Freight surge, Gulf tensions threaten ₹5,000-crore pharma exports to West Asia

Rising freight costs and escalating geopolitical tensions along key Gulf shipping routes are emerging as a risk to India’s pharmaceutical exports to the Middle East, with industry estimates warning of potential losses of ₹2,500-₹5,000 crore if shipments face prolonged disruption.

The warning comes from the Pharmaceuticals Export Promotion Council of India (Pharmexcil), which says Indian drugmakers relying on the corridor for exports of generic medicines and formulations could face significant pressure if logistics disruptions continue.

“Given the importance of this market for pharmaceutical products, a complete disruption of March’s exports could result in a potential loss of approximately ₹2,500 to ₹5,000 crore for the Indian pharmaceutical industry,” said Namit Joshi, Chairman of Pharmexcil.

The concern comes even as India’s pharmaceutical exports to the West Asia and North Africa (WANA) region have grown steadily in recent years. Shipments to the region increased from about $1.32 billion in FY2020-21 to $1.75 billion in FY2024-25, underlining the market’s growing significance for Indian manufacturers.

Gulf Cooperation Council (GCC) countries account for about 5.58% of India’s total pharmaceutical exports, with several markets relying heavily on Indian generics and affordable medicines. India’s overall pharmaceutical exports stood at around $27.9 billion in FY2024, making the country one of the world’s largest suppliers of generic medicines.

“Key markets like the UAE, Saudi Arabia, Oman, Kuwait and Yemen are highly dependent on India for affordable medicines and generic formulations,” Joshi said.

Key markets for Indian generics

Among regional markets, the United Arab Emirates remains the largest destination for Indian pharmaceutical exports, accounting for more than one-fifth of shipments in the region. Saudi Arabia has also seen strong growth in imports of Indian medicines over the past five years, while Egypt has emerged as an important destination for bulk drugs and intermediates used in pharmaceutical manufacturing.

Several smaller markets in the region are also showing rapid growth. Exports to Jordan have recorded a sharp rise, supported by increased vaccine shipments, while Kuwait and Libya have also reported strong gains in imports of Indian drug formulations.
Drug formulations and biologics remain the dominant export category across the region, followed by bulk drugs, vaccines, surgical products and traditional medicine segments such as Ayush formulations.

Logistics costs under pressure

However, exporters say the sector is facing mounting logistics challenges. “The doubling of freight charges for both imports and exports, accompanied by surcharges of $4,000–$8,000 per shipment, has put substantial pressure on Indian pharmaceutical companies,” Joshi said.

The concerns come amid escalating tensions in parts of West Asia that have disrupted shipping through key maritime corridors such as the Red Sea and the Strait of Hormuz. Attacks on commercial vessels and security risks linked to the ongoing Israel–Hamas conflict and tensions involving Iran-backed groups in the region have forced several shipping companies to reroute vessels or increase freight charges, raising costs and transit times for exporters.

Such disruptions are particularly concerning for temperature-sensitive pharmaceutical products that require strict cold-chain conditions during transport. Industry experts say that while the Middle East remains a critical export market for Indian drugmakers, the sector has historically managed logistics volatility through diversified supply chains.

"The Middle East is an important market for Indian pharmaceutical companies, accounting for roughly 5-6% of India’s total pharma exports," said Salil Kallianpur, a pharmaceutical industry expert. “If freight costs rise sharply or shipping routes are rerouted, exporters may face higher logistics costs, longer transit times and pressure on margins, particularly in price-sensitive generic markets.”

Kallianpur added that the Indian pharmaceutical industry has historically shown strong resilience in managing supply chain volatility, with many exporters operating through regional distributors, maintaining buffer inventories and using diversified logistics networks.

“Unless there is a prolonged and severe closure of key maritime routes, the impact is likely to be temporary cost pressure rather than a sustained disruption of exports,” he said.

Supply chain risks grow

Beyond freight costs, exporters are also dealing with rising supply chain pressures driven by crude oil price volatility, higher logistics costs for active pharmaceutical ingredients and finished formulations, and shipping delays that can affect inventory cycles.

Industry executives say that while the Middle East remains a stable and growing market for Indian drugmakers, prolonged disruptions in logistics routes could affect delivery schedules and increase costs for exporters.

Pharmexcil said it is engaging with government authorities and logistics stakeholders to explore measures such as freight relief, alternative shipping routes and closer coordination with regulators to minimise disruptions to exports.

Joshi said the industry would need to remain agile in navigating evolving geopolitical and logistics challenges while ensuring that the GCC and WANA regions continue to remain important markets for Indian pharmaceutical exports.