New Delhi: With tensions in the Middle East continuing to escalate, Indian exporters have expressed concern about a rise in transportation and insurance costs that could disrupt outboard shipments to the US and Europe.
It tensions continue to persist, oil prices would also get impacted and this would have further implications on inputs costs, exporters said.
The situation in the Middle East has gone from bad to worse over the last couple of days with Iran carrying out missile strikes on several countries. Even after the reported death of its supreme leader Ayatollah Ali Khamenei, Iran has warned of further attacks.
The Straits of Hormuz also been closed down by Iran and Yemen’s Houthi rebels have warned of missile strikes on shipping.
Under the circumstances, Federation of Indian Export Organisations (FIEO) president S C Ralhan told PTI that the ongoing conflict has already begun to disrupt established global logistics channels.
“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.
The heightened geopolitical risk typically results in higher marine insurance premiums, further adding to transaction costs for exporters, Ralhan said.
“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,” Ralhan said.
Indian exporters have demonstrated resilience in navigating past disruptions, but sustained instability in these critical trade corridors would warrant close monitoring and calibrated policy support to maintain competitiveness, he said.
Apparel Export Promotion Council chairman A Sakthivel shared similar views. “We are worried that our shipment may get delayed due to this tension. We may have to take long routes to send our goods to Europe, USA and other western countries,” he said.
Tensions in the Middle East region in 2024 had impacted both Indian imports and exports through the Red Sea route. Exporters were forced to take longer routes to reach destinations in the US and Europe.
“We may face similar problems now if the war continues for long,” an exporter from the leather sector was quoted as saying.
