The Israel-Iran Tension And Its Impact On India: Navigating A Delicate Balance – Analysis

The escalating tension between Israel and Iran presents a complex challenge for global powers and the countries in the region, including India. The conflict threatens not only regional stability but also poses specific geopolitical, economic, and security challenges for New Delhi.

India’s ties with both Israel and Iran are pivotal, encompassing defense, trade, energy, and expatriate communities. With a large number of Indian nationals working across the Middle East, any escalation in the conflict could have profound consequences on their safety and livelihood. Additionally, the rising instability in Bangladesh following a regime change adds to the challenges India must contend with in the region.

India's Relations with Israel and Iran: A Delicate Balance

India has historically maintained strong bilateral relations with both Israel and Iran, even as they remain adversaries in the Middle Eastern geopolitical landscape.

• India-Israel Relations: India has cultivated a deep relationship with Israel, particularly in defense and technology sectors. Israel has emerged as one of India’s most reliable defense partners, providing advanced military hardware, including drones, missile systems, and cyber security technology. Israel’s expertise in agriculture and water management has also significantly contributed to India’s development efforts. Furthermore, India has begun exporting missiles and other defense systems to Israel, marking a new chapter in bilateral cooperation.
• India-Iran Relations: Despite the impact of international sanctions on Iran, India has historically depended on Iranian oil for its energy security. Iran’s strategic importance for India extends beyond energy; the Chabahar Port, developed by India, provides critical connectivity to Afghanistan and Central Asia, bypassing Pakistan. Additionally, the International North-South Transport Corridor (INSTC), a key trade route linking India to Europe via Iran and Azerbaijan, plays a vital role in India’s regional trade strategy.

Balancing its defense and trade relations with Israel and its energy and strategic ties with Iran has allowed India to maintain a nuanced approach. However, escalating tensions between Israel and Iran threaten to upend this delicate balance, posing significant risks for India’s energy security, defense cooperation, and the safety of its expatriates in the region.

Impact of the Israel-Iran Tension on India

The potential fallout from the rising Israel-Iran conflict could significantly disrupt various aspects of India’s foreign relations, economy, and its ability to protect its citizens working abroad.

1. Energy Security at Risk

• Iran's Role in India's Energy Supplies: India’s energy security is tightly linked to Iran, which has been a major supplier of crude oil in the past. Though US sanctions have forced India to reduce its oil imports from Iran, Tehran remains a crucial element in India’s long-term energy strategy. Any military conflict involving Iran could disrupt oil shipments, further pushing up global oil prices and increasing India's energy costs.
• Crude Price Hike: The tension between Israel and Iran is already causing a surge in global crude oil prices, directly impacting India's energy import bill. India imports more than 85% of its oil needs, and any sustained increase in oil prices will fuel inflation, worsen the trade deficit, and dampen economic growth.

2. Impact on the Indian Diaspora in the Middle East

One of the most critical concerns for India is the safety and livelihood of the millions of Indian expatriates living and working across the Middle East, including in Israel.

• Large Indian Workforce in the Middle East: With over 8 million Indians living and working in Gulf countries, the Middle East is home to one of the largest Indian expatriate populations globally. These workers form the backbone of industries such as construction, healthcare, and services, and send substantial remittances back to India.
• Safety Concerns: Escalating hostilities between Israel and Iran could spill over into neighboring countries, directly threatening the safety of Indians in the region. The Indian government has already issued advisories urging its citizens in Israel and Iran to stay alert and take precautions. Should the situation worsen, large-scale evacuations may be required, similar to the operations India conducted during previous conflicts in West Asia.

Any instability in the region could lead to job losses, safety concerns, and disruptions in remittances, which form a crucial part of India’s foreign exchange inflows.

3. Threat to Maritime Trade

• Houthis and the Red Sea: Iran’s support for the Houthi rebels in Yemen could intensify if tensions with Israel escalate. The Houthis have a track record of targeting oil tankers and shipping lanes in the Bab-el-Mandeb Strait, through which a significant portion of India's trade with Europe and Africa passes. Any disruption in maritime traffic through this crucial chokepoint would directly impact India’s trade flows and increase shipping costs.
• INSTC and Trade Through Iran: The International North-South Transport Corridor (INSTC), linking India to Europe via Iran, is another potential casualty of escalating hostilities. Disruption of this corridor would significantly affect India’s access to Central Asia and Europe, forcing India to explore alternative trade routes that are longer and more expensive.

