Amid ongoing conflict in West Asia, Indian Exporters meet Commerce ministry to share concerns over UAE trade disruption, rise in freight rates

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.

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.

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.

A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC), said that the council has written to the Secretary, Ministry of Civil Aviation, Government of India, regarding the pressing problem arising from the situation prevailing in West Asia. The Chairman AEPC has requested for the waiver of demurrage charges on export cargo due to flight disruptions arising from ongoing West Asian crisis.

“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. These unforeseen developments have directly impacted the timely movement of export cargo from Indian airports to various international destinations. As a consequence, export consignments are currently stranded at multiple airport cargo terminals across India. The delays are solely attributable to external and unforeseen factors beyond the control of exporters, customs brokers, freight forwarders, or air cargo agents,” Sakthivel 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.

Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, specializing in economic policy and financial regulations. With over five years of experience in business journalism, he provides critical coverage of the frameworks that govern India's commercial landscape. Expertise & Focus Areas: Mishra’s reporting concentrates on the intersection of government policy and market operations. His core beats include: Trade & Commerce: Analysis of India's import-export trends, trade agreements, and commercial policies. Banking & Finance: Covering regulatory changes and policy decisions affecting the banking sector. Professional Experience: Prior to joining The Indian Express, Mishra built a robust portfolio working with some of India's leading financial news organizations. His background includes tenures at: Mint CNBC-TV18 This diverse experience across both print and broadcast media has equipped him with a holistic understanding of financial storytelling and news cycles. Find all stories by Ravi Dutta Mishra here ... Read More