India’s trade with Israel and Iran
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Context:
- Iran's recent attack on Israel has raised tensions in the Middle East and beyond, prompting India, which maintains friendly ties with both nations, to express "serious concerns" about the potential escalation of hostilities.
India-Israel Trade Dynamics:
- Bilateral trade between India and Israel has experienced significant growth over the past five years, doubling from $5.56 billion in 2018-19 to $10.7 billion in 2022-23.
- India's exports to Israel, valued at $8.45 billion, include products such as diesel, diamonds, aviation turbine fuel, radar apparatus, Basmati rice, T-shirts, and wheat.
- Imports from Israel amounted to $2.3 billion, consisting of space equipment, diamonds, potassium chloride, mechanical appliances, turbo jets, and printed circuits.
Foreign Direct Investment (FDI) Scenario in Israel:
- Israel accounts for a small fraction (0.4%) of India's total FDI inflows, with $288 million recorded from April 2000 to December 2023.
- Indian companies have invested significantly in Israel, with cumulative Overseas Direct Investment (ODI) totaling around $383 million.
- India's investment in Iran includes the development of the Shahid Beheshti Port at Chabahar, aimed at enhancing connectivity and trade ties with the Middle East and Central Asia.
India-Iran Trade Relations:
- India's trade with Iran has fluctuated, reaching $2.33 billion in 2022-23, with India primarily exporting agricultural goods and livestock products.
- Imports from Iran include items like methyl alcohol, petroleum bitumen, liquefied butanes, apples, liquefied propane, dates, and almonds.
Potential Impact of the War on the Indian Economy:
- Tensions in the Middle East, particularly in the Red Sea region, could disrupt global trade routes vital for India's trade, although it may not lead to a rise in petrol prices domestically.
- Shipping disruptions in the Red Sea may result in higher oil and gas prices globally, though India could mitigate the impact through tax reductions.
Conclusion:
- While the Iran-Israel conflict raises concerns for India, particularly regarding trade and economic stability, measures can be taken to minimize the impact and maintain stability in the region.
For more on the impacts of the Israel- Iran Wars in India refer to the article:
https://www.iasgyan.in/daily-current-affairs/indias-stakes-in-the-iran-israel-conflict-and-its-stand
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PRACTICE QUESTION Q) Consider the following statements about the status of FDI in India
How many of the above statements is/are correct? A)Only One B)Only Two C)All Three D)None Answer: C |
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