SUMMARY

The article from The Economic Times, dated June 13, 2025, highlights the potential economic repercussions for India due to the escalating Iran-Israel conflict.

Key impacts 

1. Energy Security: India, heavily reliant on oil imports (over 80% of its crude oil comes from the Middle East), faces risks of supply disruptions and price spikes. Brent crude prices surged past $75 following Israeli strikes on Iran, directly affecting India’s import bill.

2. Remittances: Around 9-10 million Indian workers in the Gulf region contribute approximately $45 billion annually in remittances. A wider conflict could jeopardize their safety and economic contributions.

3. Trade and Connectivity: The India-Middle East-Europe Economic Corridor (IMEC) could face delays due to regional instability. Maritime trade may also see disruptions, with export costs potentially rising by 40-50%.

4. Financial Markets: The Indian rupee weakened to 86.20 against the US dollar, prompting RBI intervention to stabilize it at 86.05. Stock markets, particularly oil marketing companies like IOC and BPCL, saw declines of up to 6%. Gold prices in India rose by Rs. 880 per 10 grams for 24-carat gold due to geopolitical tensions.

5. Aviation: Air India rerouted or canceled 16 flights due to airspace closures, impacting travel to Europe and the US.

6. India’s government has urged restraint, with PM Modi advocating for de-escalation in talks with Israeli PM Netanyahu. The Indian embassies in Iran and Israel issued advisories for the safety of over 30,000 Indian citizens in Israel and others in Iran. Analysts warn that a prolonged conflict could exacerbate inflation, widen India’s fiscal deficit, and disrupt economic stability

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