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Israel-Hamas Conflict and Its Impact on India

Created on 10 Oct 2023

Wraps up in 7 Min

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Early on Saturday, October 7th, something shocking happened in the Middle East. Hamas, a group in Gaza supported by Iran, launched a sudden and unexpected attack on Israel. They used rockets, paragliders, boats, and even motorcycles to sneak in Israel. Their goal is to hurt, scare, and even kill Israelis.

They fired around 5,000 rockets into Israel, hitting places where regular people live. In response to this , Israeli Prime Minister Benjamin Netanyahu declared that 👇

This conflict is a big deal, and it is going to affect not just the people in that area but also countries far away.

This article will explain who Hamas is and why they did this. Plus, it will show you how all of this might affect India and why you should care about it.

Why Did Israel Face an Attack?

Well, it's a bit like solving a puzzle with lots of pieces. While we can't be absolutely certain about Hamas's exact reasons, there are some important factors at play.

  1. There are several long-standing issues which have been causing tensions between the two nations for a while. 
  2. The recent clashes in Jerusalem and the West Bank, which added fuel to the fire. 
  3. On top of that, Israel had a government leaning to the far right, which made things even more complicated.
  4. And lastly, Israel and Saudi Arabia were having talks about becoming friendlier, and that stirred the pot too.

Hamas, the group behind the attack, said they did it because of the hardships Palestinians faced for many years. So, as you can see, it's a mix of many things coming together that led to this situation.

I want you to take a good look at the image below. In this map, the white part represents Israel, and the green part represents Palestinian land. Keep this map in your mind because it's going to be the key to unlocking some crucial insights as we go along.

One thing's clear: it's a lot more complicated than it might appear at first glance. Let's dive deeper into this puzzle to understand all the pieces and how they fit together. 

Meet Hamas: The Group Behind the Attack

Hamas, an acronym for Harakat al-Muqawama al-Islamiya, is a political and militant group, kind of like a political party with a military side. Before we go any further, look at the map below to check where Israel, Gaza, and the West Bank are located.

Source: https://gaza-palestine.com/

Hamas is one of the two major political groups in the Palestinian territories. Their main base is in the Gaza Strip, where they govern over two million people. But what makes this group most famous is its use of weapons to fight against Israel.

Many countries have labelled Hamas as a terrorist organisation, although some specifically use this term only for its military wing. Iran gives them support, both with money and supplies, and Turkey is said to give shelter to some of their top leaders. On the other side, there's a rival party called Fatah, which controls the Palestine Liberation Organisation (PLO) and runs things in the West Bank. Fatah has said no to violence.

This divide in Palestinian leadership and Hamas's strong stance against Israel have made it tough for things to be stable in Gaza.

Now, you might be wondering how Hamas runs things in Gaza. Well, they've been in charge there since around 2006, not long after Israel pulled out. Back then, they won most of the seats in the Palestinian legislature and formed a government.

Okay, but what do regular Palestinians think about Hamas? Well, it's kind of mixed. A poll in June 2023 by the Palestinian Center for Policy and Survey Research (PCPSR) showed that around one-third of Palestinians see Hamas as the worst thing that's happened to them since Israel was created in 1948. But more than half of Palestinians in Gaza and the West Bank said they'd vote for Hamas's leader, Haniyeh, over the current Palestinian Authority President, Abbas, if there was an election. Only about a third would choose Abbas.

Take a look at their logo 👇

Do you notice something? The upper part of the logo is the image of the map we saw earlier, and yes, it is entirely covered in green. I hope you know what their intentions are.

Now that we've explored the reasons behind this attack and have a clearer picture of who Hamas is, let's shift our focus to understanding the relationship between India and Israel.

Israel and India: Strong Partnerships

Israel is a crucial trading partner for India, holding the third-largest position in Asia and ranking 10th globally. In terms of military equipment, Israel is second only to Russia in supplying India, and this trade is valued at an impressive ₹74,000 crore

In 2022, Israel's contribution made up more than 8% of India's total defence imports. India exports a wide range of products to Israel, including diamonds, precious metals, chemicals, textiles, petroleum products, electronics, medicines, and more. This robust trade relationship highlights the growing partnership between the two nations across various sectors.

  • Nearly 300 Israeli companies have invested in India, showing a strong business connection.
  • In the financial year 2023, India sent 3,480 types of products to Israel, highlighting a diverse trade relationship.

Take a look at the graph below to get a clearer picture of how India's trade with Israel has evolved over the last two decades.

