Wars always have devastating economic impacts. Now, even without direct participation in the US-Israel-Iran wars, developing countries like India, with their import-dependent economies, will face the economic impacts.
Crude oil supplies have been primarily affected. Currently, a welcome relief for India is that the US has relaxed restrictions and allowed India to purchase oil from Russia for 30 days. This will protect India from the impact of petroleum price inflation. However, the government has declared an LPG emergency in advance, in view of the disruption in LPG gas supplies due to the war.
Companies have been ordered to increase gas production. Furthermore, another concern faces Indians due to the ongoing war. 9.5 million Indian expatriates are earning their livelihoods in these war-torn countries in the Middle East. What will be the fate of these Indian citizens now that the terrible war has occurred? If India were to face a shortage of oil and gas due to the war, the adverse effects can easily be imagined. On the diplomatic front, India is considered an economic leader of the global South and chairs BRICS. Iran also became a BRICS member last year.
Therefore, the future of BRICS is now uncertain. Indian exporters whose containers are stuck in transit due to the war are facing a predicament. Punjab exports basmati rice, hosiery, auto parts, sports goods, and tools. Tensions in West Asia have escalated to the point where routes have been blocked. Imports and exports via longer routes will increase costs and reduce profits. Therefore, foreign traders are now staring at their own doom. Shipments of Indian basmati rice to Iran had reached 1.5 million tons annually.
This has led to a major shift in farming patterns in Punjab and Haryana. Sowing basmati rice was considered profitable. What will be the future of related trade agreements now? How will we receive payment? We had decided to send 160,000 tons of Indian Bamasti rice to Iran’s trading organization, the Government Trading Corporation of Iran. The war has made everything uncertain. The routes are no longer safe, so how can exporters send goods? If produce gets stuck at ports, prices in India could rise. If Iran’s ports are disrupted, our smooth trade with Afghanistan, Turkmenistan, Uzbekistan, Tajikistan, Armenia, and Russia could be disrupted.