India exporters: Government measures to manage Gulf conflict shipping and insurance risks

India’s commerce ministry has introduced steps to reduce trade disruption for exporters as tensions continue in the Gulf region. The area is a key destination for Indian goods, including gems and jewellery, rice and pharmaceuticals. Exports to these categories were valued at about USD 57 billion in 2024-25, a senior official said on Thursday.

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At an inter-ministerial briefing on the impact of developments in West Asia, Director General of Foreign Trade (DGFT) Lav Aggarwal outlined fresh coordination measures. The conflict has complicated shipments and raised costs for exporters. Aggarwal also flagged risks to payments and credit for some sectors that depend on steady cash cycles.

West Asia conflict impact on India exports and exporters

Aggarwal said the Gulf region creates shipping challenges for Indian firms, as transport routes shift. India’s bilateral trade with the region totalled USD 178 billion in 2024-25. This included USD 56.87 billion in exports and USD 121.67 billion in imports. The six countries covered were the UAE, Saudi Arabia, Oman, Bahrain, Qatar and Kuwait.

According to Aggarwal, exporters in several industries are facing pressure from delays and higher charges. The sectors under stress include petroleum products, chemicals and plastics, engineering goods, rice, pharma and gems and jewellery. Exporters to the US and Europe are also paying more. Longer routes are being used as shipping lines reroute vessels.

West Asia conflict impact on India exports: freight, payments and perishables

The Gulf remains India’s largest agri-export destination for Basmati, marine products and fresh produce. Aggarwal said air and sea freight costs rose sharply for fruits and vegetables in transit. Payment channels can also come under strain in key markets. This can disturb credit cycles for food and agriculture-linked shipments.

For gems and jewellery, Aggarwal said the Gulf Cooperation Council (GCC) is both a key market and a sourcing base. Gold jewellery exports are facing stress. Imports of gold bars and rough diamonds from the GCC are also being disrupted. A DGFT presentation said LPG stress in manufacturing clusters is affecting melting and processing work.

West Asia conflict impact on India exports: engineering and pharma supply chains

Vessel diversions are pushing up transport bills, as shipping lines add war risk surcharges. Aggarwal said this is hurting engineering exports to the region. LPG and PNG supplies are under strain for foundry, forging and machining units. Aluminium supplies are also disrupted, while some Gulf ports are restricting access for engineering goods.

Pharma supply lines are also under pressure, as critical inputs are facing constraints. MSMEs are reporting shortages of raw materials, according to the briefing. Aggarwal said the commerce ministry is also working with insurers and banks. The discussions cover war risk insurance escalation and trade finance problems for affected exporters.

West Asia conflict impact on India exports: government coordination steps

Aggarwal said the ministry is holding regular meetings with exporters to track changing stress patterns. The goal is to design steps that resolve problems as they emerge. The commerce ministry set up an inter-ministerial group on March 2. It was formed to assess and coordinate the trade impact of the ongoing West Asia conflict.

So far, the group has held 20 meetings, Aggarwal said. A focused sub-group was also created to support the movement of perishable cargo from India to the affected region. The group is continuing to track developments and align action across ministries. Officials said the effort aims to keep trade support coordinated as conditions shift.

With inputs from PTI