Trade Routes Threatened: India Prepares for Potential Disruptions

India Reviews Trade Risks as Middle East Tensions Escalate After US and Israel Strike Iran​

Commerce Ministry Calls Urgent Meeting to Assess Impact on Exports and Shipping Routes​

New Delhi, March 1: The Ministry of Commerce has convened a high level meeting on Monday to evaluate the potential fallout of escalating tensions in the Middle East on India’s trade flows.

The meeting, to be held in hybrid mode, will bring together exporters, shipping lines, freight forwarders and officials from various ministries. The objective is to assess the evolving geopolitical situation and its possible impact on India’s export supply chains, logistics networks and freight movement.

The move follows joint military strikes by the United States and Israel on Iran on Saturday. Iran responded with drones and missile attacks targeting Israeli and US military installations across the Gulf, including Dubai, a major global business hub.

Exporters Raise Alarm Over Strait of Hormuz and Bab el-Mandeb Disruptions​

Exporters have voiced serious concerns that the conflict could disrupt critical maritime corridors, particularly the Strait of Hormuz and the Bab el-Mandeb Strait. These strategic waterways are vital for global shipping and connect India with the Gulf region, North America and Europe.

West Asia remains a crucial transit hub for Indian exports bound for major markets. Any prolonged disruption in these routes could significantly alter shipping timelines and costs.

FIEO Flags Logistical Uncertainty and Longer Transit Times​

SC Ralhan, President of the Federation of Indian Export Organisations, said the ongoing conflict has already begun affecting established global logistics channels.

Air routes are being altered while maritime trade through the Red Sea and key Gulf straits is facing heightened uncertainty. If diversions continue, shipments may increasingly be rerouted via the Cape of Good Hope. Such a shift could add an estimated 15 to 20 days to transit times for exports to Europe and the United States.

Ralhan noted that freight rates and insurance premiums may rise if disruptions persist. Exporters indicated that clarity on shipping capacity, revised routes, insurance terms and freight costs could take several days.

Key Export Markets at Stake​

India’s merchandise exports to the United States stood at USD 86.5 billion, while exports to Europe reached USD 98.4 billion. Shipments to West Asia amounted to USD 58.8 billion. Collectively, these three regions account for nearly 56 percent of India’s total merchandise exports.

Given the scale of trade exposure, any sustained disruption in West Asian transit corridors could have wide ranging implications for exporters.

Lessons from 2023 to 2025 Conflict Resurface​

Between 2023 and 2025, the conflict between Israel and Hamas triggered a sharp rise in freight rates and extended transport timelines. During that period, shipping lines avoided the Red Sea and rerouted vessels around the Cape of Good Hope, increasing travel times between India and Western markets by 15 to 20 days.

Exporters noted that while earlier tensions were geographically limited, the current situation appears broader in scope.

Freight rates are typically revised at the beginning of each month by major shipping lines. New rates are scheduled to be published on Monday. At the start of 2026, freight rates had been contracting, but the latest developments may alter that trajectory depending on the duration and intensity of the conflict.

The Commerce Ministry’s meeting is expected to provide an initial assessment of how the crisis could reshape trade flows, logistics costs and shipping routes in the coming weeks.