Israel has fallen victim to a major terror attack after Palestine-based terror group Hamas launched 5000 rockets into the country and shooting civilians in residential areas. Till now, over 300 people have died and thousands have been left injured.
India, which is one of the oldest and strongest allies of Israel, has shown its solidarity with the country and is expected to send aid if matters in Tel Aviv take a turn for the worse. Prime Minister Narendra Modi condemned the terror attack, expressing shock at the recent developments.
If the terror attack and retaliation between Israel and Palestine turn into a full-blown war, the economic repercussions could be somewhat similar to what was experienced during the start of the Russia-Ukraine war, causing worldwide inflation.
The impact could be felt harshly by India, since Israel is a major trade partner of the country. Israel is the third-largest Asian trade partner of India and 10th overall. After Russia, Israel supplies the most military equipment to India, with the military business between the two worth over Rs 74,000 crore.
The war between Israel and Palestine could deeply impact the trade agreement it holds with India, leading to the defence system and budget of the latter taking a major hit. This means that India might have to lean more heavily on Russian military equipment, which is more expensive.
Israel’s major exports to India include precious stones and metals, electronic equipment, fertilisers, machines, engines, pumps, medical and technical equipment, organic and inorganic chemicals, salt, sulphur, stone, cement, and plastics, all of which are of essential use in major industries and factories.
Israel currently exports goods and equipment worth over USD 3 billion to India. This means that if the terror attacks and war lead to the stop of bilateral trade between the two countries, India could lose out on goods worth Rs 25,000 crore, leading to a spike in prices of some household items.
The impact of the inflation caused by the Russia-Ukraine was felt across the globe, but Russia chose to continue its supply of military equipment to India despite the tense situation in the country. As of now, it is expected that Israel will continue to hold up its end in the bilateral trade agreement to keep its economy functioning.
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