West Asia crisis: Exporters seek support measures; govt ensures all facilitation

New Delhi, Mar 2 (PTI) With tensions escalating in the West Asian region amid the ongoing conflict, the government on Monday held inter-ministerial deliberations with exporters and logistics players to assess the impact on India's trade, with industry representatives seeking higher RoDTEP rates and urging the ECGC not to raise insurance premiums.

Exporters urged the government to restore high rates under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme as it was halved recently. They asked the commerce ministry to direct Export Credit Guarantee Corporation of India (ECGC) not to raise insurance premiums and include more goods under the insurance cover.

The stakeholder consultation was called by the commerce ministry with all stakeholder ministries, key logistics and trade facilitation partners to review the emerging geopolitical situation and its potential impact on India's export-import (EXIM) cargo flows.

The ministry said ensuring continuity of EXIM logistics and mitigating any disruptions to India's trade flows is a priority of the government.

"It was emphasised that the approach will remain facilitative and coordinated, with a focus on maintaining supply chain resilience, protecting the interests of exporters -- particularly MSMEs -- with a view that essential imports required for domestic production and consumption are not adversely affected," the commerce ministry said in a statement.

During the meeting it was agreed to maintain close, real-time coordination for monitoring route and capacity developments, surcharges, and equipment availability.

"Mechanisms for facilitation of time-sensitive export segments such as perishables, pharmaceuticals, and high-value manufactured exports were also discussed. The meeting emphasised strengthening facilitation at ports/ICDs (inland container depots) and ensuring smooth cargo evacuation to avoid congestion and extended dwell times," it said.

The US and Israel jointly launched military strikes on Iran on Saturday. Iran responded by firing drones and missiles at Israel and US military installations around the Gulf, and also at the global business hub of Dubai.

In the meeting, stakeholders presented an assessment of the evolving operational environment, including routing and transit-time changes, vessel scheduling adjustments, container/equipment availability, freight and insurance cost trends, and implications for time-sensitive exports.

The participants emphasised the need to maintain predictability in cargo movement, minimise avoidable delays, and ensure seamless documentation and payment processes for exporters and importers.

The government reiterated its readiness to facilitate trade operations, including procedural flexibility in export-related authorisations in cases of genuine disruption; coordination with customs authorities to ensure smooth clearance; and engagement with financial and insurance institutions to support exporter interests.

"The department reaffirmed that it will continue to engage closely with all stakeholders and relevant ministries/departments to ensure that India's trade continues to move efficiently and that any emerging issues are addressed in a timely manner," the ministry said.

The meeting was chaired by Special Secretary in the Department, Suchindra Misra, and Lav Agarwal, Director General of Foreign Trade (DGFT).

The meeting was attended by representatives from logistics operators and shipping lines/forwarders, Central Board of Indirect Taxes and Customs, Department of Financial Services, Ministry of Petroleum and Natural Gas, Ministry of Ports, Shipping and Waterways, the Reserve Bank of India, export promotion ecosystem and other concerned agencies.

A participant said the DGFT suggested participating export promotion councils (EPCs) to share their concerns and suggestions in writing.

The gems and jewellery exporters asked for an increase in time period for the sector for activities like shipments, diamond certification and return of jewellery from exhibitions. "If the war continues for more time, we need support from the government to deal with the issues," an exporter said.

According to exporters, closure of the Strait of Hormuz could impact oil trade and push crude oil prices. It will be inflationary for traders as high input costs will make goods uncompetitive.

Following US and Israeli attacks on the Iranian government, military and nuclear facilities, Iran warned shipping away from the strait and insurers withdrew coverage, effectively halting tanker movements. India imports 88 per cent of its crude oil needs and any rise in prices will swell its import bill as well as fuel inflation.

The Strait is a narrow 33-kilometre passage connecting the Persian Gulf to the Arabian Sea.

TRADE THROUGH AIR ROUTE -------------------------------- Federation of Indian Export Organisations (FIEO) President S C Ralhan has said the ongoing conflict has already begun to disrupt established global logistics channels.

Air routes are being altered as some of the airports and air spaces in the Middle East region remain closed. These airspaces connect to the US, Europe, and African nations.

Indian exporters use air routes to ship goods such as perishables, gems and jewellery, high end apparels, fruits and vegetables.

"Long time closure of airspaces will push air freights and in turn cost of goods," an exporter said. Of the total India's exports, 15 per cent goes through air routes and remaining through sea routes.

Apparel exporters council AEPC has urged the government to waive demurrage charges on export cargo at airports, as flight disruptions arising from ongoing West Asian crisis may impact movement of consignments.

In a communication to the civil aviation ministry, Apparel Export Promotion Council (AEPC) said the prevailing situation has significantly disrupted international flight operations, resulting in route restrictions, airspace closures, flight diversions, schedule irregularities, and operational constraints at certain overseas airports.

Airport demurrage charges are fees on cargo or baggage at an airport terminal being kept beyond the allowed free period. These charges encourage swift clearance. It varies by airport, cargo type and duration.

SEA ROUTE ------------- Exporters are apprehensive that extension of the conflict in other parts of the Arab world may have an impact on movement of goods through Bab-el-Mandeb, Red Sea, and Suez Canal.

The Bab-el-Mandeb Strait is a crucial shipping route for traders connecting the Red Sea and the Mediterranean Sea to the Indian Ocean.

The route starts from major Indian ports like Mumbai, JNPT, or Chennai, heads westward through the Arabian Sea, enters the Red Sea, and navigates through the Suez Canal into the Mediterranean Sea. From there, ships can reach various European ports, depending on their destinations.

If disruptions occur on this route, shipping lines may divert vessels via the Cape of Good Hope, circumnavigating Africa, which could add an estimated 15-20 days to transit times for shipments to Europe and the US.

"So far there is no problem in this area, but we are keeping our fingers crossed as this route was severely affected during the Israel-Hamas war (2023-24). That had impacted the country's exports," an exporter said.

Any disruptions in logistics would push costs related to shipping, containers, demurrage and insurance. It will in turn make goods uncompetitive. Re-routing of goods will also delay shipments.

"At present, these charges have not yet increased," an industry representative said, adding, "we are watching the situation carefully". PTI RR HVA TRB TRB