Escalating tensions in West Asia are beginning to ripple through India’s trade channels, with potential implications for food inflation, export flows, and bullion markets. Industry stakeholders warn that prolonged disruption could push up retail prices of pulses, while rice exports to Iran and other Gulf nations may face immediate risks.
Pulses Prices Under Pressure
India imports approximately 5–6 million tonnes of pulses annually, including tur, urad and lentils, primarily from Myanmar, Canada and African nations. According to Suresh Agarwal, president of the All India Dal Mill Association, any extended disruption to shipping routes could raise logistics costs and, consequently, landing prices.
“If the war continues beyond a week, the price of pulses will increase,” Agarwal said, noting that higher freight rates would quickly filter into retail markets. With pulses being a staple in Indian households, any spike could add pressure to food inflation.
Rice Trade Advisory Issued
While pulses prices may rise, rice prices could soften domestically if export shipments to Iran and Gulf countries slow. The Indian Rice Exporters Federation (IREF) has advised members to avoid new CIF (cost, insurance and freight) contracts for these regions, recommending FOB (free on board) terms instead so that freight and insurance risks remain with buyers.
Dev Garg, vice president of IREF, cautioned that rising bunker fuel costs and oil price volatility could sharply increase container and bulk freight charges. Insurance premiums may also climb, exposing exporters to losses on fixed delivered-price contracts.
Gem and Jewellery Sector at Risk
Beyond agriculture, the conflict poses challenges for India’s gem and jewellery trade, particularly its strong linkages with the UAE and Dubai.
Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council, warned that supply disruptions in rough diamonds and bullion could impact employment in Surat, India’s diamond cutting and polishing hub, which supports nearly one million workers.
Dubai remains India’s second-largest supplier of gold. In calendar year 2025, India imported gold bars worth $16.48 billion, up 28.47% year-on-year. Rough diamond imports through Dubai rose marginally to $7.45 billion, while exports of cut and polished diamonds to Dubai surged nearly 49% to $2.39 billion.
The India-UAE Comprehensive Economic Partnership Agreement has significantly strengthened bilateral trade flows in recent years, reducing duties and boosting competitiveness. Any geopolitical escalation could disrupt this momentum.
Bullion Markets Brace for Volatility
Precious metals are also expected to remain volatile as investors seek safe-haven assets amid heightened geopolitical risk.
Jateen Trivedi, VP Research Analyst (Commodity and Currency) at LKP Securities, noted that renewed military tensions involving Iran could trigger a gap-up opening in gold and silver prices when global markets resume trading. As equity markets face pressure, capital typically shifts toward bullion as a hedge against uncertainty.
With oil prices, freight rates, and insurance costs all vulnerable to further escalation, the evolving West Asia situation carries significant implications for India’s food inflation trajectory, export stability, and commodity markets in the weeks ahead.
