Context

• Recent Conflict between Israel and Iran has put many effects on India as India is a major partner of both the Countries.

About the Issue

• In a sudden attack on June 13, Israel launched strikes on Iranian nuclear installations, assassinated top generals, and bombed several cities across the country. Iran's response has been more robust than expected, as it too has launched barrage after barrage of ballistic missiles on military targets and research facilities in Israel. 

India Stance on the issue

• PM Modi expressed "concern" to Israeli PM Netanyahu, emphasizing the need for peace and stability. 
• EAM Jaishankar conveyed "deep concern" to Iran's FM, urging against retaliation and for diplomacy. 
• Similar concerns were conveyed to Israel. Official MEA statements called for dialogue and diplomacy, avoiding direct criticism of Israel. 
• India abstained on a UN Gaza ceasefire resolution critical of Israel and dissociated itself from an SCO statement condemning Israeli "aggression," marking a departure from past positions.

Economic Impact

• Declining Trade: Trade with both Iran and Israel has significantly dropped due to regional tensions: 
• Iran: Fell from ~$14 billion (2017) to $1.4 billion (last year) after India halted oil imports under US pressure.
• Israel: Fell from $11 billion (2022) to $3.75 billion (last year) due to Gaza conflict tensions. 
• Exception: Indian defense imports from Israel surged from $5.6 million (2015) to $128 million (last year). 

Strait of Hormuz Closure

• If Iran closes the Strait (as a pressure tactic or due to fighting), India faces severe consequences. 40-50% of India's energy imports transit the Strait. 
• Sharp spike in oil & LNG prices, increased shipping costs/insurance premiums, costly imports, less competitive exports, and inflation. 

Impact on Connectivity Projects

• IMEC (India-Middle East-Europe Corridor): Already stalled post-Oct7 attacks, requires cooperation through Arab states and Israel. 
• Chabahar Port & INSTC: Investments critical for trade/connectivity to Afghanistan, Central Asia, and Eurasia are threatened by the conflict.

Geopolitical Impact 

• Balancing ties: India faces a complex challenge maintaining strong ties with both Israel and Iran, who represent polarized global blocs (US/West vs. Global South/Russia/China).
• Global Division: US & G7 largely back Israel's "right to defend" and label Iran the "principal source of regional instability."Global South, critical of Israel's Gaza war, expressed sympathy for Iran. 
• BRICS Challenge: India faces difficulty distancing itself from potential antiIsrael statements at the upcoming BRICS summit (July), which now includes Iran. India's SCO abstention sets a precedent being watched.
• Gulf Relations Risk: A perceived "pro-Israel shift" could damage India's vital ties with Gulf nations, crucial for 40% of India's remittances 54% of oil imports.

Way Forward

• Protect Remittances & Labour: Assure safety of the large Indian diaspora in the Gulf and maintain open channels for remittances. 
• Diversify Energy Imports: Fast-track plans to reduce dependence on the Gulf/Hormuz route (LNG terminals, pipelines, renewables, strategic reserves). 
• Chabahar & INSTC: Engage with Iran and Russia to insulate these projects as much as possible. Explore involving other Central Asian partners more deeply. Seek alternative routes within INSTC if Iran becomes untenable.
• Revive IMEC: Use diplomacy to keep the concept alive with Arab partners and Europe, even if implementation is delayed. Position it as a post-conflict stability project.
• Deepen Gulf Ties: Beyond energy/remittances, expand investments, technology partnerships, and security cooperation (maritime security, counter-terrorism) with key Gulf states.