The Impact of the Israeli-Palestinian Conflict on Indian Exporters

The ongoing Israeli-Palestinian conflict has raised concerns within the international trade community, particularly for Indian exporters. While experts believe that the conflict is unlikely to significantly impact trade volumes, there are worries about increased insurance premiums and shipping costs that could affect the profitability of domestic exporters.

Key Points

  1. The unexpected multifront attack by the Hamas militant group in Israel has led to air, land, and sea offensives in its southern regions.

2. Indian exporters may face higher insurance premiums and shipping expenses due to the conflict. India’s Export Credit Guarantee Corporation (ECGC) might impose higher risk premiums on Indian firms engaged in exports to Israel.

3. Short-term impacts on Indian exporters are expected, but concerns arise if the conflict escalates further

4. Disruption of operations at Israel’s major ports, such as Haifa, Ashdod, and Eilat, could severely impact trade. These ports handle various shipments, including agricultural products, chemicals, electronics, machinery, and vehicles. Eilat port, a significant gateway for India’s merchandise trade with Israel, remains unaffected so far.

5. The duration and intensity of the conflict will determine the actual impact on trade.
India’s merchandise and services trade with Israel is estimated to reach USD 12 billion in 2022-2023.

6. Key exports from India to Israel include diesel, polished diamonds, electronics, telecom components, potassium chloride, and herbicides.

7. Besides merchandise trade, both countries engage in IT services trade and collaborate in agriculture, water technology, and renewable energy research. They are also exploring a free trade agreement.

8. The bilateral ties between India and Israel extend to tourism, medical innovation, and investments. Indian hospitals import medical equipment and technology from Israel, while Israeli firms invest in Indian healthcare startups.

9. Israeli companies have made substantial investments in India, particularly in renewable energy, real estate, water technologies, and research and development centers.

While the Israeli-Palestinian conflict may not have an immediate and significant impact on trade volumes, Indian exporters need to consider potential increases in insurance premiums and shipping costs. Monitoring the situation and its potential escalation is crucial for exporters operating in this region.


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