The Israel-Iran Conflict and Its Implications on India

Introduction

The recent rise in tensions between Israel and Iran has taken the world by its storm. The conflict that is taking place in the turbulent Middle East has consequences that go way beyond the boundaries of the two nations. In India, which has been strategically, economically and diasporically connected to the region, the impacts are being experienced. Energy security, trade disruptions, and diplomatic balancing are just some of the issues that India is having to negotiate in a complicated geopolitical storm.

Background of the Israel-Iran Conflict

The relationships between Israel and Iran have been tense, as they have ideological, religious and strategic disputes. Israel has always been worried by the support that Iran gives to the proxy forces like Hezbollah in Lebanon and Hamas in Gaza. On the other hand, the Israeli attacks on the Iranian nuclear plants and military installations have sought reprisals and threats of retaliation by Tehran.

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It became severe in the middle of 2025, when Israeli air attacks allegedly struck main Iranian nuclear and military installations. Iran retaliated by bombing Israeli cities and military bases using missiles and drones. The threat of a larger regional conflict is on the increase and this includes the participation of Hezbollah, the Houthi rebels in Yemen and the escalating tensions along the northern and southern borders of Israel.

Impact on India

1.Energy Security at Risk:

   India is the third-largest oil importer in the world, and it depends on the Middle Eastern supplies. The current brewing has put at risk the Strait of Hormuz and the Red Sea- two major maritime oil delivery routes in the world. Any interference in this would have direct implications in terms of energy security in India.

During June 2025, the Brent crude prices rose more than 15 percent to almost $75 per barrel following the fear of supply shocks. Such volatility is especially risky to India which imports more than 85 percent of its crude oil. Although the government has said that strategic reserves would enable it to absorb short term disturbances, an extended war would result in escalation of fuel prices, inflation and an increased trade deficit.

2.Disruption in Trade and Shipping:

    The trade routes of India through Europe, Africa and the U.S are dependent on the Suez Canal and the Red Sea, which are now under threat. Houthis who are supported by Iran were known to attack commercial ships in the Red Sea previously, and a rise in the conflict level could increase the frequency of such attacks.

The Indian exporters particularly the textile, machinery and pharmaceutical sector are experiencing slow shipment and increased freight rates. Shipment of cargo insurance has also increased its premiums, which increases the cost of international trade. Such hiccups may negatively affect the export growth of India when the world is already facing pressure on its demand.

3.Diplomatic Balancing Act:

   The relationship of India with both Israel and Iran is very strong and that is why its diplomatic positioning is rather fragile. Israel has been a defense and technology partner and collaborative areas include cybersecurity, missile defense, and agriculture. Conversely, Iran is also strategically important to India, especially in regard to energy partnerships and the availability of Central Asia by means of the Chabahar port.

India has been in a wait and watch mode so far demanding restraint as well as dialogue. Nevertheless, an extended or expanded war can put India in an even more narrow diplomatic box, particularly as the world powers take opposing sides and the international pressure builds.

4.Concerns for Indian Diaspora:

    There are thousands of Indian nationals in Israel/Iran, who live and work there. Professionals, carers and students are included in the diaspora in Israel. Although Iran has fewer Indians, it has also expatriates in trade and oil business.

The growing violence is a cause of concern with regard to safety and security of these communities. The Indian government has put out advisories and contingency evacuation plans are apparently being worked out but there has been no mass exodus so far.

5.Strategic and Security Implications:

   India has been speaking about peace and stability in West Asia as it considers it crucial when it comes to connectivity and security in the region. The escalating Israel-Iran war is a danger that may further destabilize the region and encourage the rise of extremist organizations and even terror acts, some of which may find their way to South Asia.

Further, any hindrance in the supply of arms by Israel, which is a key source of sophisticated military equipment to India, is likely to impact on the military preparedness of India. India has recently modernized its defense with Israeli technology on drones, radar systems and missile defense and therefore continuity of supply is a must.

Economic Fallout

*. Rupee Volatility: Rising crude prices have weakened the Indian rupee, increasing the cost of                                                   imports.

*.Inflation Pressure: Transportation and energy costs are climbing, which could push overall inflation                                             higher.

*.Fiscal Stress: Increased oil import bills and potential subsidies to cushion consumers may strain                                                         government finances.

Economists warn that if oil prices stay above $90 for a sustained period — a real risk if the conflict worsens — India’s fiscal deficit and current account balance could be adversely affected, dampening economic growth.

Conclusion

The Israel-Iran war is not just a regional crisis; it is a global event with far-reaching consequences. For India, the conflict poses significant challenges — from rising oil prices and trade disruptions to complex diplomatic calculations and concerns over national security.

As the situation evolves, India must prepare for both short-term shocks and long-term strategic realignments. Maintaining balanced relations, securing energy interests, and protecting the diaspora will be crucial pillars of India’s response. In a multipolar world marked by shifting alliances and persistent volatility, India’s resilience will be tested — diplomatically, economically, and strategically.

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