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- Published: October 18, 2023 13:39
New Delhi: On October 7, 2023, the West Asia woke up to sudden & surprise all-out attack on Israel as over 5,000 rockets came rushing down on latter’s civilian areas, from Hamas operated bases in Gaza Strip. The unexpected air-water & ground onslaught in Israel’s civilian regions led to widespread destruction & loss of lives and drew international condemnation. Calling it a ‘state of war’, the Israeli Army strongly retaliated, vapourized many terror bases in Gaza and is now preparing for colossal ground assault in Hamas-operated region.
More than 3,500 people have been killed and thousands injured & displaced from home. The international community is alarmed over ‘state of emergency’ in Israel-Gaza war and countries like US, France and also United Nations (UN) are persuading Israel to abandon its ‘bloodthirsty calls for revenge’ while asking Gaza to release the Israeli hostages.
However, there seems no let up in hostilities as not just Hamas but also Hezbollah militants from Lebanon have joined forces with the former. The world powers including India are concerned about the cascading effects of this war. There is wide possibility of Israel-Hamas war dragging in many countries and thus making it a much bigger crisis. In such a scenario, the economy of many nations would face a crushing blow as the West Asia remains the biggest supplier of crude oil & petroleum products supply to the entire world.
Oil crisis threat may loom over India
The world is yet to recover from Russia-Ukraine war and its fallout resulted in disrupted energy & food supplies, mostly in Europe and some impact on Asian nations also.
On two occasions, India has showed solidarity with Israel over recent terror rampage however maintained that war is the not the solution for any conflict.
Analysts & international watchers believe that short-term conflict won’t impact India but a longer engagement will take a toll on our economy.
The biggest impact would be on India’s crude oil imports. India is world’s third largest oil importer and its 85% oil requirements are met from oil imports.
If the West Asia turns into a ‘warzone’, the oil exporting nations will presumably cut down oil supplies. Oil-importing nations including already reeling under skyrocketing fuel prices will receive another jolt.
Any increase in oil price rise will lead to rise in retail inflation. Notably, it was just beginning to decline but a fresh shoot-up is likely if the prices go up.
In fact, India had recently urged oil-producing nations to show ‘sensitivity’ to importing nations after Russia & Saudi Arabia announced voluntary cuts in production.
Gems & jewellery business may take a hit
Though India & Isarel have limited trading business, the gems & jewelery trade account for over $2 billion. Trade analysts say that if situation intensifies, it will deal a blow to Israel’s 2nd biggest business partner in Asia.
Israel exports rough & polished diamonds while India exports include gems & jewelleries. The trade partnership stands jeopardized in this segment, if war escalates.
Military supplies & Pharma industry
Israel is one of the biggest military equipment suppliers to India. With military trade above $2 billion, Israel is among top four arms suppliers to India for almost a decade now. And, with growing ties between the two nations, this sector has potential to scale up further.
If Israel-Hamas conflict escalates, it has potential to disrupt the Indian pharmaceutical businesses by blocking exports to many countries in the Middle East & North Africa region. According to notable pharma experts, the war extending beyond two weeks will curtail the flow of pharma products in that region.
The biggest importers of Indian pharma include UAE, Qatar, Saudi Arabia, Egypt, Bahrain & more. A long drawn battle in West Asia will curtail flight services to these counties, hence impacting India’s pharma exports.
Overall, given the depressed economic situation globally, escalation in Israel-Hamas war & possible involvement of more nations will mean fresh geo-politics crisis and this may led to onset of fresh recession not just in United States but other nations too.