India’s relationship with both Israel and Iran is crucial and involves defence, trade, energy and its communities living abroad
The rising tension between Israel and Iran throws up a complicated tapestry of geopolitical equations that poses challenges for global powers and nearby countries, including India. The issue involves sensitive and judicious balancing of political interests and ensuring regional stability. The conflict also creates specific political, economic and security challenges for New Delhi.
India’s relationship with both Israel and Iran is crucial and involves defence, trade, energy and its communities living abroad. Many Indians work in the Middle East. So, any increase in the conflict could jeopardise their safety and jobs. The growing instability in Bangladesh after a change of government adds more challenges for India to handle globally.
INDIA’S TIES WITH ISRAEL AND IRAN
India has traditionally kept a strong relationship with both Israel and Iran, even though they are bitter rivals in the Middle East.
India-Israel Relationship
India has developed a strong partnership with Israel, especially in defence and technology. Israel has become one of India’s most dependable defence partners, supplying such advanced military equipment as drones, missile systems and cyber security technology. Israel’s skills in agriculture and water management have greatly helped India’s development. India has started exporting missiles and other defence systems to Israel, opening a new phase in bilateral cooperation.
Defence Partnership
India has bought $2.9 billion worth of military equipment from Israel over the past 10 years, including radars, surveillance drones, combat drones and missiles. India is the biggest buyer of Israeli arms, purchasing around 41% of Israel’s total defence exports. As the world’s largest arms importer, India purchased $37 billion in weapons from 2012 to 2022, according to the Stockholm International Peace Research Institute.
Israel ranks as the fourth-largest arms supplier to India, as India also bought $21.8 billion worth of weapons from Russia, $5.2 billion worth from France and $4.5 billion worth from the US in the past decade. India is working to lessen its reliance on Russian weapons by buying from such countries as France and Israel and strengthening its own arms manufacturing industry.
Israel’s Elbit Systems collaborates with India’s Adani Group to produce Hermes-900 drones in southern India, which are then sent back to Israel for use. India has bought several important defence systems from Israel. These include the Phalcon airborne early warning system mounted on Russian Il-76 aircraft. India also uses a variety of Israeli UAVs, such as the Heron, Searcher II and Harop. India has also acquired such surface-to-air missile systems as Spyder and Barak, as well as such air-to-surface missiles as Popeye I and II. The country also utilises Spike anti-tank guided missiles and various sensor systems.
The Indian army uses Israeli sensors, Heron drones, hand-held thermal imaging devices and night vision equipment to monitor and prevent militant infiltration from Pakistan along the line-of-control (LoC). These tools are also used in counter-insurgency operations. India has used Israeli weapons in offensive operations. In February 2019, it deployed Spice 2000 guided bombs in an airstrike on a terrorist training camp in Balakot, Pakistan. The Indian special forces use such Israeli weapons as Tavor and Galil assault rifles, Negev machine guns and the B-300 portable anti-tank system.
Israeli defence companies, such as IAI, Elbit Systems and Rafael Advanced Defense Systems have teamed up with such Indian firms as Bharat Forge, Tech Mahindra, Adani Defence and Aerospace and Tata Advanced Systems. Together, they produce advanced components and security systems. Adani Defence and Aerospace has partnered with Elbit Systems to produce such UAVs as the Drishti-10 Starliner, a version of the Hermes-900 drone. This is reportedly the only facility outside Israel making this drone.
India-Iran Relationship
Experts say India hardly imports any crude oil from Iran. India imports oil from about 40 countries, such as Russia, Iraq, Saudi Arabia, Abu Dhabi and the US, to meet its supply needs. Iran is important to India not just for oil. The Chabahar Port, which India helped develop, offers key access to Afghanistan and Central Asia, bypassing Pakistan.
