The ever-deepening crisis in the Middle East has drawn lines of worry on the forehead of the Indian business world. Tension in the Middle East is at its peak after the recent attacks on Iran by America and Israel. The echo of these explosions taking place there may be thousands of kilometers away, but there is every possibility that it will have a direct impact on India’s markets, companies and the pockets of the common man. Gulf countries are not only a big market for India, but are also a very important trade route to transport goods to other parts of the world. In such a situation, companies in sectors like energy, specialty chemicals and gems and jewelery are facing a big crisis.
Goods stuck at ports, companies stuck in legal troubles
The seriousness of the situation can be gauged from the fact that panicked Indian exporters and importers are increasingly turning to legal experts. Due to disruption of air and sea traffic, there has been a brake on the movement of ships, due to which goods have been dumped in ports and warehouses. Due to this, companies have to pay heavy demurrage. Sanjay Natani, partner at Economic Law Practice (ELP) law firm, explains that businesses are struggling to implement ‘force majeure’ (unexpected and uncontrollable circumstances) clauses in their existing contracts. They want to somehow restore their supply chain. First the Corona epidemic, then strict restrictions and now these circumstances of war have badly shaken the business structure.
Crisis looms on $178 billion trade
The Gulf Cooperation Council (GCC) is India’s largest trading partner group. In the financial year 2024-25, bilateral trade between the two was $ 178.56 billion, which is 15.42 percent of India’s total global trade. India sends large quantities of engineering goods, rice, textiles and jewelery to the region, while its main imports are crude oil, LNG, petrochemicals and precious metals like gold. According to Anand Desai, Managing Partner, DSK Legal, there is a lot of uncertainty among traders regarding the delivery of goods in the GCC region. If the situation does not normalize soon, many trade agreements will either be put on hold for a long time or will be completely canceled.
Petrol and diesel prices will rise
According to an analysis by broking firm MK Global Financial Services, if this war prolongs then macroeconomic (macro) risks may arise for India. Due to supply disruption, inflation may increase and pressure on petrol and diesel prices may be seen. However, experts also estimate that given the imbalance in the military forces of both sides and the recent weakness in Iran’s top leadership, this conflict may subside within a few days or weeks.
Despite this, the atmosphere of fear persists. Rakesh Kumar, Managing Director of Square Insurance, says that exporters and businessmen related to logistics are continuously contacting him. They are trying to understand how to recover their financial losses in case of shipment delay or rerouting.
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