'Sense of worry among exporters': Govt rolls out Rs 497-cr relief as Hormuz curb disrupts shipments to Gulf

The government on Wednesday unveiled a Rs 497 crore export support package as disruptions linked to the Iran conflict and shipping constraints around the Strait of Hormuz begin to affect trade flows to the Middle East.

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Commerce Secretary Rajesh Agrawal said the crisis has started to impact the trade environment, with exporters facing delays and uncertainty in shipments.

"Due to the crisis, there has been some impact on the trade environment in India," he said, noting that "exporters to the Middle East [are] facing challenges" and "exports haven't reached destinations, future exports getting impacted."

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He said there is a "sense of worry among exporters exposed to the Middle East," with operational issues emerging around cargo returns and warehousing. The government, he said, is "working with all stakeholders, ministries daily to address challenges."

The support, announced under the Export Promotion Mission, targets shipments to 18–19 countries in the region and is structured in three components, covering both existing and prospective exporters.

The first component allocates Rs 56 crore for exporters already covered under the Export Credit Guarantee Corporation (ECGC) insurance. It applies to consignments with landing bills issued between February 14 and March 15 and covers shipments to the UAE, Saudi Arabia, Kuwait, Qatar, Iran, Oman, Bahrain, Israel, Iraq and Yemen. The government said, "100% coverage will be given to them."

The second component, with an estimated Rs 159 crore outlay, extends ECGC coverage to upcoming exports while keeping premium charges unchanged. It covers consignments with landing bills between March 16 and June 15.

The third component provides Rs 282 crore in support for MSME exporters, including those not previously insured under ECGC, for consignments with landing bills issued between February 14 and March 15.

The scheme also covers additional war-risk premiums and conflict-related shipping charges arising from route disruptions.

Agrawal said the government is looking to enhance risk coverage levels. "We are trying to see that we go upto 90% coverage rather than the existing 75% as these are challenging times," he said, adding, "we have also covered MSME exporters who are not under insurance."

While the Strait of Hormuz remains a key route, exporters are adjusting logistics. "Not all shipments are going via the Strait of Hormuz; some of them are going via different ways too to ensure we have movement," he said.

The measures come as conflict in West Asia disrupts maritime routes, raising costs and delaying shipments to a region that accounts for a significant share of India's exports.