West Asia Conflict Threatens India's Trade, Energy Supplies: Assocham Warns

The apex industry chamber said India's economy is closely linked to West Asian supply chains while also relying heavily on the Gulf region as a key export destination.

The Middle East remains a major supplier of crude oil, liquefied natural gas (LNG), petrochemicals, fertilisers and aluminium.

According to Assocham, one of the emerging concerns in the ongoing Israel-Iran tensions is the potential disruption of oil and gas shipments passing through the Strait of Hormuz, a critical maritime chokepoint that accounts for nearly 20 per cent of the world's oil supply and a significant share of global LNG trade.

Any prolonged disruption to shipping routes could drive up global fuel prices, the chamber said. It also highlighted that energy is a key input for manufacturing and logistics and higher prices could increase costs across global supply chains.

Given India's heavy dependence on imported crude oil, a surge in international oil prices could widen the current account deficit, increase inflationary pressures and affect economic growth prospects.

Assocham President, N.K. Minda, noted that beyond goods trade, the Gulf region also plays a crucial role as a hub for the Indian diaspora.

"Beyond goods trade, the Gulf is home to a large share of the Indian diaspora working in construction, healthcare, hospitality and tourism sectors. According to the Reserve Bank of India's Remittances Survey for 2023-24, the UAE alone accounted for 19.2 per cent of India's total inward remittances. Countries in the conflict-affected region form one of India's most important remittance channels," Minda said.

Assocham Secretary General Col. Saurabh Sanyal said West Asia remains a key supplier of essential commodities to India.

"In 2025, India's imports from the region were around $98.7 billion and included critical resources such as energy, fertilisers and industrial inputs. Energy-intensive industries are likely to face challenges. At a time when global trade is witnessing heightened volatility and tariff uncertainty, such developments adversely affect trade predictability, stability and long-term business confidence," he said.

The chamber also pointed out that disruptions to maritime routes in the Gulf have already delayed container shipments and deliveries across several parts of the world.

As India both supplies to and imports products from the conflict-affected region, sectors such as gems and jewellery, pharmaceuticals, electronics, petroleum products and agricultural goods could face implications if the conflict continues for an extended period.

Assocham noted that a large number of containers stuck at Indian ports are reportedly being taken back for domestic sale of goods due to shipment disruptions.

Moreover, the chamber welcomed the government's decision to create an Inter-Ministerial Group (IMG) for Supply Chain Resilience to monitor developments in Iran and the wider region and assess their impact on India's trade.

- IANS