A large proportion of India’s agricultural exports is concentrated in Gulf markets, with nearly 40% of basmati rice, over 75% of cardamom, and more than 80% of bananas exported to countries such as the UAE, Saudi Arabia, Iraq, and Iran.

Maritime disruptions and rising logistics costs

Disruptions in traditional maritime routes, especially through the Strait of Hormuz, have emerged as a major challenge for India’s exports to the Gulf. The conflict, which intensified in late February this year, following military strikes involving the United States, Israel, and Iran, has turned the region into a high-risk zone for commercial shipping. Missile and drone threats, combined with the suspension or steep increase of marine insurance coverage, have forced shipping lines to re-route vessels or halt operations altogether. As a result, exporters are facing both delays and significantly higher costs.

Exporters also report that while some consignments have been successfully redirected, the smaller scale of these facilities has slowed cargo handling and increased turnaround times.

Freight costs have surged dramatically, further straining exporters. The cost of shipping a container of vegetables has reportedly increased nearly sixfold, reaching around US$ 900 for a 29-tonne container. Additional road transport costs of US$ 60 to US$ 100 per container are incurred when using alternative ports. These higher logistics expenses, combined with delays in customs clearance, have made exports to the Gulf region economically unviable for many businesses.

The crisis has also led to a sharp increase in detention charges imposed by shipping lines, ranging between US$ 7,000 and US$ 10,000 per full container load. Thousands of containers remain stranded across multiple Middle Eastern ports, adding to the financial burden on exporters. Many shipments have been delayed, rerouted, or held up due to container shortages and logistical uncertainties.

Industry sources emphasize that profit margins have been severely eroded, discouraging exporters from operating at full capacity.

It is important to note that in an effort to mitigate the disruptions, Dubai Customs introduced a temporary facilitation mechanism last month, allowing cargo destined for Jebel Ali Port to be rerouted through smaller ports such as Khorfakkan and Fujairah. From there, goods are transported by road into Dubai and other parts of the UAE. However, these alternative ports have limited capacity compared to Jebel Ali, one of the region’s busiest container hubs.

Impact on perishables and other commodities

The maritime disruptions have had the greatest impact on highly perishable commodities. Products such as fruits, vegetables, poultry, eggs, and seafood have limited shelf lives and require strict adherence to delivery timelines. Even minor delays can result in significant quality deterioration, making them less competitive in international markets. Compared to non-perishable goods like textiles, perishables face a much higher risk of loss under current conditions.

The situation is particularly concerning also for commodities like tea, where around 41% of exports pass through the Strait of Hormuz. Assam orthodox tea, a major export to markets such as Iran, Iraq, and the UAE, is especially vulnerable. If disruptions persist, there is a risk of surplus supply in the domestic market, which could lead to a decline in auction prices.

Other export-oriented industries have also been affected by the ongoing crisis. Sectors such as marble, textiles, handicrafts, and gems and jewellery have experienced significant slowdowns. Small and medium enterprises in these sectors are facing mounting financial pressure due to delayed payments, rising costs, and reduced demand.

Redefining export pathways amid rising geopolitical risks

In response to maritime disruptions, exporters have increasingly turned to air freight as an alternative, particularly for perishable goods. Traditionally, about 99% of India’s agricultural exports to the Gulf were transported by sea, with only around 1% moved by air. However, the current situation has reversed this pattern in some cases, with air shipments becoming more common despite costs nearly doubling. While this shift has helped maintain supply continuity, exporters acknowledge that it is not a sustainable long-term solution due to the significantly higher expenses involved.

Exporters are increasingly exploring alternative routes and strategies to maintain supply continuity. These include trans-shipment through regional hubs such as Colombo and rerouting via ports like Fujairah. While these options provide temporary relief, they come with higher handling costs and longer transit times.

There is also growing interest in long-term alternatives such as the International North–South Transport Corridor (INSTC), a multimodal network connecting India with Iran, Russia, and Central Asia.

Additionally, some exporters are experimenting with routing consignments through third countries, including members of the Commonwealth of Independent States (CIS) such as Kazakhstan, Uzbekistan, and Armenia, to reach markets like Iran and Iraq. However, these routes are still evolving and cannot yet fully replace traditional maritime pathways.

