Iran-Israel Conflict and Its Implications for India

GS 2 – International Relations

Context:

The ongoing hostilities between Iran and Israel are intensifying, though the immediate economic impact on India remains moderate. However, short-term fluctuations in oil prices and trade dynamics are possible.

Military Operations Involved:

• Israel – Operation Rising Lion:
  Conducted aerial and drone-based strikes targeting Iranian military and nuclear infrastructure to stall its nuclear weapon development.
• Iran – Operation True Promise 3:
  Launched retaliatory missile attacks on Israeli cities like Jerusalem and Tel Aviv, resulting in explosions and heightened regional tensions.

Core Drivers of the Conflict:

1. Ideological Rift Post-1979:
   Iran’s stance towards Israel shifted drastically after the Islamic Revolution, leading to antagonism rooted in political and religious ideology.
2. Nuclear Proliferation Concerns:
   Iran’s uranium enrichment at 60% and stalled JCPOA negotiations raise serious security alarms for Israel, which views this as a potential existential threat.
3. Proxy Engagements:
   Iran’s support for groups such as Hezbollah and Hamas fuels instability and intensifies its indirect conflict with Israel.
4. Regional Power Struggle:
   The two countries support rival factions in regional hotspots like Syria, Iraq, and Yemen, vying for influence in West Asia.
5. Aggressive Rhetoric:
   Statements from Iran calling for Israel’s destruction provoke preemptive actions and sustain deep-seated hostility.

Impacts on India:

1. Energy Security Risks:

• India sources over 2 million barrels per day through the Strait of Hormuz, a strategic chokepoint that could be affected by military tensions.
• Any disruption can lead to:
  • Oil supply shortages
  • Spiking global prices (already surged by 8%)
  • Increased inflation and fiscal burden
  • Rising shipping insurance and freight costs

2. Oil Import Costs:

• India imports nearly 80% of its oil demand, and though direct imports from Iran are limited, indirect effects via global pricing are substantial.
• Alternate shipping via the Cape of Good Hope could delay deliveries by 15–20 days and increase container charges by 40–50%.

3. Strategic Connectivity Projects at Risk:

• Initiatives like:
  • Chabahar Port
  • India-Middle East-Europe Corridor (IMEC)
  • International North-South Transport Corridor (INSTC)
    may face implementation delays, funding obstacles, and disruptions in planned routes.

4. Diaspora Concerns:

• Around 66% of the 1.34 crore Indians overseas reside in West Asia, especially in the UAE, Saudi Arabia, and Qatar.
• Escalating conflict may jeopardize their safety and potentially require emergency evacuation efforts.

5. Investment Shift to Gold:

• Rising geopolitical uncertainty has driven up gold prices (crossing ₹1 lakh per 10g), as investors seek safer assets amid inflation fears.

Suggested Way Forward for India:

• Support a Two-State Solution:
  Endorse a peaceful settlement of the Israel-Palestine issue to lay the foundation for regional peace.
• Promote Diplomatic Engagement:
  Back efforts by the UN and EU to mediate between Israel and Iran, aiming to reduce nuclear tensions and prevent further escalation.
• Revive JCPOA Negotiations:
  Encourage Iran’s return to the nuclear agreement under IAEA supervision, while dissuading unilateral military interventions.
• Strengthen Regional Dialogue:
  Facilitate inclusive dialogue through multilateral platforms like the Gulf Cooperation Council (GCC) and Arab League, bringing both rivals into cooperative frameworks.