Conflict & Commerce: How India's trade with Israel and Iran has changed

India's trade with Iran is just tenth of what it used to be a decade ago

India’s trade with Iran has become a tenth of what it used to be a decade ago, while its business with Israel has remained unchanged in the same period, according to a Moneycontrol analysis.

As US sanctions impacted oil shipments from Iran, India’s trade with the country shrank to $2.5 billion in FY24 compared with $26.5 billion a decade ago.

With Israel, however, India’s exports grew 21 percent,  while imports shrank 15 percent during this period. However, the nature of trade has changed slightly. Despite shrinking imports, India’s arms and ammunition imports have risen 100X, from around $1 million in FY13 to $104 million in FY24. Similarly, its aircraft, spacecraft, and parts imports have jumped from $31.8 million to $193 million in FY24.

While the two  countries earlier accounted for 70 percent of India's trade with West Asia, excluding the Gulf Council countries, they now account for just a fifth of the total trade.

But the ramifications of a conflict between the two countries go beyond trade, as the region accounts for around a tenth of India’s total trade. Also, the continuation of disruption in the Red Sea is likely to keep shipping costs elevated and hurt India’s trade with the West.

India's trade with Iran has shrunk, but is stable with Israel

Exports to Israel have grown faster

Trade with Iran has become negligible

Aircraft, arms trade with Israel has increased