New Delhi, March 2 Amid escalating tensions in the West Asian region, the government held inter-ministerial deliberations with exporters and logistics players on Monday to assess the impact on India's trade. Industry representatives sought higher RoDTEP rates and urged the ECGC not to raise insurance premiums.
Exporters urged the government to restore high RoDTEP rates, which were recently halved. They asked the Ministry of Commerce to direct the Export Credit Guarantee Corporation of India (ECGC) to maintain insurance premiums and cover more goods.
The consultation was organized by the Ministry of Commerce, along with key logistics and trade facilitation partners, to review the emerging geopolitical situation and its potential impact on India's export-import (EXIM) cargo flows.
The government emphasized its priority to ensure continuity of EXIM logistics and mitigate any disruptions to India's trade flows.
"The approach will remain facilitative and coordinated, with a focus on maintaining supply chain resilience, protecting the interests of exporters – particularly MSMEs – while ensuring that essential imports required for domestic production and consumption are not adversely affected," the Ministry of Commerce stated.
During the meeting, it was agreed to maintain close, real-time coordination for monitoring route and capacity developments, surcharges, and equipment availability.
"Mechanisms for facilitating time-sensitive exports, such as perishable goods, pharmaceuticals, and high-value manufactured goods, were also discussed. The meeting emphasized strengthening facilitation at ports/ICDs (inland container depots) and ensuring smooth cargo evacuation to avoid congestion and extended dwell times," it said.
The US and Israel jointly launched military strikes on Iran on Saturday. Iran responded by firing drones and missiles at Israel and US military installations around the Gulf, as well as at Dubai, a global business hub.
Stakeholders presented an assessment of the evolving operational environment, including routing and transit-time changes, vessel scheduling adjustments, container/equipment availability, freight and insurance cost trends, and implications for time-sensitive exports.
Participants emphasized the need to maintain predictability in cargo movement, minimize avoidable delays, and ensure seamless documentation and payment processes for exporters and importers.
The government reiterated its readiness to facilitate trade operations, including procedural flexibility in export-related authorisations in cases of genuine disruption; coordination with customs authorities to ensure smooth clearance; and engagement with financial and insurance institutions to support exporter interests.
"The department reaffirmed that it will continue to engage closely with all stakeholders and relevant ministries/departments to ensure that India's trade continues to move efficiently and that any emerging issues are addressed in a timely manner," the ministry said.
The meeting was chaired by Special Secretary Suchindra Misra and Director General of Foreign Trade (DGFT) Lav Agarwal.
The meeting was attended by representatives from logistics operators and shipping lines/forwarders, Central Board of Indirect Taxes and Customs, Department of Financial Services, Ministry of Petroleum and Natural Gas, Ministry of Ports, Shipping and Waterways, the Reserve Bank of India, export promotion ecosystem, and other concerned agencies.
A participant said the DGFT suggested participating export promotion councils (EPCs) to share their concerns and suggestions in writing.
Gems and jewellery exporters requested an extension in the period for activities like shipments, diamond certification, and return of jewellery from exhibitions. "If the war continues for a longer period, we need support from the government to address the issues," an exporter said.
According to exporters, the closure of the Strait of Hormuz could impact oil trade and push crude oil prices. This would make goods less competitive due to higher input costs.
Following US and Israeli attacks on the Iranian government and its military and nuclear facilities, Iran warned against shipping through the strait and insurers withdrew coverage, effectively halting tanker movements. India imports 88% of its crude oil needs, and any rise in prices will increase its import bill and fuel inflation.
The Strait is a 33-kilometre passage connecting the Persian Gulf to the Arabian Sea.
TRADE THROUGH AIR ROUTE
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Federation of Indian Export Organisations (FIEO) President S C Ralhan has said the ongoing conflict has already disrupted established global logistics channels.
Air routes are being altered due to the closure of some airports and air spaces in the Middle East region. These airspaces connect to the US, Europe, and African nations.
Indian exporters use air routes to ship goods such as perishables, gems and jewellery, high-end apparels, fruits, and vegetables.
"The closure of airspaces will increase air freight costs, which in turn will increase the cost of goods," an exporter said. Of India's total exports, 15% go through air routes, with the remaining through sea routes.
The Apparel Export Promotion Council (AEPC) has urged the government to waive demurrage charges on export cargo at airports, as flight disruptions arising from the ongoing West Asian crisis may impact the movement of consignments.
In a communication to the civil aviation ministry, the Apparel Export Promotion Council (AEPC) said the prevailing situation has significantly disrupted international flight operations, resulting in route restrictions, airspace closures, flight diversions, schedule irregularities, and operational constraints at certain overseas airports.
Airport demurrage charges are fees for cargo or baggage at an airport terminal being kept beyond the allowed free period. These charges encourage swift clearance. The charges vary by airport, cargo type, and duration.
SEA ROUTE
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Exporters are apprehensive that the conflict in other parts of the Arab world may impact the movement of goods through Bab-el-Mandeb, the Red Sea, and the Suez Canal.
The Bab-el-Mandeb Strait is a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean.
The route starts from major Indian ports like Mumbai, JNPT, or Chennai, heads westward through the Arabian Sea, enters the Red Sea, and navigates through the Suez Canal into the Mediterranean Sea. From there, ships can reach various European ports, depending on their destinations.
If disruptions occur on this route, shipping lines may divert vessels via the Cape of Good Hope, adding an estimated 15-20 days to transit times to Europe and the US.
"So far, there have been no problems in this area, but we are keeping a close watch as this route was severely affected during the Israel-Hamas war (2023-24). This had impacted the country's exports," an exporter said.
Any disruptions in logistics would push costs related to shipping, containers, demurrage, and insurance. This would make goods less competitive. Re-routing of goods would also delay shipments.
"At present, these charges have not yet increased," an industry representative said, adding, "we are watching the situation carefully".