Indian exporters on Saturday flagged concerns over rising logistics and insurance costs after a joint military strike by the United States and Israel on Iran triggered a sharp escalation in the Middle East, threatening key trade routes to the US and Europe.
Industry representatives warned that prolonged tensions could disrupt established shipping lanes, inflate freight rates and push up input costs, especially if global crude prices surge.
Following the attack, Iran launched retaliatory strikes targeting several American military bases across the region, including in Qatar, Kuwait and the United Arab Emirates, raising fears of a wider conflict that could destabilise critical maritime corridors.
Federation of Indian Export Organisations (FIEO) President SC Ralhan said the unfolding conflict has already begun to strain global logistics networks. “Air routes are being altered, and maritime trade through the Red Sea and key Gulf straits faces heightened uncertainty. If diversions become prolonged, shipments may increasingly have to reroute via the Cape of Good Hope, adding an estimated 15–20 days to transit time for Europe and the United States,” he said.
Ralhan added that heightened geopolitical risk typically leads to a spike in marine insurance premiums, further increasing transaction costs for exporters. “A prolonged disruption could also exert upward pressure on global energy prices, with consequential implications for input costs and currency stability, including pressure on the Rupee,” he noted.
Apparel Export Promotion Council Chairman A Sakthivel echoed similar concerns, saying exporters are worried about delays in shipments to Europe, the US and other Western markets if vessels are forced to take longer routes.
India, meanwhile, urged all sides to exercise restraint and avoid further escalation, emphasising that the sovereignty and territorial integrity of all countries must be respected.
Exporters recalled that tensions in the Middle East following the Israel-Hamas war in 2024 had already disrupted shipments via the Red Sea route, forcing carriers to opt for longer voyages. The crisis had intensified on October 19, 2023, when Iran-backed Houthi rebels in Yemen began attacking civilian cargo vessels near the Yemeni coast.
A leather exporter said the sector could face similar challenges if the current conflict drags on, warning that sustained instability in the Red Sea and Gulf region would require close monitoring and policy support to help exporters remain competitive.
(With inputs from PTI)
