India among top 5 trading partners for both Iran and Israel

Iran Israel conflict can impact India in other ways than oil and shipping

The escalation of conflict between Iran and Israel may have a global impact, especially if shipping routes are disrupted and energy prices surge. But for countries like India and China, the implications go beyond oil.

A Moneycontrol analysis shows that both Iran and Israel count India, China, Turkey, Germany, and Italy among their top 10 trading partners.

In India’s case, the nature of trade has evolved significantly since 2014. While India was Iran’s second-largest trading partner after China in 2015—facilitating trade worth $15.7 billion—it slipped to sixth place by 2023.

A previous Moneycontrol analysis found that India’s imports from Iran declined 87 percent since 2019, when the United States reimposed sanctions. During the same period, exports from India to Iran fell 68 percent.

Despite the decline, India remained the third-largest importer of Iranian goods in 2023, trailing only China and Turkey, and ahead of Pakistan.

In contrast, India’s trade with Israel has deepened post-2014. From being Israel’s tenth-largest trading partner, India rose to fifth position by 2024. China continues to be Israel’s second-largest partner.

In terms of Israeli exports, India moved from eighth to sixth place between 2014 and 2024. For Israeli imports, India climbed from tenth to fifth.

A Moneycontrol analysis indicates that beyond electrical machinery, arms and ammunition have emerged as a key component of India-Israel trade. Arms trade between the two countries grew 33-fold over the last decade, reaching $185 million in 2024.

However, overall trade with Israel has declined since 2023 and nearly halved compared to 2022, as the country remains embroiled in persistent conflict following the Hamas attack on October 7.

Smartphones transcend conflict

Amid these disruptions, one category that has shown resilience is smartphones. Despite declining overall trade with both countries, India’s electrical machinery exports—mainly smartphones—have increased.

Exports to Iran in this category rose 25 percent in 2024, while shipments to Israel grew 18 percent.

Tensions escalated on June 14 when Iran launched a drone attack on Israel, a day after Israel struck Iranian nuclear facilities and killed senior military commanders and nuclear scientists. Israel has stated that the operations will continue for weeks to eliminate what it describes as a threat to its "very survival," while Iran has vowed retaliation.