Conflicts in West Asia: India’s trade and diaspora at risk amid prolonged Gaza War

A time aft a ceasefire betwixt Israel and Lebanon’s Hezbollah came into effect, the 2 sides accused each different of violating the truce meant to halt the warring that ran parallel to the Gaza War for implicit a year. 

The speech of accusations doesn’t bode good for the cautious optimism sparked by the US-brokered truce, which aimed to de-escalate the struggle triggered by the Hamas and Palestinian Islamic Jihad (PIJ)’s onslaught connected Israel connected 7 October 2023. 

The enlargement of the Gaza War to Lebanon and the Persian Gulf, driven by the engagement of Hezbollah, Ansar Allah (the Yemeni militant radical commonly known arsenic Houthis), Iraqi militias, and the Iranian Revolutionary Guard Corps (IRGC), has agelong threatened to escalate the struggle beyond Israel and Palestine. 

The concern raises a captious question: however mightiness this prolonged warfare and its imaginable enlargement impact India’s bilateral commercialized and Indian expatriates successful the region?

Stalling economical progress

The menace of escalation overshadows the reconciliatory steps (such arsenic the Abraham Accords) chiefly motivated by the tendency among the determination countries to absorption connected economical maturation and improvement and eschew governmental tensions and geopolitical contention that had go the hallmark of determination authorities successful the 2010s. 

Among the starring countries that focused connected advancing economical interests alternatively of governmental confrontations are the UAE and Saudi Arabia, too Türkiye and Egypt. However, the situation successful Gaza and the resultant menace of a determination struggle has erstwhile again threatened to propulsion economical maturation and improvement to the backmost burner.

For India, stakes are peculiarly high. The Middle East, peculiarly the Gulf Cooperation Council (GCC) nations, accounts for implicit $150 cardinal successful bilateral commercialized annually and is simply a captious root of vigor imports.

Additionally, the portion is location to millions of Indian expatriates who lend importantly to India’s system done remittances.

Expatriates and remittances  

The portion is among the apical destinations for Indians migrating to antithetic parts of the satellite for work. In 2023, for example, India was the largest root of emigration, with astir 18.7 cardinal Indians moving extracurricular for enactment oregon different purposes. The six GCC countries person traditionally attracted ample numbers of Indians, and arsenic of 2024, astir 9 cardinal Indians unrecorded and enactment successful them. Notably, the Indians successful the GCC countries signifier 1 of the largest concentrations of Indian citizens abroad, on with North America and Western Europe. 

Among the determination countries, the largest attraction is successful the UAE, with astir 3.56 cardinal people, including 14,574 persons of Indian root (PIOs). Saudi Arabia (2.46 million), Kuwait (0.99 million), Qatar (0.84 million), Oman (0.69 million) and Bahrain (0.33 million) besides person important numbers of Indian expatriates.

Indians who emigrate overseas for enactment person traditionally been a root of remittances, making India the apical remittance-recipient state successful the world. In 2023, India received US$120 cardinal successful remittances from crossed the globe, and astir 30 per cent of the remittance originated successful the Gulf region, with the UAE unsocial contributing 18 per cent.

Potential interaction of remittance loss 

The astir devastating interaction for India successful lawsuit of the widening of the struggle would beryllium connected its expatriates. Historically, the information and information of Indians successful the Gulf person been a large preoccupation of Indian policymakers. In the past, the Government of India has sprung into enactment to undertake oregon facilitate large-scale rescue, evacuation and repatriation operations during crises to unafraid Indian citizens successful the Gulf. In 1991, for example, India evacuated astir 180,000 of its citizens from Kuwait aft the Iraqi penetration and annexation. 

Similarly, during the Arab Spring, India undertook the evacuation of its citizens from Egypt, Libya, Syria, Iraq and Yemen astatine antithetic times, though connected a overmuch smaller scale. During the COVID-19, India launched the Vande Bharat mission to repatriate Indians stranded abroad, with a ample fig of Indian citizens successful the Gulf utilizing it to instrumentality location astatine a distressing time.

