Iran, Israel conflict may have short-term impact on good's demand in Gulf region: FIEO

The ongoing conflict between Iran and Israel may have a short-term impact on demand and logistics, particularly in the Gulf region, which serves as a crucial hub for Indian exports, the Federation of Indian Export Organisations ( FIEO) said on Monday.

FIEO said that the conflict may also lead to increased shipping costs, longer transit times, and hike in marine insurance premiums.

The Israel-Iran conflict has escalated significantly in recent weeks, with both sides exchanging heavy strikes and the US becoming directly involved in the hostilities.

"We do anticipate some short-term impact on demand and logistics, particularly in the Gulf region, which serves as a crucial hub for Indian exports. Increased shipping costs, longer transit times, and rising marine insurance premiums may add pressure, especially in price -sensitive sectors," FIEO President SC Ralhan said.

He said that crude oil price volatility can influence both inflation and logistics costs.

But India's diversified energy procurement strategy and the Reserve Bank's proactive stance help maintain liquidity and macroeconomic stability, Ralhan added.

"Overall, while there are temporary headwinds, we see this as an opportunity for Indian exporters to explore alternate routes, strengthen regional partnerships, and consolidate India's role as a reliable trade partner in uncertain times," he said.

While geopolitical tensions in the Middle East, including the ongoing conflict, pose certain challenges to global trade dynamics, India's export sector remains resilient and adaptive.

"Our trade with both Iran and Israel, while important, constitutes a small share of our overall export-import basket. The government and industry are jointly monitoring developments to ensure minimal disruption," the President said.