The Israel-Hamas war may lead to higher insurance premiums and shipping costs for Indian exporters, think tank Global Trade Research Initiative (GTRI) said Sunday. India-Israel bilateral trade has doubled to $10.77 billion in FY23 from $5.65 billion in the pre-pandemic period of 2021-22.
While this may reduce exporters’ profits but it will not impact trade volumes unless the war escalates, it said. India’s outbound shipments to Israel in FY23 were $8.4 billion with diesel, cut and unpolished diamonds, and electronics and telecom components like integrated circuits, parts of photovoltaic cells being the top exports whereas total imports of $2.3 billion comprised mainly rough diamonds, fertilisers and herbicides.
“Trade may be seriously impacted if operations at the three largest ports of Israel, Haifa, Ashdod, and Eilat are disrupted. These ports handle shipments in agricultural products, chemicals, electronics, machinery, and vehicles,” it said.
India’s goods trade with Israel happens mostly through Eilat port, located on the Red Sea. So far there is no report of port disruption, according to GTRI.
India is Israel’s second-largest trading partner in Asia and the seventh-largest globally. Though bilateral merchandise trade is dominated mainly by diamonds, petroleum products, and chemicals, recent years have witnessed an increase in trade in areas such as electronic machinery and high-tech products; communications systems; medical equipment. The two sides had also begun talks for a tree trade agreement.
As per the report, India-Israel bilateral services trade is estimated at around $1.3 billion but this may not get impacted unless the war escalates to involve bigger parts of Israel.
“The real impact would depend on the duration and intensity of the war,” GTRI said.
Information technology, research and development, tourism, healthcare, and education are the top traded services between India and Israel.
