India has expressed that it would cut import duties and regulate exports if necessary to ensure adequate domestic supplies of essential products whose availability is restricted by the war in the Middle East. The conflict has effectively closed the Strait of Hormuz, which routes about 20% of the world’s oil flows causing energy and freight costs to surge and placing global supply chains under severe strain. India’s Director General of Foreign Trade Lav Agarwal stated the government is examining cuts to import duties on critical raw materials and other essential goods. The conflict has disrupted movement of key goods such as energy, fertilizers, food items, and industrial inputs, raising concerns about inflation, manufacturing slowdown, and food security for India. The government has also extended support for exporters through the RoDTEP scheme and removed customs duties on several petrochemical products through June.
India’s response to the Iran war highlights the country’s deep economic vulnerability to the Middle East’s instability. As one of the world’s largest energy importers, the closure of the Strait of Hormuz has hit India especially hard. What’s notable is the policy shift as India is willing to temporarily prioritize domestic stability over free trade principles, which reflects a broader global trend of economic nationalism during times of crisis. This situation also reveals the limits of India’s “strategic autonomy” doctrine: despite trying to stay neutral on the Iran conflict, India cannot escape the economic consequences. Long term, this may cause India’s push to diversify its energy sources and trade routes.
The Indian government will likely implement duty cuts on petrochemicals and food-related imports while monitoring export-sensitive goods closely, balancing domestic needs with its commitments to trade partners. Indian exporters will benefit from extended support schemes but face headwinds from higher freight costs. Trading partners who rely on Indian exports may face shortages if export regulations are tightened.
This connects to Development and Sustainability. India’s predicament illustrates how development goals, sustaining affordable energy, food security, and manufacturing growth, can be rapidly undermined by events far from its borders. It also connects to the concept of Sustainability in a global economy because even large, emerging economies like India are exposed to shocks in critical chokepoints like the Strait of Hormuz, showing why energy diversification is increasingly central to national development.