Israel-Hamas Conflict May Impact Global Supplies, Says Commerce Ministry

The commerce ministry on Friday said that it does not foresee any significant impact on global supplies due to the ongoing conflict between Israel and Hamas. However, the ministry is keeping a close watch on the situation and will take corrective measures if necessary.

Impact on Gems and Jewellery Trade

Gems and jewellery traders have expressed concerns that the conflict could impact their business. India's total gems and jewellery trade with Israel stood at USD 2.04 billion in 2022-23, down from USD 2.8 billion in 2021-22. If the conflict escalates, it could lead to disruptions in the supply of diamonds and other precious stones, which would hurt the industry.

India-Israel Trade

India's merchandise trade with Israel happens mostly through the Eilat port, located on the Red Sea. The total India-Israel trade in merchandise and services sectors in 2022-23 is estimated to be USD 12 billion. India's merchandise exports and imports from Israel during 2022-23 were USD 8.4 billion and USD 2.3 billion, respectively, leading to a merchandise trade surplus of USD 6.1 billion.

Key Exports and Imports

India's key exports to Israel include diesel, cut and polished diamonds, and pharmaceuticals. Key imports from Israel include rough diamonds, cut and polished diamonds, electronics and telecom components, potassium chloride, and herbicides.

Reason for Dip in Import Bill

The commerce ministry also attributed the dip in India's import bill to a decline in edible oil prices. Due to the Russia-Ukraine conflict, last year prices of soya and sunflower touched nearly USD 1,700 per tonne and now it has come down to below USD 1,000 per tonne. Prices of other goods like polypropylene have also contributed to lower import value.

The commerce ministry is closely monitoring the situation in Israel and will take corrective measures if necessary to mitigate any potential impact on global supplies. The ministry is also working to diversify India's trade portfolio to reduce its reliance on any single country or region.