Source: Livemint
  • India's exports to Israel were valued at ₹70,320.90 crore in FY23, a significant increase from ₹39,862.40 crore in FY22, indicating growing trade. 
  • During April-May 2023, India's exports to Israel reached ₹4,903.3 crore, suggesting a consistent trade flow. 

Now, let's see how the war is affecting India.

How the Israel-Hamas War Affects India

The Israel-Palestine conflict could have a significant impact on India, and here's why it matters:

Trade Ties at Stake: As described above, Israel is a major trade partner for India. This ongoing war could potentially affect our trade agreements with Israel. This, in turn, might have consequences for India's defence systems and budget. As a result, we might find ourselves relying more on expensive Russian military equipment.

Oil Prices and Economic Ripple: You might be wondering why the Israel-Palestine conflict could affect things like oil prices, even though they aren't the biggest players in the global oil market. Well, it's all about looking at the bigger picture.

Think of it like this: the conflict is unfolding in a region that's crucial for producing oil. So, when there's tension in this region, it can send ripples through the oil market. In fact, we've already started to see changes in oil prices.

It's a reminder that what happens in one part of the world can have far-reaching effects, especially when it comes to something as essential as oil. So, even if Israel and Palestine aren't the biggest oil producers themselves, their conflict can still impact the global economy.

The Domino Effect: Now, let's break down how this works. When oil prices go up, it often leads to inflation. And when inflation rises, it puts pressure on the Indian rupee. 

Here's why: High oil prices can make the US dollar stronger compared to other currencies. And a stronger dollar can make oil more expensive for countries like India.

So, you see, it's like a chain reaction. The conflict in Israel-Palestine can set off a series of events that impact our economy, our currency, and even the prices we pay for everyday goods.

Oil prices upar gaye,
Inflation bhi badh gaya,
₹ kamzor ho gaya, Ab kya?

Now that the Indian Rupee (₹) has become weaker, something interesting might happen. Gold could become a more attractive option for investment. People might choose to buy gold instead of putting their money into the stock markets. When more folks buy gold, the demand goes up, which often leads to an increase in gold prices. And voilà! ⤵️

Now, let's turn our attention to the final significant point that's bound to get impacted. An initiative was introduced during the recent G20 Summit in Delhi. ⤵️

India-Middle East-Europe Economic Corridor (IMEC): So, what exactly is IMEC, why will it get impacted, and how does it concern India? I'll explain it all to you. Rukho jara, sabar karo! ✋ Keep reading!

IMEC is a brand-new initiative with a pretty grand goal: to boost connectivity and economic ties between Asia, the Arabian Gulf, and Europe. IMEC will consist of two main parts – the east corridor connecting India to the Arabian Gulf and the northern corridor linking the Arabian Gulf to Europe. 

Now, here's where it gets interesting. They're planning to build a railway that will create a dependable and cost-effective way to move goods and services across borders. This will benefit countries like India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. Along this railway route, they want to lay cables for electricity and digital connections and pipes for exporting clean hydrogen. 

Why is this a big deal? Well, it'll make supply chains more secure, trade easier, and reduce environmental impact. Plus, it'll create jobs and lower greenhouse gas emissions. 

But here's the thing – they plan to meet again soon to develop a plan of action. However, given the current situation, it might be a bit challenging. What do you think? Will they be able to make it happen in the near future, or will this project be put on hold?

The world, as a whole, is set to bear the brunt of this conflict. Just when we were beginning to recover from the aftermath of the Russia-Ukraine war, this crisis emerged. The far-reaching impacts of this war are unmistakable and could reshape the global landscape significantly.

The Bottom Line

As of today, on October 10, 2023, the situation is grim. Many Palestinians in Gaza, about 123,538 of them, have had to leave their homes because of Israeli airstrikes and shelling in their neighbourhoods. The conflict is still going strong, with Israel hitting more than 500 targets in Gaza and fierce battles happening in southern Israel with Hamas fighters.

In conclusion, we must understand that this conflict affects many people, and finding peace is crucial for everyone's well-being. It's a challenging time, but we must hold onto hope for a better future.

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Sakshi Dhakre

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Sakshi is an adventurous spirit who enjoys both the intellectual stimulation of Finance and the sensory experiences of good food and nature’s beauty. She has a passion for delving into complex financial topics and distilling them down into easy-to-understand insights. When she's not poring over financial reports, you might find her exploring a new corner of the city, trying out new restaurants and cuisines or admiring the beauty of the night sky.

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