Besides the menace to the information and well-being of Indians, widening the struggle would mean a sizeable nonaccomplishment to the forex (foreign exchange) inflow to India successful the signifier of remittances. Given that the remittance forms a important root of forex for India and contributed implicit 3 per cent to GDP, the nonaccomplishment successful remittance from the Gulf portion would earnestly interaction the economy. The nonaccomplishment of commercialized and commerce volition beryllium different superior situation for India if the warfare expands to the Gulf region.

Image source: Wikimedia Commons

Trade and energy 

In presumption of bilateral trade, successful 2023-24, 9 MENA (Middle East and North Africa) countries were among the apical 50 economical partners of India, including the UAE and Saudi Arabia being the 3rd and 5th largest trading partners of India with bilateral commercialized astatine US$83.65 cardinal and US$42.97 cardinal respectively. 

Among others, Iraq (US$33.32 billion), Qatar (US$14.05 billion), Kuwait (US$10.47 billion), Türkiye (US$10.43 billion), Oman (US$8.95 billion), Israel (US$6.53 billion) and Egypt (US$4.68 billion) featured arsenic apical 50 trading partners of India. Conventionally, Iran, Syria and Libya excessively person been among the large trading partners of India but person slipped down implicit the past decennary owed to the sanctions connected Iran and civilian wars successful the second two.

Besides trade, the portion is among India’s astir important sources of vigor imports. Although diversification efforts considerably reduced India’s dependence connected the Middle East for lipid and state imports implicit the years, the reliance connected the portion for hydrocarbons remains arsenic precocious arsenic 55-60 per cent arsenic of 2023-24.

Among the determination countries, Iraq, Saudi Arabia and the UAE stay among the apical 5 suppliers, too Russia astatine the apical and the US astatine the fifth. 

Moreover, Qatar, Kuwait, Oman, and Türkiye are among India’s apical 20 vigor suppliers. Here, too, the vigor imports from Iran, Syria and Libya person been disrupted owed to sanctions and conflicts.

Investments and defence

Besides, India has important business-to-business ties with the determination countries. It has worked towards expanding overseas nonstop concern (FDIs) and portfolio investments from the Gulf and the wider MENA region. The UAE, Saudi Arabia and Oman are among India’s large FDI sources. In addition, the fig of Indian companies doing concern and investing successful the determination marketplace has witnessed a important uptick successful caller years.

Moreover, countries similar Israel are among India’s largest defence commercialized partners. In contrast, successful caller times, India and the GCC countries, particularly the UAE and Saudi Arabia, too Egypt, person discussed defence trade, including associated manufacturing, raising the possibilities of maturation successful this sector.

The imaginable of the widening of the struggle to the Gulf portion tin person devastating consequences for Indians successful the area. While the economical interaction would mean the nonaccomplishment of jobs, immoderate escalation successful the struggle would mean a menace to life, and this would person to beryllium addressed by the Government of India successful lawsuit the warfare expands. A contingency program for specified a concern is needed. Therefore, India indispensable beryllium prepared to offset immoderate imaginable disruption successful hydrocarbon supplies.

Post Read Questions

What are the imaginable economical consequences for India if the enlargement of the Gaza War disrupts commercialized and commerce?

How could the widening of the struggle successful West Asia impact the information and well-being of Indians successful the Gulf region?

What could beryllium the imaginable interaction of the nonaccomplishment of remittances from the Gulf portion connected India’s economy?

How mightiness a diminution successful remittance inflow interaction India’s overseas speech reserves?

What are the imaginable measures that the Indian authorities would see to guarantee the information and information of Indian expatriates successful the lawsuit of the escalation successful the Gaza war?

(The writer is an Associate Professor of Middle East studies astatine Jawaharlal Nehru University, New Delhi. Views are personal. @MuddassirQuamar.) 

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