A significant share of India’s outbound shipments transits the Strait of Hormuz and adjoining Gulf shipping lanes
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REUTERS
Israel and the United States’ massive ongoing strikes on Iran have left Indian exporters on edge, as a significant share of India’s outbound shipments transit the Strait of Hormuz and adjoining Gulf shipping lanes.
While there is no immediate wholesale disruption to exports — though some consignments to the UAE and Qatar are being temporarily held back — exporters fear that a prolonged conflict will sharply increase freight rates, insurance premiums, and transit times.
“There are both immediate and medium-term risks if there is an escalation, as a significant portion of India’s merchandise trade moves through the Strait of Hormuz,” said Ajay Sahai, Director General of the Federation of Indian Export Organisations. “Even without a physical disruption, higher war-risk premiums and vessel rerouting can drive up freight costs.”
Gulf exposure
The Gulf region is highly important for India’s trade as GCC countries accounted for roughly 13 per cent of the country’s goods exports in FY25 at $56.87 billion. Exports to the UAE alone were at over $36 billion. If the uncertainty prolongs, these volumes may face a temporary contraction.
India’s direct exports to Iran, however, remained modest at $1.4 billion in FY25, comprising primarily humanitarian, non-sanctioned items such as Basmati rice, Tea, and pharmaceuticals.
“How exports fare depends entirely on the progression of the conflict and the safety of sea routes,” said Pankaj Chadha of EEPC India. He noted that some engineering firms are pausing shipments to the UAE and Qatar to clarify insurance coverage for “adverse situations.”
Route Disruption
The logistics landscape is already changing. Citing evolving security risks, French shipping giant CMA CGM announced that passage through the Suez Canal is suspended until further notice, with vessels being rerouted via the Cape of Good Hope. The detour could add 15–20 days to transit time for Europe and the US, according to FIEO.
“All containerised merchandise bound for the Mediterranean, Europe, and the US East Coast will be impacted by the Suez detour,” said J Krishnan, Partner at S Natesa Iyer Logistics LLP. He warned that if the conflict escalates, operations through the Chabahar port could effectively cease.
Textile exporters are also monitoring the situation closely, as the UAE is one of their largest global markets. “We are looking forward to an early resolution and a return to normalcy,” said Chandrima Chatterjee, Secretary General of the Confederation of Indian Textile Industry (CITI).
Published on March 1, 2026