Ludhiana: The country’s merchandise exports are expected to register a fall of 2-3 per cent in 2025-26 due to global economic uncertainties, aggravated by the West Asia crisis, according to FIEO.
Federation of Indian Export Organisations (FIEO) President S C Ralhan said that the crisis may have led to a decline in shipments by 7-8 per cent in March.
The joint attack launched by the US and Israel on Iran on February 28 severely disrupted the country’s exports to West Asia, pushed up shipping freight, air transport prices and insurance costs.
Disruptions in the movement of oil and gas from Middle East countries have also led to an increase in the prices of raw materials such as steel, plastic and rubber, Ralhan said.
“Exports are expected to record a fall of 2-3 per cent last fiscal and 7-8 per cent in March,” he told reporters here.
However, he said that India’s goods and services exports are likely to rise by 5-6 per cent. Exports stood at $825 billion in 2024-25 ($437 billion goods and $388 billion services).
The final numbers will be released by the commerce ministry on April 15.
Ralhan expressed hope that ship movements would resume soon following the ceasefire announcement for two weeks between the US and Iran.
He suggested that the government should look into issues such as high interest rates, simplification of advance authorisation redemption, and harmonisation of nomenclature between the Directorate General of Foreign Trade and customs.
Advance Authorization Redemption is a term used in India’s foreign trade policy (FTP). It is the process of closing or fulfilling an advance authorization licence after meeting its export obligation.
Advance authorization allows exporters to import raw materials duty-free on the condition that they will use those inputs to manufacture export products.
“We need a rate of interest at par with international standards, which is 2-4 per cent. In India, it is about 8.25 per cent after subsidy and without collaterals, it goes to about 12 per cent,” Ralhan said.
He added that it would take a few months for exports to stabilise from the West Asia crisis.
The announcement of a ceasefire between the US and Iran would provide immediate relief to exporters by easing shipping disruptions, the FIEO President said.
The conflict has posed challenges for exporters to ship goods to the Gulf region, with which India had a bilateral trade of $178 billion in 2024-25 ($56.87 billion exports and $121.67 billion imports).
The government has rolled out a host of measures to cushion exporters from the impact of the conflict in the Gulf region, a key market for India’s exports such as gems and jewellery, rice and pharma, which were valued at about $57 billion in 2024-25.
The major sectors which are under stress include petroleum products, chemicals and plastics, engineering goods, rice, pharma and gems and jewellery.
The six countries in this region are the UAE, Saudi Arabia, Oman, Bahrain, Qatar and Kuwait. The region is the largest agri-export destination for basmati, marine products and fresh produce, he said, adding that air and sea freight costs surged for fresh fruits and vegetables in transit.