War Risk, Cargo Delays: Govt activates daily crisis response amid Hormuz disruptions

Commerce Secretary Rajesh Agrawal said on Thursday that the ongoing conflict in West Asia -- which is nearing the end of its third week -- has impacted India's trade environment, with the potential impact anticipated not only on active exports but also future consignments. The remarks come at a time when rapid escalations in the Middle East -- which began with joint US-Israel strikes against Iran and Tehran's retaliatory action against several countries in the region -- are impacting global financial markets with nearly four-year highs recorded in benchmark oil rates.

The central government has assured strong coordinated government response, focusing on cost control, cargo movement and exporter support. It has formed an Inter-Ministerial Group (IMG) of the concerned departments, which will be meeting to review the situation and the measures daily.

The official said that the situation looks concerning and the government is receiving regular updates from all stakeholders. Updates on areas like cargo, warehousing and logistics are being reviewed, according to the government.

The Centre has also planned a new scheme to support exporters under its broader Export Promotion Mission initiative.

The Inter-Ministerial Group has discussed supply chain issues, said Director General of Foreign Trade (DGFT) Lav Agrawal.

He also said that the Strait of Hormuz situation has impacted consignments to Europe through the Gulf.

'RELIEF' for Hormuz-struck exporters

The central government gave the nod to a Rs 497-crore targeted support programme -- called RELIEF or Resilience and Logistics Intervention for Export Facilitation -- to assist exporters hit by logistics disruptions in West Asia. The initiative -- under the Export Promotion Mission -- follows rising freight, insurance and war-risk costs triggered by tensions near the Strait of Hormuz.

RELIEF will provide enhanced risk coverage and partial reimbursement, with the Export Credit Guarantee Corporation of India (ECGC) designated as the nodal agency. The programme will cover existing and forthcoming shipments to key Gulf markets.

Here are answers to frequently asked questions (FAQs) on the subject:

How is the Middle East conflict (also known as the West Asia conflict) impacting India’s trade?

The conflict has increased freight, insurance and war-risk costs for Indian traders, through disrupted shipping routes, delayed cargo, and affected both current and future export consignments.

Which steps are proposed by the central government?

The government has set up an Inter-Ministerial Group (IMG) to monitor logistics, cargo movement and costs, and broadly to ensure a coordinated response across departments.

What is the RELIEF scheme?

Resilience and Logistics Intervention for Export Facilitation is a Rs 497-crore support programme under the Export Promotion Mission aimed at helping exporters impacted by disruptions in West Asia.

Who will implement RELIEF?

The Export Credit Guarantee Corporation of India (ECGC) will act as the nodal agency, handling risk coverage, claims and disbursement.

What support does RELIEF offer?

The programme is aimed at providing enhanced insurance cover, risk protection and partial reimbursement for eligible exporters.

Will these include MSMEs?

Yes, MSMEs facing high logistics costs will be covered under the programme.

Which regions are most affected?

Trade routes via the Strait of Hormuz are impacted, affecting shipments to Gulf countries and onward exports to Europe.