Amid raging Iran-Israel/US war which has triggered uncertainties globally, the government is working on measures aimed at easing trade finance and risk pressures.
At an inter-ministerial media briefing, Director General of Directorate Foreign Trade (DGFT) Lav Aggarwal noted that the ongoing tensions in West Asia has created logistical and financial challenges for exporters, particularly in sectors such as petroleum products, chemicals, engineering goods, and agriculture.
The DGFT chief said the commerce ministry is working closely with banks and insurance companies to address rising war risk premiums and trade finance concerns.
Regular consultations are also being held with exporters to assess evolving issues and identify solutions, reported PTI citing the senior official.
Exports to the Gulf region—including gems and jewellery, rice, and pharmaceuticals—were valued at about USD 57 billion in 2024–25.
India’s total trade with the Gulf region stood at USD 178 billion in 2024–25, comprising USD 56.87 billion in exports and USD 121.67 billion in imports. The region includes the UAE, Saudi Arabia, Oman, Bahrain, Qatar, and Kuwait.
Logistics and Cost Pressures Rise
Exporters are facing higher freight costs due to vessel rerouting and war risk surcharges imposed by shipping lines. Perishable goods such as fruits, vegetables, and marine products have been particularly affected, with rising air and sea freight charges.
Payment channels and credit cycles, especially in the food and agriculture sectors, are also under strain, raising concerns for exporters reliant on timely settlements.
Impact on Gems, Engineering and MSMEs
The Gulf Cooperation Council remains a key market and sourcing hub for the gems and jewellery sector. However, gold jewellery exports are under pressure, while imports of gold bars and rough diamonds are facing disruptions.
Engineering exports are also affected due to increased shipping costs and restricted access at certain Gulf ports. Additionally, supply disruptions of LPG and PNG are impacting manufacturing clusters, particularly foundries and machining units.
Aluminium supplies and critical pharmaceutical inputs have also been hit, with MSMEs facing raw material shortages.
Government Monitoring and Coordination
To address these challenges, the commerce ministry set up an inter-ministerial group on March 2 to monitor the situation and coordinate responses. The group has held around 20 meetings so far.
A dedicated sub-group has also been formed to facilitate the movement of perishable cargo to affected regions. Officials said efforts are ongoing to ensure coordinated action across ministries and minimise the impact on India’s export sector.
