The ongoing conflict between Israel-Iran could have far-reaching trade implications too. Apart from the risk to the two nations, trade across the region would be a casualty if stretched for long.
From India’s perspective, it has had traditionally friendly terms with both Israel and Iran. In FY25, India exported goods worth $1.24 billion to Iran and imported $441.9 million in return. In the case of Israel, India exported goods worth $2.15 billion and imported $1.61 billion.
A look at what’s at stake
What does India export to Israel?
Major exports from India to Israel include pearls and precious stones, automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textile and apparel products, base metals and transport equipment, agricultural products.
What are India’s key imports from Israel?
Meanwhile, major exports from Israel to India include chemical and mineral/fertilizer products, machinery and electrical equipment, petroleum oils, defense, machinery and transport equipment.
India-Israel trade rises 10-fold
Earlier in 2025, Commerce and Industry Minister Piyush Goyal had said there can be tenfold growth in bilateral trade between India and Israel in the next 12-13 years. Merchandise trade between the two countries reached $2.34 billion, excluding defence, during April–November with the balance of trade in India’s favour. However, in terms of India’s total exports, the share was less than 1 per cent. On the other hand, India is Israel’s second-largest trading partner in Asia.
Arms take the centrestage
While gems and jewellery along with electrical machinery continued to dominate trade between India and Israel, it is arms and ammunition that have seen the fastest growth in the past decade.
According to a Moneycontrol analysis, arms and ammunition trade between the two countries surged 33-fold between 2015 and 2024, even as Israel’s exports to India have declined over the years.
In 2024, the arms trade between India and Israel surged to $185 million, marking a significant rise from just $5.6 million in 2015. The peak, however, came in 2023, when bilateral weapons trade reached a record $265 million.
Majority of this trade, according to the analysis, comprised of imports by India, with the country being one of the world’s biggest buyers of weapons
In 2015, Israel exported $168,000 worth of arms to India which went up to $135 million in 2023 before slipping to $128 million in 2024.
In terms of products, arms and ammunition emerged as the second-largest import from Israel after electrical machinery in 2024. Interestingly, until 2020, this category did not even feature in India’s top 10 imports from Israel.
How will the recent escalation impact the trade?
Since Israel represents a minor portion of India’s total trade, around $3 billion out of $1,160 billion, it will have a very limited impact on New Delhi’s trade, if at all. However, any disruption to key maritime routes could significantly impact trade.
The main worry is the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea and is a vital passageway for nearly 20 per cent of global oil shipments and any move to block it would ripple through energy markets.
However, it is unlikely that Iran would be closing the waterway.
India calls for dialogue
India has also expressed deep concern over the escalating conflict, urging both sides to de-escalate and prioritize dialogue and diplomacy. The Ministry of External Affairs (MEA) has emphasized that India maintains close and friendly relations with both Israel and Iran and stands ready to extend all possible support to both nations.