Domestic cost of conflict in West Asia

Yesterday morning, I stopped at a roadside stall to parcel poha for breakfast. “Pack me the twenty-rupee poha, bhaiya,” I said. He pointed to an updated price board I had missed. “It’s ₹25 now.”

That was the first hit I felt from a war almost 3,000 kilometres away.

In this interconnected world, the conflict involving Iran & Israel is not merely a foreign policy concern, it poses a direct domestic economic vulnerability for India.”

Domestic Issues.

Energy Security.

India is the world’s third largest oil importer, and the numbers tell a stark story of dependence, 60% of its LPG consumption is imported, of which nearly 90% passes through the Strait of Hormuz. Any disruption, whether a direct Iranian supply cut or broader regional instability, translates into fuel and cooking gas prices for ordinary Indians.

Over the last decade, India invested thousands of crores pulling rural women away from smoky chulhas toward clean cooking fuel through PM Ujjwala Yojana. Launched in 2016, the scheme today covers over 10 crore households most of them poor, rural, and with little capacity to absorb price shocks. When LPG becomes unaffordable, these families will go back to burning wood. A war in West Asia risks undoing a decade of hard won progress in clean energy access, public health, and the dignity of rural women.

Indian Diaspora.

Beyond remittances & forex reserves, we have to see this at micro level. Nearly 9 million Indians live & work in Gulf region making it the biggest diaspora population in the world. Families of these people depend on the remittances they receive for school fees, hospital bills etc. A crisis in west asia will disrupt more than 9 million families in India.

Although India has carried out evacuation operations earlier like Operation Ganga (Ukraine, 2022), Operation Kaveri (Sudan, 2023) & Operation Ajay (Israel, 2023) with combined total evacuations of 23,722 Indians. But Gulf diaspora is exponentially larger than any previous scenario, so the question is, is India ready for such a huge evacuation operation?

Fertiliser & Food Security.

Post Green Revolution, India achieved self-sufficiency in food supporting 1.4 billion people. But this self-sufficiency is based on a critical foundation.

Indian agriculture is monsoon dominated & thus irrigation & fertiliser intensive, making it one of the largest comsumer of urea & other chemical fertilisers.

Domestic production of fertiliser is not enough so India imports fertilisers & raw materials both. Iran is an important urea supplier to India, & Gulf region provides natural gas which is primary feedstock in fertiliser production. The war in West Asia will drive up prices of fertilisers globally.

India’s small & marginal farmers who constitute majority in agricultural sector will be hardest hit as they lack margins to absorb price shocks. And when the farmer struggles, the price eventually reaches every kitchen in the country, from urban apartments to rural households who are already spending nearly half their income on food.

Trade Routes.

India’s growth story was built on services like IT, finance, and consulting. But services, for all their dynamism, cannot absorb the millions of young Indians entering the workforce every year. India’s real employment challenge demands manufacturing which is labour intensive, scalable, and capable of generating the kind of mass employment that transformed economies like China, South Korea, and Taiwan before it.

In the last decade India proactively focused on manufacturing sector via Make in India, Start-Up India, Production Linked Intensive schemes, generating employment for millions of Indian youth.

India has positioned itself as key exporter of pharmaceuticals, textile, electronics etc. Unlike services, manufacturing is extremely dependent on trade routes. Goods must move from ports & across oceans. Nearly 90% of India’s trade by volume moves by sea. And the Gulf region sits at the intersection of India’s most critical shipping lanes connecting it to Europe, Africa and West Asia.

A war in West Asia would disrupt trade routes raising import prices, squeezing export competitiveness, & threatening the very manufacturing ambitions India has spent a decade building.

Conclusion.

India’s stance on the Israel-Iran war has often been criticised as moral ambiguity & cowardice. But the four vulnerabilities mapped in this article tell a different story. India cannot afford to antagonise Iran because of energy and fertilisers dependence. It cannot alienate the Gulf broadly because nine million of its citizens live there. And it cannot abandon its Western partnerships without sacrificing its manufacturing ambitions. A rigid foreign policy limits India’s wide ranging interests.

India’s answer is calibrated multi-alignment, it is the doctrine of maintaining productive relationships with competing powers simultaneously, prioritising national interest over ideological alignment. It is not the moral neutrality of the old Non-Aligned Movement. It is something more pragmatic and more demanding, active engagement with all sides, with eyes wide open.

Critics may call it fence-sitting. But the next time the price of poha goes up at a roadside stall, remember, there is an entire foreign policy doctrine working quietly to ensure it doesn’t go up further.