UP: Traders say clashes in Mideast threaten footwear, handicraft exports

Lucknow: The escalating conflict between Iran and Israel has triggered anxiety across Uttar Pradesh’s export hubs, with traders in Agra and Moradabad warning of severe disruption to shipments, payments and new orders this financial year.

In Agra, the globally known footwear cluster is bracing for logistical shocks as shipping routes through the Strait of Hormuz and the Red Sea become risky. Exporters say consignments bound for Europe may now have to be routed via the Cape of Good Hope off Africa, adding 30 to 50 days to delivery timelines. Freight costs are expected to nearly double, squeezing margins for MSME exporters who already face weak global demand.

Agra exports footwear worth around Rs 4,000 crore annually, including high-end leather shoes and safety footwear supplied to European industrial markets and security agencies. Trade with Israel and Middle East markets alone accounts for Rs 250 to 500 crore. The city also exports marble inlay work, brassware and zari zardozi items to Iran and Israel. Industry bodies estimate that route disruptions and payment risks could push business down by up to 40 percent this year.

Exporters say global banking transactions have begun slowing, with possible fresh sanctions on Iran and wartime restrictions in Israel raising fears of delayed or stuck payments. Rising crude oil prices have also pushed up the cost of chemicals used in leather processing, making Agra products costlier in global markets and weakening competitiveness against China and Vietnam.

The conflict has also cast a shadow over Moradabad’s handicraft industry, where exporters supply brassware and decorative items to the US, Japan and Middle East markets. District traders said the attack on Iran by Israel and the United States has heightened uncertainty among buyers, with orders secured at international fairs in Frankfurt and Delhi likely to be put on hold. Negotiations on fresh contracts may also stall.

Moradabad has around 2,400 exporters and ships handicrafts worth Rs 8,000 to 9,000 crore every year, with the United States and Japan among the biggest markets. Exporters fear up to 75 percent of the sector’s business could be affected if the conflict drags on. The industry was already under pressure due to higher tariffs and rising raw material costs. Traders said the full extent of cancellations and losses would become clearer in the next few days.

Industry representatives warned that prolonged hostilities will raise shipping costs, cause volatility in raw material prices and delay payments. They said factories could begin slowing production if shipping companies cut services on risky routes. Artisans and small exporters, already struggling with logistics and competition, are expected to bear the brunt of the disruption, with livelihoods at stake if overseas demand weakens further.