Iran War: India's Gulf Trade Faces Headwinds, Exports from Basmati to Cars Vulnerable

• The Iran war poses a significant threat to India's trade with the GCC region, impacting exports like Basmati rice, engineering goods, automobiles, diamonds, and ceramics.
• GCC accounts for 14% of India's exports and 21% of imports; UAE is the largest trading partner, followed by Saudi Arabia.
• Disruptions in the Strait of Hormuz and the Red Sea (Houthi attacks) are driving up freight and insurance costs, already increasing by $2,000 per container.
• Rising crude oil prices and gas supply disruptions are immediate concerns, affecting production costs and potentially hurting MSMEs like the Morbi ceramic cluster.
• While India is expected to be resilient in the medium term, a prolonged conflict could lead to a global demand slowdown and sustained crude price volatility.