Kolkata: The ongoing unrest in Iran has not had any significant impact on India Inc’s global trade, or the credit profiles of domestic corporates, thus far, according to a report released by Crisil Ratings.
But if tensions persist or escalate, sectors such as oil refining, aviation and crude-linked sectors, such as specialty chemicals, paints, petrochemicals and synthetic textiles, may be affected due to a rise in crude oil prices, the rating agency said.
Additionally, companies involved in basmati rice, fruits, and nuts trade may see heightened impact.
India’s direct trade with Iran is minuscule, accounting for a bare ~0.3% of total exports, and less than 0.1% of total imports last fiscal. The exports mainly comprise basmati rice (over 60% of total exports to Iran), while imports are mostly fruits and nuts, and some crude-linked products.
As Iran accounts for 4-5% of global crude oil supply, any escalation that disrupts its production could spike prices. The trajectory of that will also bear watching, given India’s high import dependence on crude oil.
While India’s direct dependence on Iran for crude-linked products is low, any sharp rise in crude oil prices will have a cascading impact on sectors such as oil refining, aviation, specialty chemicals, paints, flexible packaging and synthetic textiles, among others, that consume the oil itself or linked raw materials. The extent of impact will depend on the specific sector’s ability to pass on the incremental cost.
Brent crude prices, which spiked past $65 per barrel from less than $60 as the unrest began, had then subsequently stabilised at lower levels thereafter.
For domestic basmati rice exporters, Iran is the third-largest destination, accounting for ~13% of total exports in fiscal 2025. But since basmati rice is a staple in Iran, the impact on demand is likely to be limited.
Additionally, India has a diverse presence in the Middle East with significant exports to Saudi Arabia, Iraq and the United Arab Emirates, which reduces demand risk. Nevertheless, a prolonged unrest could disrupt supply chains and delay payments from Iranian counterparties, potentially lengthening the working capital cycle for exporters.
As for imports from Iran, fruits and nuts comprise over 60% and account for 10% of India's total imports of these products. Being non-essential, their demand is likely to be highly elastic in the event of a disruption in Iranian supplies.
Furthermore, any additional tariffs levied on India due to trade relations with Iran can potentially exacerbate the impact on Indian exporters.
But if tensions persist or escalate, sectors such as oil refining, aviation and crude-linked sectors, such as specialty chemicals, paints, petrochemicals and synthetic textiles, may be affected due to a rise in crude oil prices, the rating agency said.
Additionally, companies involved in basmati rice, fruits, and nuts trade may see heightened impact.
India’s direct trade with Iran is minuscule, accounting for a bare ~0.3% of total exports, and less than 0.1% of total imports last fiscal. The exports mainly comprise basmati rice (over 60% of total exports to Iran), while imports are mostly fruits and nuts, and some crude-linked products.
As Iran accounts for 4-5% of global crude oil supply, any escalation that disrupts its production could spike prices. The trajectory of that will also bear watching, given India’s high import dependence on crude oil.
While India’s direct dependence on Iran for crude-linked products is low, any sharp rise in crude oil prices will have a cascading impact on sectors such as oil refining, aviation, specialty chemicals, paints, flexible packaging and synthetic textiles, among others, that consume the oil itself or linked raw materials. The extent of impact will depend on the specific sector’s ability to pass on the incremental cost.
Brent crude prices, which spiked past $65 per barrel from less than $60 as the unrest began, had then subsequently stabilised at lower levels thereafter.
For domestic basmati rice exporters, Iran is the third-largest destination, accounting for ~13% of total exports in fiscal 2025. But since basmati rice is a staple in Iran, the impact on demand is likely to be limited.
Additionally, India has a diverse presence in the Middle East with significant exports to Saudi Arabia, Iraq and the United Arab Emirates, which reduces demand risk. Nevertheless, a prolonged unrest could disrupt supply chains and delay payments from Iranian counterparties, potentially lengthening the working capital cycle for exporters.
As for imports from Iran, fruits and nuts comprise over 60% and account for 10% of India's total imports of these products. Being non-essential, their demand is likely to be highly elastic in the event of a disruption in Iranian supplies.
Furthermore, any additional tariffs levied on India due to trade relations with Iran can potentially exacerbate the impact on Indian exporters.
