India is already seeing rising cost pressures, trade imbalances, and sectoral risks linked to ongoing tensions in West Asia, with the potential for further economic impact if the situation remains unresolved, according to a joint report by Rubix Data Sciences and Vayana TradeXchange.
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The report, ‘The West Asia Conflict and Impact on the Indian Economy’, provides a sector-wise risk assessment across 14 key industries, highlighting varying degrees of exposure to the region. Crude oil, liquefied natural gas (LNG), liquefied petroleum gas (LPG), fertilizers, and petrochemicals are identified as high to very high-risk sectors, given their dependence on imports and critical shipping routes such as the Strait of Hormuz.
India imports nearly 88 per cent of its crude oil requirements, with around 46 per cent sourced from key West Asian countries, making it sensitive to supply-side disruptions and price volatility. The report estimates that every $10 per barrel increase in crude prices raises India’s annual oil import bill by $13–14 billion, with knock-on effects on inflation and external balances.
India’s total merchandise trade with West Asia stood at $220 billion in FY25, with imports significantly exceeding exports, resulting in a structural trade deficit driven largely by energy dependence.
“While the situation has seen phases of de-escalation, the economic impact is already visible through higher energy prices, logistics costs, and uncertainty in trade flows,” said Mohan Ramaswamy, Co-founder and chief executive officer of Rubix Data Sciences.
On the goods export side, the agri and food segments are also seeing early signs of risk transmission. The report identifies rice exports as a high-risk category, given the sensitivity to freight costs, shipping disruptions, and demand conditions in Gulf markets. Frozen bovine meat exports are assessed as moderate risk, reflecting relatively more diversified demand, but continued exposure to trade route disruptions and pricing pressures.
Remittances, another key linkage, could also see near-term variability. India received a record $135 billion in remittances in FY25, with nearly 38 per cent originating from Gulf Cooperation Council (GCC) countries. Any prolonged uncertainty in regional economies, particularly in sectors employing large numbers of Indian workers, could affect income flows, the report said.
On the investment front, from April 2000 to December 2025, cumulative foreign direct investment inflows from West Asia into India stood at $31.7 billion, led by sovereign-backed funds from the UAE and Saudi Arabia. While flows have remained steady so far, sustained uncertainty could slow the pace of new investments and capital deployment, the report said.
The report concludes that while India’s economic linkages with West Asia remain strong, the impact of recent developments is already feeding into costs, supply chains, and sectoral performance, with the extent of further impact dependent on how quickly stability returns to the region.
Published on April 11, 2026