Four weeks into the US-Israel-Iran conflict, India’s trade with West Asia has sharply declined, with exports—making up nearly 16% of India’s total trade—coming to a near standstill since March 1. Pankaj Chadha, Chairman of the Engineering Export Promotion Council, highlighted the significant impact of the Hormuz blockade on Indian exporters, disrupting shipping, air cargo, insurance, and payment systems.
The crisis encompasses more than just delayed shipments. Exporters are facing suspended services, soaring War Risk Surcharges, and a severe payment crisis, as Gulf buyers struggle to receive goods and defer payments. This liquidity squeeze poses a serious financial risk, especially for small and medium enterprises reliant on timely payments.
In the coffee sector, around 300 containers, each carrying 20 tonnes, are stranded or moving sluggishly through the Strait of Hormuz. Many consignments have been rerouted to safer ports, while some containers have been returned to Indian ports, creating logistical and financial challenges for exporters.
While India’s overall exports reached over $714 billion in FY 2025-26, reflecting steady growth, the current disruptions in both Gulf and US markets are causing significant challenges for Indian exporters, limiting their avenues for recovery amidst geopolitical instability.
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