How Indian exporters are tackling the West Asia crisis
What's the story
In the wake of the ongoing crisis in West Asia, Indian exporters are adjusting their strategies to minimize disruptions. They are closely monitoring shipping companies, planning early shipments, and looking for alternate routes. The exporting community is also modifying inventory, contracts, and schedules to ensure flexibility. Support measures like regular advisories and discussions with shipping lines over surcharges are recommended to help businesses navigate this challenging period.
Export challenges
Geopolitical tensions in West Asia affecting India's exports
The ongoing geopolitical tensions in West Asia, particularly around the Strait of Hormuz, are creating uncertainty for India's exports. These tensions have affected shipping schedules and costs while causing a spike in insurance premiums and disrupting supply chains. Exporters are closely monitoring these developments as surcharges and longer transit times continue to affect cargo movement. SC Ralhan, President of the Federation of Indian Export Organisations (FIEO), said they are trying to manage their exports despite these challenges.
Industry impact
Apparel export orders to Middle East may fall
An expert from the apparel industry has warned that export orders to the Middle East could fall in the coming months due to the ongoing war. This could also lead to a drop in consumption. Notably, around 11.8% of India's apparel exports go to these war-torn West Asian countries. In FY 2024-25, India's ready-made garment exports to these West Asian countries were $1.9 billion as compared to $1.82 billion in FY 2023-24.
Supply chain concerns
Textile manufacturers could face raw material shortages
Textile manufacturers relying on imported raw materials such as synthetic fabric and embellishments could face shortages or increased costs if disruptions continue. An increase in logistics charges could further escalate the cost of raw materials, ultimately leading to higher final product costs. Ramesh Kumar Juneja, Chairman of the Council for Leather Exports, said shipments to the Persian Gulf have completely halted due to these ongoing issues.
Route changes
Shipping lines rerouting shipments, increasing costs
In light of the crisis, shipping lines are now rerouting shipments around the Cape of Good Hope, encircling Africa to avoid the Strait and Red Sea. These diversions add nearly 3,500 nautical miles and can delay shipments by 10-15 days while increasing fuel and insurance costs. This could make order delivery to US and Europe costlier. An expert also warned that longer voyages could lead to vessel shortage in coming weeks, driving up costs as availability decreases beyond the region.