India is preparing for potential disruptions to its trade and energy supply chains as the fallout from the Iran-Israel conflict grows. The Ministry of Commerce has announced plans to hold key discussions this week with shipping companies, container associations, and other stakeholders to assess emerging challenges in global trade logistics.
The ministry noted early signs of trouble in strategic maritime routes such as the Strait of Hormuz and the Red Sea. While long-term freight contracts may offer short-term protection, officials acknowledged that prolonged geopolitical instability could put upward pressure on shipping costs and delivery timelines.
Exporters are already expressing concern. The Federation of Indian Export Organisations (FIEO) highlighted the risk of disrupted trade flows, especially with Europe and Russia, and warned of a potential spike in freight rates and insurance premiums, as per CNBCTV-18 report.
“The movement of cargo vessels in these sensitive waterways is likely to face challenges,” FIEO said, adding that extended conflict could drive up commodity prices and further shake global trade confidence.
The New Delhi-based think tank Global Trade Research Initiative (GTRI) has called for an immediate reassessment of India’s energy security framework. With more than 80% of India’s crude oil imported — much of it from the Gulf region — the threat of supply shocks looms large.
GTRI urged the government to diversify crude sourcing and enhance India’s strategic petroleum reserves. “The Iran-Israel conflict exposes India to serious economic risk,” said GTRI founder Ajay Srivastava, emphasising the growing uncertainty surrounding India’s commercial interests in West Asia.
Despite the geopolitical tensions, the government remains focused on deepening trade partnerships. Officials said efforts are underway to improve the use of existing Free Trade Agreements (FTAs), with the UAE FTA already showing strong results.
Territorial divisions within the Commerce Ministry have been asked to identify utilisation gaps and recommend ways to boost certificate of origin usage and preferential duty access — key levers for maintaining trade competitiveness amid global uncertainty.
Read More: India on Alert: How Will the Israel-Iran Tensions Impact the Economy?
As the Iran-Israel conflict creates fresh uncertainties in global trade, India is taking a proactive stance. While exporters worry about freight hikes and supply chain disruptions, the Commerce Ministry is engaging stakeholders and working to secure both shipping routes and energy sources. Simultaneously, a renewed push for FTA utilisation may offer some buffer against the rising geopolitical tide.
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Published on: Jun 17, 2025, 9:50 AM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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