The International North-South Transport Corridor (INSTC) is an important trade route that connects India to Europe through Iran and Azerbaijan. It is crucial for India’s regional trade plans. India maintains a balanced approach by managing its defence and trade relations with Israel while maintaining strategic ties with Iran. Rising tensions between Israel and Iran could disrupt the delicate balance that India maintains, putting at risk its energy security, defence partnerships and the safety of Indians living there.
EFFECTS OF ISRAEL-IRAN TENSIONS
The growing conflict between Israel and Iran could seriously affect India’s foreign relations, economy and the safety of its citizens working overseas.
Impact on India’s Energy Supply
India’s supply of oil may not face immediate disruptions, but rising geopolitical tensions could still cause temporary price hikes and drive up average monthly prices. The ongoing conflict in the region poses a risk of unpredictable shifts in global oil markets.
A potential attack by Israel on Iran’s oil and gas facilities could push oil prices even higher. Iran, producing about 3.3 million barrels of oil daily, may retaliate by blocking the Strait of Hormuz, a critical waterway for global oil shipments. Such a move would cause major disruptions in global oil supply.
This situation could be challenging for India, which imports 88% of its oil from such countries as Russia, Iraq, Saudi Arabia, Abu Dhabi and the US. India remains highly dependent on oil to meet its energy needs. In July, Russian oil accounted for 44% of India’s imports, but, by August, oil from the Middle East rose to 44.6% of India’s total imports.
Liquefied natural gas (LNG) is another vital energy source for India, with nearly half of its supply coming from Qatar. In February, India signed a $78-billion deal with Qatar to continue importing LNG for the next 20 years. However, a full-scale war between Iran and Israel, with increased attacks from Iran’s allies—Hezbollah and the Houthis—could threaten India’s energy security.
Key shipping routes, such as the Strait of Hormuz—the world’s most crucial choke point for oil as a significant portion of global energy supplies flows through it—are particularly vulnerable. India also imports oil from Russia via the Red Sea. In the event of the conflict snowballing, shipments may need to be diverted around the Cape of Good Hope, increasing both travel time and costs. India is particularly concerned about potential disruptions in the Strait of Hormuz, through which it imports oil from Iraq and Saudi Arabia, as well as LNG from Qatar.
India’s reliance on imported energy is substantial—about 67% of its oil and 50% of its LNG passes through the Strait of Hormuz. Any disruptions to this route would lead to increased energy prices, which could raise inflation despite its recent decline. For India, maintaining steady energy imports is vital for sustaining its industries and keeping inflation in check.
Impact on the Indian Diaspora
A major concern for India is the safety and well-being of the millions of Indian workers and residents spread across the Middle East, including those in Israel.
Significant Indian Workforce: The Gulf region is home to more than 8 million Indians, making it one of the largest Indian expatriate communities in the world. These workers are essential to key sectors, such as construction, healthcare and services, and send a significant amount of foreign exchange back to India in the form of remittances. Instability in the region could result in job losses, safety risks and interruptions in remittances, which are an important part of India’s foreign exchange earnings.
Safety Also a Prime Concern: Rising tensions between Israel and Iran could spread to nearby countries, putting the safety of Indians in the region at risk. The Indian government has advised its citizens in Israel and Iran to remain cautious and take the necessary safety measures. If the situation escalates, India may need to carry out large-scale evacuations, similar to those done during past conflicts in West Asia.
The Threat to Maritime Trade
Houthis and the Red Sea: If tensions with Israel rise, Iran may increase its support for the Houthi rebels in Yemen. The Houthis have previously targeted oil tankers and shipping routes in the Bab-el-Mandeb Strait, a key passage for much of India’s trade with Europe and Africa. Any disruption to shipping at this vital choke point would directly affect India’s trade routes and raise shipping costs considerably.
INSTC, Trade through Iran: The INSTC could also be at risk if tensions continue to rise. If this passage is impacted, it could prevent India’s access to Central Asia and Europe, forcing India to seek alternative routes—but these may be longer and more costly.
