India faces major economic jolt if Iran-USA war breaks out, oil prices may hit the sky

India is closely following the growing tension between Iran and the United States of America. The two countries are almost on the verge of getting sucked into a deadly war after the US killed Iranian Major General Qasem Soleimani, the head of the Islamic Revolutionary Guard Corps Quds Force, in a drone attack which was followed by Tehran launching a barrage of missiles on two American military bases in Iraq.

A war between the two countries will have a massive impact on the world economy and will hit Indian interests too. Some economic impact of the ongoing skirmish between the two countries is already visible with crude oil and gold prices rising. An all-out war will result in crude oil prices skyrocketing, impacting every sphere of life in India.

Indian stock markets, too, are feeling the heat and have seen most of the shares on a downward slide in the last few days. An Iran-US war will also lead to a negative fallout on diplomatic relations with several countries.

India imports almost 84% of its crude oil from the Gulf countries and the route is through Iran's Hormuz strait. In case of a war breaking out, the area will bear the brunt resulting in imports being hit.

"Our third largest import is crude oil. If its prices increase, it will certainly impact the Indian currency and there is s possibility of depression in Rupee. The twin developments will result in a rise in the prices of all the commodities," averred Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations.

Tackling slowdown in the Indian economy will become very difficult if petrol and diesel prices move up due to a war between Iran and the US. The war will also hit the export of Indian basmati rice and tea to Iran.

India had in 2018-19 exported basmati rice worth Rs 32,800 crore out of which Rs 10,800 crore was to Iran alone. If Iran stops importing basmati rice and tea from India, it will impact their domestic prices, too, leading to their crash and hit the business hard.

Even evacuating lakhs of Indian nationals working in the Gulf countries will become a herculean task. There are 25,000 Indians in Iraq where the two US air bases in Irbil and Al Asad were targeted by Iranian missiles.

While Iran’s supreme leader Ayatollah Ali Khamenei called the missile attacks on the two bases in Iraq a "slap on the face" to the US, the latter's President Donald Trump a few hours after the strike claimed that no Americans were harmed in the retaliation by Tehran.