Modi Faces Backlash Over Israel Trip Days Before Iran Attacks

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(Bloomberg) — India’s opposition groups criticized Prime Minister Narendra Modi for his Israel trip last week, saying it gave tacit approval for subsequent airstrikes in Iran that’s sparked a crisis in the region. 

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The main Indian National Congress said on Saturday that Modi’s two-day visit to Israel was ill-timed and gave the perception of “partisan alignment and tacit endorsement” of Israel’s coordinated strikes with the US on Iran. Congress party spokesman Jairam Ramesh said Sunday that the Modi government’s response has been a “betrayal of India’s values, principles, concerns, and interests,” while another Congress leader, Priyanka Gandhi, called the assassination of Iran’s leader Ayatollah Ali Khamenei “despicable.”

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The attacks on Iran also drew heavy criticism from the Communist Party of India on Sunday.

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With about 9 million Indians working in the Gulf region and India heavily reliant on oil imports, the widening Iran crisis creates fresh uncertainty for the economy. India imports nearly 5 million barrels a day, making it the world’s third-largest oil consumer.

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“The immediate impact for India is in terms of its population that’s working in West Asia or tourists transiting. That’s a massive number,” said Ashok Malik, partner at the Asia Group. “Further, energy prices are sure to go up.”

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India’s government hasn’t officially responded to Khamenei’s killing. Modi will chair a meeting of India’s top security panel on Sunday night, according to government officials. The Ministry of External Affairs and prime minister’s office didn’t respond to a request for comment on Sunday. 

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Meanwhile, protests erupted Sunday in parts of Jammu and Kashmir, India’s only Muslim-majority region which has been plagued by militant violence. Omar Abdullah, chief minister of the region, called for calm and said police should refrain from using force or restrictive measures.

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The immediate worry for the economy would be the impact of higher oil prices, which could widen India’s trade deficit and put pressure on the currency. Oil prices climbed to a seven-month high of $73 a barrel in London last week amid concern over a possible strike in Iran. 

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“If oil prices climb and stay over $80 a barrel, current account deficit can widen by about $10 billion, exert pressure on the rupee and push fuel inflation up,” said Gaurav Kapur, an economist at IndusInd Bank.

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Oil Imports

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Based on available data for April to November, India sourced about 32% of oil imports from Russia, followed by 18% from Iraq, and the remainder from other Gulf countries and the US. India’s purchases from Russia, however, have fallen sharply in recent months after US President Donald Trump slapped punitive tariffs on Indian goods to push the country to halt imports from Russia. 

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A senior official in New Delhi said oil trade is disrupted, while cargo shipments to the Middle East are now halted. The situation is very volatile and it’s difficult to estimate the impact on exports, the official said, asking not to be identified because the discussions are private.