What Happened
- India's total imports from West Asia amount to approximately $98.7 billion, spanning crude oil, LNG, fertilisers, rough and polished diamonds, and various industrial materials — all now at risk from the escalating US-Israel-Iran conflict.
- The disruption to the Strait of Hormuz — through which approximately 50% of India's crude oil and 54% of its LNG imports are routed — is the primary transmission channel of the supply shock.
- Key import categories at immediate risk include: crude oil and petroleum products (the dominant share), LNG, urea and phosphatic fertilisers, rough diamonds (India is the world's largest diamond polishing hub), edible oils, and capital goods.
- Energy prices have already surged: Brent crude rose from an average $66–67/barrel in January–February 2026 to $82–84/barrel; Asian spot LNG prices jumped from approximately $10/mmBtu to $24–25/mmBtu.
- CRISIL Research highlighted that LNG-dependent sectors — city gas distribution, fertilisers, power generation — and trade-dependent sectors like basmati rice, diamonds, and aviation face the most severe near-term disruption.
Static Topic Bridges
India's Trade Exposure to West Asia: Imports and Exports
West Asia (the Middle East) is India's most important trading region for both imports and exports. The region accounts for the largest share of India's energy imports and a significant portion of commodity imports. Simultaneously, West Asia is a major destination for India's goods exports (particularly food, textile, and industrial products) and is the source of nearly 40% of India's remittance inflows.
- India's top imports from West Asia: crude oil and petroleum products (the largest item), LNG, fertiliser raw materials (rock phosphate, phosphoric acid, urea), rough diamonds, edible oils
- Key exporting countries: Saudi Arabia, UAE, Iraq, Kuwait, Qatar, Iran (historically)
- India's exports to West Asia: basmati rice, engineering goods, textiles, gems and jewellery, pharmaceuticals, chemicals
- West Asia accounts for ~8–9 million Indian expatriates who remit approximately $40 billion/year to India
- UAE is India's third-largest trading partner overall; Saudi Arabia and Iraq are top crude oil suppliers
Connection to this news: The $98.7 billion import exposure figure captures India's structural dependence on a region now experiencing active military conflict, with each import category having a distinct supply chain vulnerability.
India's Fertiliser Import Dependence
India is one of the world's largest consumers of chemical fertilisers — essential for agricultural productivity. While India produces urea domestically (partially), it depends heavily on imports for phosphatic (DAP) and potassic (MOP) fertilisers. West Asia is a critical supplier of fertiliser raw materials: roughly 40% of India's fertiliser imports and raw materials (rock phosphate, phosphoric acid) originate from the region.
- India's fertiliser subsidy bill: approximately ₹1.5–2 lakh crore per year (among the largest subsidy expenditures)
- Key imported fertilisers: DAP (di-ammonium phosphate), MOP (muriate of potash), urea (partially imported)
- Rock phosphate (for DAP): imported from Morocco, Jordan, Egypt — some routed via Hormuz/Red Sea
- Phosphoric acid: significant imports from Jordan, Saudi Arabia
- A disruption in fertiliser supply ahead of the Kharif sowing season (June–July) could threaten food security
Connection to this news: Fertiliser supply chain disruption is among the most consequential impacts of the West Asia conflict for India — higher fertiliser prices directly raise farm input costs, threatening food inflation and agricultural output.
India's Diamond Polishing Industry and West Asia Trade Routes
India is the world's dominant diamond polishing hub, responsible for cutting and polishing approximately 90% of the world's diamonds by volume. Rough diamonds — predominantly from Russia, Botswana, South Africa, Angola, and Canada — are imported, processed in Surat (Gujarat), and re-exported. A significant portion of this trade flows through UAE (particularly Dubai) and uses West Asian shipping routes.
- Surat handles approximately 90% of global diamond cutting and polishing by value
- India's gems and jewellery sector: ~$35–40 billion in annual exports; significant employment in Gujarat and Maharashtra
- Dubai/UAE is a key transit hub for rough diamond imports and polished diamond exports
- Disruption to Hormuz routes raises insurance costs, freight rates, and delays shipments — affecting working capital
- The sector employs over 1 million workers, primarily in Surat
Connection to this news: The $98.7 billion import exposure includes rough diamond imports via West Asia, but the sector is also at risk from the export disruption side — as polished diamond re-exports pass through UAE transit hubs that are now in a conflict-adjacent zone.
Current Account and Trade Balance Dynamics
India's trade balance (exports minus imports) is structurally negative — India consistently imports more than it exports in goods. The current account deficit (CAD) is partly offset by services exports (IT/software) and remittances. A simultaneous shock of higher import prices (oil, LNG, fertilisers) and lower export receipts (basmati, gems) from West Asia is a particularly damaging "double squeeze" on the current account.
- India's merchandise trade deficit: typically $200–250 billion/year
- Petroleum imports: ~$130–160 billion/year in normal conditions
- Non-oil, non-gold CAD is considered the "core" measure of trade competitiveness
- Remittances (~$135 billion in FY2025): largest offset to the trade deficit, but West Asia-origin remittances at risk if conflict displaces Indian workers
- Currency pressure: a widening CAD depreciates the rupee, making all imports (including oil) costlier in rupee terms
Connection to this news: The $98.7 billion import exposure from West Asia is not just about oil — it represents a broad-based vulnerability that simultaneously pressures the trade balance, fiscal accounts (via subsidies), and inflation.
Key Facts & Data
- India's total imports from West Asia: approximately $98.7 billion (at risk from the conflict)
- Strait of Hormuz: routes ~50% of India's crude oil and ~54% of LNG imports
- Brent crude: rose from $66–67/barrel (Jan–Feb 2026 avg) to $82–84/barrel (Mar 2026)
- Asian LNG spot prices: jumped from ~$10/mmBtu to $24–25/mmBtu
- India's crude oil import dependence: ~85% of consumption imported
- Fertiliser: ~40% of imports and raw materials sourced from West Asia
- India's diamond polishing: ~90% of world's diamonds by volume processed in India (Surat)
- India's gems and jewellery exports: ~$35–40 billion/year
- Basmati rice exports: ~72% of total basmati exports go to West Asia
- Indian diaspora in West Asia: ~8–9 million workers; remittances ~$40 billion/year from the region