Rethinking markets amid changing demand patterns

Beyond logistics, the maritime crisis has affected demand patterns across the Gulf region. Exporters report a slight dip in demand in the UAE, partly due to population movements, while shipments to Saudi Arabia and Oman have remained relatively stable. Ports such as Jeddah, Sohar, and Salalah, which do not rely on the Strait of Hormuz, have continued to handle cargo with fewer disruptions.

The impact of the crisis extends beyond exports to imports as well. Delays and higher costs in importing essential inputs such as fertilizers and energy products are increasing production costs for Indian farmers. This creates a dual challenge for the agricultural sector: rising input costs on one hand and constrained export revenues on the other.

The disruptions have also prompted a broader reassessment of India’s export strategy. Industry stakeholders are emphasizing the need to diversify export markets to reduce dependence on the GCC region. Efforts are underway to expand trade with Central Asia, Southeast Asia, and other emerging markets. At the same time, surplus produce that cannot be exported is being redirected to the domestic market to prevent spoilage and stabilize prices.

However, despite ongoing disruptions, exporters remain cautiously optimistic as demand for essential food items in the Gulf stays strong. Supply chains continue to function, though at a slower pace and higher cost, even in conflict-affected areas. Exporters are adapting through flexible logistics, closer coordination with importers, and exploration of alternative routes. Food trade has proven resilient during geopolitical instability, with staples like rice, fruits, and vegetables maintaining steady demand.

Although the crisis has altered established trade patterns and increased uncertainty, it has also highlighted the adaptability of exporters and the critical importance of maintaining robust and resilient food supply chains.

Conclusion

The recently announced ceasefire between the United States and Iran introduces a cautiously optimistic note. If sustained, it could ease maritime risks, reduce insurance premiums, and gradually normalise freight rates—key variables that directly influence export competitiveness. However, exporters remain watchful. Past episodes have shown that logistics systems take longer to stabilise than political signals, and residual disruptions—port congestion, container imbalances, and clearance delays—often persist even after tensions de-escalate.

In the near term, the outlook hinges on three moving variables:

• Durability of the ceasefire and broader regional stability
• Correction in freight and insurance costs
• Restoration of predictable transit timelines for perishables

For Indian agri exporters, the lesson is clear: beyond market access, supply chain resilience is now central to export strategy. Diversification of routes, investment in cold chain infrastructure, and closer coordination with logistics partners will be critical—not just to recover lost ground, but to build shock-resistant export systems in an increasingly volatile trade environment.

Read more

Gulf War Hits Rajasthan Exports Hard

West Asia war: India’s livestock exports hit by shipment delays and cancellations

India Extends RoDTEP, launches RELIEF as West Asia crisis disrupts trade flows

Rising airfares, hotel cancellations & fuel shortages: Iran war hits Indian tourism & aviation

FAQs

1. Why have India’s agricultural exports to the Gulf slowed down recently?
   India’s exports have slowed due to geopolitical tensions in West Asia, disruptions in key maritime routes like the Strait of Hormuz, rising freight costs, and delays in customs clearance, all of which have reduced shipment volumes.
2. How are rising freight costs and logistical disruptions affecting exporters?
   Freight costs have increased sharply—by as much as six times in some cases—along with higher detention and handling charges. This has eroded profit margins and made exports, especially of low-value and perishable goods, less viable.
3. Which agricultural products are most impacted by the current crisis?
   Perishable goods such as fruits, vegetables, poultry, and seafood are the most affected due to their short shelf life and dependence on timely delivery. Commodities like tea are also vulnerable due to reliance on disrupted routes.
4. Why is the Gulf region important for India’s agricultural exports?
   The Gulf imports around 85% of its food, making it a key market. India supplies significant shares, including about 40% of basmati rice, over 75% of cardamom, and more than 80% of bananas to the region.
5. What strategies are exporters adopting to manage the disruptions?
   Exporters are using alternative routes, increasing reliance on air freight for perishables, rerouting through ports like Fujairah, and exploring new markets in Central and Southeast Asia to reduce dependence on the Gulf.