4. Defense and Strategic Relations with Israel

• India’s Defense Cooperation with Israel: India relies heavily on Israel for cutting-edge military technology, from advanced surveillance systems to missile defense systems like the Barak 8. Disruptions in defense imports from Israel could weaken India’s military readiness, particularly given the hostile environment in India's immediate neighborhood, including potential threats from Pakistan and China.
• Missile and Defense Exports to Israel: Beyond imports, India has also become a supplier of defense equipment to Israel, including the export of missiles and other military hardware. The continuation of this cooperation is essential for India’s defense sector, and any instability that affects Israel’s defense imports could impact India’s growing defense export industry.

5. Regional Instability and the Role of External Powers

• US and Global Sanctions: Should the tensions escalate into direct conflict, there is a strong likelihood that the US and its allies could impose further sanctions on Iran. India has historically struggled to maintain trade relations with Iran under such sanctions, and any new sanctions regime would further complicate India's engagement with Tehran, particularly in sectors like energy, infrastructure, and trade.
• China’s Growing Influence in Iran: China’s deepening economic and military ties with Iran pose a challenge for India. With China's Belt and Road Initiative (BRI) already entrenched in Iran, any reduction in India’s engagement with Tehran would leave more space for China to consolidate its influence. This could affect India's long-term strategic interests in the region.

Impact on India's Broader Geopolitical Strategy

The fallout from the Israel-Iran tension comes at a particularly challenging time for India, as it also contends with growing instability in Bangladesh following a recent regime change.

• Bangladesh’s Political Shift: India has traditionally enjoyed a strong relationship with Bangladesh under the leadership of Sheikh Hasina. However, the recent regime change in Bangladesh has introduced anti-India rhetoric, with radical elements already beginning campaigns against Hindus and India. This adds to India's regional challenges, as Bangladesh was one of the few stable and cooperative nations in India's immediate neighborhood.
• Dual-Front Instability: With tensions rising in both the Middle East and South Asia, India could find itself managing instability on multiple fronts. This will stretch India's diplomatic and security apparatus, especially if hostile elements in Bangladesh exploit India's divided focus on Israel and Iran.

What Can India Do?

India must adopt a proactive and nuanced approach to mitigate the risks posed by the Israel-Iran tensions while securing its national interests and protecting its diaspora.

1. Maintain Diplomatic Neutrality: India should continue its policy of strategic autonomy, balancing its defense cooperation with Israel and its energy and trade relations with Iran. By avoiding taking sides publicly, India can safeguard its relationships with both nations while pushing for diplomatic solutions through multilateral forums.
2. Ensure the Safety of Indian Nationals: The Indian government must closely monitor the evolving situation in the Middle East and stand ready to conduct evacuation operations, if necessary. Building on previous experiences, India should also engage with host governments in the region to ensure the safety of its nationals.
3. Diversify Energy Sources: India should accelerate efforts to diversify its energy supplies, reducing its dependence on the Middle East. This includes deepening partnerships with countries like the United States for LNG supplies, boosting domestic renewable energy production, and further engaging with Saudi Arabia and UAE to secure alternative energy sources.
4. Enhance Maritime Security: Given the potential for disruption in key shipping lanes, India should bolster its naval presence in the Indian Ocean and Red Sea. Strengthening partnerships with countries such as Oman and UAE will help safeguard India's trade routes.
5. Leverage Multilateral Diplomacy: India should use its growing clout in international organizations such as the United Nations, BRICS, and Shanghai Cooperation Organisation (SCO) to promote peaceful resolutions between Israel and Iran. A stable Middle East is in India's strategic interest, and New Delhi should position itself as a mediator where possible.
6. Focus on Bangladesh Diplomacy: India should engage with the new regime in Bangladesh and aim to neutralize anti-India sentiments. Maintaining stability in Bangladesh will be essential for India's broader regional strategy.

Conclusion

India’s foreign policy faces one of its most challenging tests as it navigates the fallout from the Israel-Iran tensions while grappling with regional instability in South Asia. Protecting the safety and interests of Indian expatriates in the Middle East, maintaining energy security, and continuing its defense and strategic cooperation with both Israel and Iran will be vital. By maintaining a pragmatic and balanced approach, India can weather the storm, but it must remain vigilant and proactive in the face of these evolving crises.

About the authors:

• Dr. Jagmeet Bawa, Professor & Head, Department Political Science, Central Univesity of Himachal Pradesh, India.
• Dr. Balinder Singh Department Political Science, Central Univesity of Himachal Pradesh, Punjab, India.