Indian exporters of wide-ranging products including pharma, engineering, garments and food products, have informed the Commerce and Industry Ministry that they are particularly worried about a disruption in trade with the United Arab Emirates (UAE), amid escalating conflict in West Asia, as the transhipment hub has emerged as one of the largest trade partners in the last few years following the free trade agreement (FTA) in 2022.
Iranian drone strikes have hit key infrastructure across the region, including ports and airports in the UAE. Trade data showed that the UAE has emerged as India’s second-largest trade partner during the ongoing financial year after the US. While India’s exports to the UAE between April 2025 and February 2026 stood at $32.84 billion, total imports during the period stood at $56.59 billion. The volume of trade was second only to the US.
The Commerce and Industry ministry on Monday held a stakeholder consultation with all stakeholder ministries, key logistics and trade facilitation partners to review the emerging geo-political situation and its potential impact on India’s export-import (EXIM) cargo flows, including the export ecosystem.
The meeting was chaired by Special Secretary, Department of Commerce, Suchindra Misra and Lav Agarwal, Director General of Foreign Trade (DGFT).
“During the meeting, it was agreed amongst the stakeholders 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 and ensuring smooth cargo evacuation to avoid congestion and extended dwell times,” the Commerce Ministry said in a statement.
Following the meeting, Confederation of Indian Textile Industry (CITI) Chairman Ashwin Chandran said that conflict in West Asia comes against the backdrop of the continuing uncertainty on the US tariffs issue. Another development, the recent reduction in the rates under the Remission of Duties and Taxes on exported Products (RoDTEP) Scheme has added to the challenges faced by Indian textile and apparel exporters, he added.
Expressing worry over trade with the UAE, Chandran said that the United Arab Emirates, particularly, is one of India’s largest markets for textile and apparel exporters in West Asia.
Story continues below this ad
In 2024, the UAE was the 4th largest market for India’s textile and apparel exports, after the US, the EU, and Bangladesh.
“Considering the narrow margins under which textile and apparel exporters operate, any escalation in the cost of logistics and insurance due to the West Asia scenario puts them in a very tight spot, affecting their ability to meet contractual obligations besides significantly raising operating costs,” Chandran said.
Pankaj Chadha, Chairman, Engineering Exports Promotion Council (EEPC), said: “The ongoing war involving the US, Israel, and Iran is quite worrying for the exporting community. As for engineering goods, Saudi Arabia and the UAE are among our key markets.”
Chadha said the UAE acts as a gateway to our exports to the West Asia and North Africa (WANA) region.
Story continues below this ad
It seems the war is escalating, which could not only disrupt engineering exports to this region but may also affect some of the trade routes. As has been indicated by many experts in geopolitics, the Strait of Hormuz, through which 20% of global oil flows, could be blocked, Chadha said.
“In case the current situation prolongs, it will have a huge negative impact on the engineering sector. It threatens to erode our competitiveness as a result of logistics and insurance costs going up. The overall situation seems very volatile. Trade disruptions to this region, especially the UAE and Saudi Arabia, mean a substantial impact on our shipments. All the factors combined are set to increase input cost, thus putting further strain on our revenue and profitability,” the EEPC chief said.
S C Ralhan, President Federation of Indian Export Organisations (FIEO) said 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, Ralhan said.
“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. This will inevitably raise freight costs and stretch supply chains. In addition, heightened geopolitical risk typically results in higher marine insurance premiums, further adding to transaction costs for exporters,” Ralhan said.