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Middle East conflict will have slight, but manageable, impact, on diamond sector

The ongoing conflict in the Middle East, confined mainly to the Gaza region now, has caused only negligible disruption in India’s trade so far, according to the report based on the CRISIL Ratings. Some sectors such as fertilisers and diamonds — both cut and polished — may see a slight, but manageable, impact, while for most others impact will be insignificant, the report added.

But the conflict has driven up prices of gold and crude oil. Their trajectories will bear watching, especially crude oil, given India’s high dependence on its import. Also, elevated crude oil prices have a cascading impact on a host of other sectors that consume the oil itself or linked raw materials.

India’s trade with Israel is relatively low, accounting for 1.9% of total exports and 0.3% of total imports last fiscal session. The merchandise exports mainly comprise polished diamonds and petroleum products, including refined hydrocarbons, while imports largely comprise industrial equipment, fertilisers, rough diamonds and precious stones.

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