The recent turmoil in West Asia could have serious economic repercussions for India, and to assess the same, the government held inter-ministerial deliberations with exporters and logistics players.
Potential impact of the West Asia crisis on India
- Threat to energy security: The possible blocking of the Strait of Hormuz is concerning as it accounts for roughly one-fifth, or around 20%, of global oil passes.
- The Strait of Hormuz carries 85% of India’s LPG, 55% of LNG.
- India relies on imports for more than 85 per cent of its crude oil needs, with a substantial portion coming from West Asia.
- Impact on trade: Uncertainty over 56% of India’s goods exports, raising concerns as the region serves a major market for India and also transit corridor linking India to Europe, Africa, etc.
- Supply chain disruption: Disruptions to shipping routes are increasing insurance costs and transit times, affecting Gulf transshipment hubs like Jebel Ali Port (UAE) and Port of Salalah (Oman).
- Diaspora: Indians constitute around 30% of total expatriate workers in the Gulf Cooperation Council.
- Remittance: Around 19% of India's total remittances come only from the UAE, 7% from Saudi Arabia, while Kuwait, Oman and Qatar also have significant contributions. (RBI Remittances Survey for 2023-24).
- Connectivity: May affect development of International North-South Transport Corridor (INSTC), India-Middle East-Europe Economic Corridor and the Chabahar port operated by India.
