Impact of Middle East Conflict on India's Diverse Import Dependencies

The ongoing conflict in the Middle East has far-reaching implications for India's economy, affecting various sectors beyond just oil. With significant dependencies on imports like diamonds, fertilizers, and polymers from the region, India faces potential supply disruptions and price volatility. While some sectors may find alternative suppliers, the overall impact on trade and manufacturing could be profound. This article delves into the complexities of India's import dependencies and the strategies that could mitigate risks amid ongoing geopolitical tensions.

By Narendra Chaudhary Mar 18, 2026, 08:03 IST

Broader Implications of the Middle East Conflict on India

The ongoing conflict in the Middle East is often analyzed primarily through the lens of oil and gas supply issues. However, its repercussions for India are extensive, revealing vulnerabilities across various sectors, including gold, diamonds, fertilizers, and aviation. India relies heavily on this region not only for crude oil and LNG transported through the Strait of Hormuz but also for a substantial portion of its non-energy imports. In 2024, approximately 10% of India's non-energy imports were sourced from the Middle East, underscoring the region's significant role in global trade, according to a report.

Specific sectors are particularly vulnerable. For instance, nearly 47.5% of India's diamond imports, 63% of fertilizers, 50% of polymers, and 48% of hydrocarbons are sourced from this region. This reliance poses risks of supply interruptions and price volatility if the conflict continues.

The situation is complex, as India not only imports raw materials like gold and diamonds from the Middle East but also processes these materials domestically for re-export. Any disruption in these imports could adversely affect export activities, particularly in the jewelry sector.

On a positive note, some industries may find alternatives through diversification. For example, aircraft components and fertilizers could potentially be sourced from other countries such as Germany, France, Russia, and China, assuming these nations can increase their supply capacity.

Fertilizers remain a significant concern due to India's heavy reliance on nitrogen-based supplies from the Middle East. A prolonged disruption could lead to increased global prices and compel the government to raise subsidies, similar to the measures taken during the Russia-Ukraine conflict.

Despite these challenges, analysts suggest that India's macroeconomic stability provides a buffer against external shocks. Strategies such as diversifying import sources and focusing domestic production on local needs could help alleviate the impact.

In summary, while oil often captures the headlines, the broader effects of the Middle East conflict extend into critical supply chains that support India's trade, agriculture, and manufacturing sectors.