The conflict between Israel and Hamas could lead to increased challenges for Indian exporters shipping goods to Israel, including higher insurance premiums and shipping costs, according to experts. The Hamas militant group, governing the Gaza Strip, initiated a surprise multifront attack on Israel's southern regions by air, land, and sea.

International trade specialists have indicated that this conflict might reduce the profits of Indian exporters temporarily, though trade volumes are unlikely to be impacted unless the war escalates significantly.

The Global Trade Research Initiative (GTRI), a think tank, stated that Indian merchandise exports to Israel might face elevated insurance premiums and shipping expenses. India's Export Credit Guarantee Corporation (ECGC), a government-owned entity, might impose higher risk premiums on Indian firms exporting to Israel.

Sharad Kumar Saraf, founder chairman of Mumbai-based exporter Technocraft Industries India, expressed concerns about the short-term impact on Indian exporters. He warned that if the conflict escalates further, the situation could worsen for exporters in the region.

Ajay Srivastava, co-founder of GTRI, emphasised that trade could be severely affected if operations at Israel's major ports ? Haifa, Ashdod, and Eilat ? are disrupted. These ports handle shipments of various products, including agricultural goods, chemicals, electronics, machinery, and vehicles. Most of India's trade with Israel takes place through the Eilat port, located on the Red Sea.

As of now, there have been no reports of port disruptions. India-Israel bilateral services trade is estimated to be around $1.3 billion, but it might not be impacted unless the conflict expands to involve larger parts of Israel. Srivastava emphasised that the actual impact would depend on the duration and intensity of the war.

In the fiscal year 2022-2023, India's merchandise and services trade with Israel is estimated at $12 billion. India's key exports to Israel include diesel ($5.5 billion) and cut and polished diamonds ($1.2 billion). Key imports from Israel include rough diamonds ($519 million), cut and polished diamonds ($220 million), electronics and telecom components, potassium chloride, and herbicides.

Additionally, India exports various IT services to Israel, such as software development, IT consulting, and data processing. The two countries collaborate extensively in research and development in agriculture, water technology, and renewable energy.

Moreover, India is a popular tourist destination for Israelis, and both nations are exploring a free trade agreement. Israeli companies have made significant investments in India, particularly in renewable energy, real estate, and water technologies, establishing research and development centres and production units in the country. During the period from April 2000 to June 2023, Israeli firms have invested $286 million in India.

Source: ET Energy World