India's strategic ports caught up in the Israel-Iran war
The escalation between Israel and Iran is testing India’s "strategic autonomy". New Delhi has strong economic and geopolitical interests in both countries. From the Port of Haifa controlled by the Adani group to the Iranian terminal of Chabahar, India is trying to defend its trade corridors from Chinese interference and growing regional tensions. But the instability caused by the war threatens its energy, exports, and digital infrastructure.
The war between Israel and Iran is a major diplomatic headache for India since it has relations with both countries, in particular through the port of Haifa, in Israel, and the port of Chabahar, in Iran, as alternatives to China’s geopolitical and maritime competition.
Haifa is a maritime hub that handles over 30 per cent of Israel's total imports and is the busiest and most efficient port in the country.
India has a significant stake, with 70 per cent ownership by a consortium led by Indian billionaire Gautam Adani, Adani Ports and Special Economic Zone Ltd (APSEZ), along with Israel’s Gadot Group, which holds a 30 per cent stake.
The acquisition, valued at approximately US$ 1.2 billion, was completed in January 2023.
According to Indian sources, despite recent Iranian missile strikes targeting a nearby oil refinery, the Adani-run port was unscathed and loading operations continued without a hitch. The Bazan refinery, by contrast, Israel’s largest, has suspended all operations, with major fires and three employees killed in recent days.
For Adani, who is close to Indian Prime Minister Narendra Modi, the Haifa port is a modest asset in terms of trade, contributing less than 2 per cent of the total cargo volume handled by Adani Ports and SEZ, and about 5 per cent of its revenues. But its location is strategic, and offers deep-water access to large ships, close to major military installations, adding to its value to investors.
The port acquisition aligns with India’s broader strategic goals, particularly the India-Middle East-Europe Economic Corridor (IMEC), a multinational initiative involving India, Israel, the United Arab Emirates, Saudi Arabia, the European Union, and the United States, which aims to connect Indian ports to Europe as an alternative route to the Suez Canal and the Red Sea.
Israeli Prime Minister Binyamin Netanyahu has described Haifa as an important link in this regard. The port acquisition has also been called the “first success of I2U2,” a reference to an economic grouping that includes India, Israel, the United Arab Emirates, and the United States.
Haifa is also a place of competition between global powers. China’s Shanghai International Port Group (SIPG) operates a separate terminal, an arrangement that had sparked controversy over its proximity to Israel’s nuclear submarine base and US Navy ships.
US concerns about Chinese control over the infrastructure led Israel to abandon plans for further Chinese involvement in port operations, ultimately awarding the tender for the old Haifa terminal to the Adani-Gadot consortium.
The Adani Group has additional interests in Israel’s defence sector, including a joint venture with Elbit Systems to produce Hermes 900 drones.
At the other end of the regional divide, India has invested heavily in Iran’s Chabahar port, with more than US$ 85 million, and a terminal operated by India Ports Global Limited (IPGL). The port is designed to establish a direct link to Central Asia, bypassing Pakistan and its Gwadar port, where China is involved.
Chabahar is crucial to boosting India’s energy security because it would provide access to rare earth elements from Central Asia, a region with which India does not share a direct border, limiting potential trade.
In this case, the port falls within the International North-South Transport Corridor (INSTC), an ambitious trade route that links New Delhi to Moscow via Iran and Azerbaijan. Again, the region would be connected by excluding routes that are part of China’s Belt and Road Initiative.
Should the war between Israel and Iran escalate, it risks blocking the project’s completion, slowing India’s efforts to counter China’s footprint in the region. The port is in a vulnerable area that is not necessarily protected from cyber and naval intrusions.
On the long run, a deterioration in Iran’s position could lead to more severe Western sanctions, jeopardising Chabahar’s viability for trade, so far exempted from the US embargo.
India’s approach to the war fits neatly with its policy of “strategic autonomy,” under which it seeks to maintain friendly relations with rival states while avoiding alienating either side.
India dissociated itself from a statement by the Shanghai Cooperation Organization (SCO) condemning Israel’s attacks on Iran, opting instead to call for de-escalation and a diplomatic solution.
The move underscores its unique position, given its key strategic interests in both Iran and Israel. Unlike many SCO members that do not have strong diplomatic relations with Israel, India is also Israel’s largest military customer.
The potential impact of the war on India’s economy does not stop there. New Delhi is heavily dependent on oil imports from the Persian Gulf, with more than 80 per cent of its crude imports transiting through the Strait of Hormuz, which Iran has threatened to close.
Meanwhile, basmati rice exports to Iran are already facing payment delays.
India’s digital economy, which relies on undersea cables that run through risk zones near Israel and Iran, faces serious problems and is at risk of disruption; in fact, more than 90 per cent of India’s global data flow passes through the Middle East.
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