the seventh-largest globally, according to the Indian embassy in Israel.

Though bilateral merchandise trade is dominated mainly by diamonds, petroleum products, and chemicals, recent years have witnessed an increase in trade in areas like electronic machinery and high-tech products, communications systems, and medical equipment.

In scenarios like war, exporters trading with the war-hit country have to pay higher insurance premiums and shipping costs. However, unless the war escalates, India is unlikely to see a hit, according to Prahalathan Iyer, former chief general manager at the Export-Import Bank of India.

Cumulative overseas direct investment from India during April 2000 to August 2023 was $383 million, according to the Department of Economic Affairs.

Indian companies are marking their presence in Israel through mergers and acquisitions and by opening branch offices, the Indian embassy said.

IT companies like Tata Consultancy Services Ltd., Infosys Ltd., Tech Mahindra Ltd., and Wipro Ltd. have made acquisitions or investments in Israel, while the State Bank of India operates a branch in Tel Aviv. Saisanket Enterprises Pvt., Sun Pharmaceutical Industries Ltd., Jain Irrigation Systems Ltd., and the Lohia Group

In December 2022, Adani Ports and Special Economic Zone Ltd. made an investment in Haifa Port Co. through a partnership with Israel's Gadot Group, which won the tender for privatising the port.

Brent crude oil prices rose by more than $4 a barrel to $86.96 as political tensions across the Middle East increased because of the war. However, unless the war escalates and pushes up crude oil prices, at this stage, India is unlikely to take a hit, according to Teresa John, economist at Nirmal Bang Institutional Equities.

India is largely considered a neutral power and enjoys good relations with Israel and even countries like Iran, John said.