Defence & Strategic Ties with Israel
India’s Defence Dependence: India depends on Israel for advanced military technology, including high-tech surveillance equipment and missile defence systems, such as the Barak 8. Interruptions to defence imports from Israel could reduce India’s military preparedness, especially considering the tense situation in its neighbourhood with possible threats from Pakistan and China.
Military Exports to Israel: In addition to importing, India has also started supplying defence equipment to Israel, including missiles and other military hardware. Maintaining this cooperation is crucial for India’s defence sector and any instability affecting Israel’s defence imports could harm India’s expanding defence export industry.
The Influence of Global Powers
The US & Global Sanctions: If tensions escalate into a direct conflict, the US and its allies are likely to impose more sanctions on Iran. In the past, India has faced difficulties maintaining trade with Iran under sanctions and any new sanctions would make it even harder for India to work with Tehran, especially in such areas as energy, infrastructure and trade.
China’s Growing Influence: China’s growing economic and military connections with Iran create a challenge for India. With China’s Belt and Road Initiative (BRI) already established in Iran, less Indian involvement would give China more room to bolster its influence. This could impact India’s long-term strategic goals in the region.
Effect on India’s Geopolitical Strategy
The effects of Israel-Iran tensions are hitting India at a tough time, as it is also dealing with increasing instability in Bangladesh after a recent change in leadership.
Bangladesh’s Political Shift: India has had a strong relationship with Bangladesh, especially under Sheikh Hasina’s leadership. However, the recent change in government has brought in anti-India sentiments, with some radical groups starting campaigns against Hindus and India. This adds to India’s challenges in the region, as Bangladesh had been one of the few stable and friendly neighbours.
Instability on Dual Fronts: As tensions grow in both the Middle East and South Asia, India may have to handle instability on several fronts. This could put pressure on India’s diplomatic and security resources, especially if hostile groups in Bangladesh take advantage of India’s focus on the Israel-Iran situation.
What Actions Can India Possibly Take?
Poised Diplomatic Steps: India must follow an unbiased strategy, carefully balancing its defence ties with Israel and its energy and trade demands from Iran. By staying neutral publicly, India can protect its relations with both countries, while promoting diplomatic solutions through international forums.
Protecting Indian Citizens: The Indian government needs to keep a close watch on the situation in the Middle East and be prepared to carry out evacuation operations, if needed. Drawing from past experience, India should also work with local governments in the region to ensure the safety of its citizens.
Diversifying Energy Supplies: India needs to speed up its efforts to reduce reliance on the Middle East for energy. This includes strengthening partnerships with countries, such as the US for LNG, increasing domestic renewable energy production and working more closely with Saudi Arabia and the UAE to secure alternative energy sources.
Improving Maritime Security: With possible disruptions in important shipping lanes, India should increase its naval presence in the Indian Ocean and Red Sea. Strengthening ties with such countries as Oman and the UAE will help protect India’s trade routes.
Utilising Multilateral Diplomacy: India should leverage its increasing influence at international forums, such as the United Nations, BRICS and the Shanghai Cooperation Organisation (SCO) to advocate for a peaceful resolution of the Israel-Iran conflict. A stable Middle East aligns with India’s strategic interests and New Delhi should aim to act as a mediator when possible.
Prioritising B’desh Diplomacy: India should work with the new leadership in Bangladesh to address, and reduce, anti-Indian sentiments. Keeping Bangladesh stable will be crucial for India’s overall regional strategy.
CONCLUSION
India’s foreign policy is facing a tough challenge as it deals with the impact of Israel-Iran tensions while also managing regional instability in South Asia. Ensuring the safety of Indian expatriates in the Middle East, securing energy supplies and sustaining defence and strategic ties with both Israel and Iran will be crucial. By taking a balanced and practical approach, India can navigate these crises, but it needs to stay alert and proactive as the situation develops.
(The author of this article is a Defence, Aerospace & Political Analyst based in Bengaluru. He is also Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany. You can reach him at: girishlinganna@gmail.com)
(Disclaimer: The views expressed above are the author's own and do not reflect those of DNA)
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