Israel is a major global producer of muriate of potash (MoP) and among the top three countries that India imports…reports Asian Lite News
The ongoing conflict in the Middle East, confined mainly to the Gaza region now, has caused only negligible disruption in India’s trade so far, said Crisil Ratings, implying that the Indian companies were not in the crosshairs for now.
Some sectors such as fertilisers and diamonds — both cut and polished — may see a slight, but manageable, impact, while for most others impact will be insignificant, the rating agency said on Tuesday in a report.
However, the conflict has driven up prices of gold and crude oil.
“Their trajectories will bear watching, especially crude oil, given India’s high dependence on its import. Also, elevated crude oil prices have a cascading impact on a host of other sectors that consume the oil itself or linked raw materials,” the Crisil report noted.
India’s trade with Israel is relatively low, accounting for 1.9 per cent of total exports and 0.3 per cent of total imports last fiscal
The merchandise exports mainly comprise polished diamonds and petroleum products, including refined hydrocarbons, while imports largely comprise industrial equipment, fertilizers, rough diamonds and precious stones.
For domestic diamond polishers, Israel is primarily a trading hub. Exports to the country were 5 per cent of total diamond
exports from India last fiscal. Additionally, 2 per cent of all roughs imported are from Israel. Polishers also have alternative trading hubs, such as Belgium and the United Arab Emirates, with ultimate customers based in the US and Europe.
Israel is a major global producer of muriate of potash (MoP) and among the top three countries that India imports
from, accounting for 25 per cent of all MoP imports last fiscal. However, the share of MoP (as a final product or as an
ingredient in other fertilisers) remains low at 10 per cent of domestic fertiliser consumption.
Crisil said India’s ability to source from other countries lowers the supply risk.
The CRisil report, however, cautioned that any spillover of the conflict to nearby oil producing and exporting regions could result in supply-related constraints and spiralling prices of crude oil.
Within a week of the conflict, crude oil prices rose 4 per cent to USD 90 per barrel but have stabilised a tad lower thereafter.
A sharp rise in crude oil prices will impact linked sectors in India, such as aviation, automotives, paints, tyres, cement, chemicals, synthetic textiles and flexible packaging.
Besides, higher inflation may lead to interest rates continuing to rule firms in India till the conflict de-escalates, the rating agency noted.
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