India Steps in With $53 Million to Shield Exporters From Middle East Conflict Costs

As the war escalates and affects countries and sectors worldwide, India is stepping up to provide support. On March 19, India's trade ministry announced that the government will extend insurance coverage for shipments passing through conflict-affected areas. This decision comes in response to exporters facing rising logistics and transportation costs.

India Plans For War-Risk Cover

Routes through conflict‑hit West Asia have seen a steep ​rise in freight ​and insurance bills, costs that exporters ‌have ⁠limited ability to pass on, the ministry said. India's trade ministry said on Thursday the government will extend support for insurance cover on shipments routed through conflict-hit corridors, as exporters struggle with sharply rising logistics costs. 

The Indian Trade Ministry has introduced a 4.97 billion rupees ($53.26 million) scheme to provide insurance cover for shipments moving through the affected corridors. These funds will help stabilise costs and prevent order cancellations. The RELIEF scheme will include consignments made for delivery and transshipment to the following routes:

• The UAE

• Saudi Arabia

• Kuwait

• Qatar

• Oman

• Bahrain

• Iraq

• Iran

• Israel

• Yemen

The Trade Ministry also highlighted that the routes crossing the conflict‑hit areas of West Asia have seen a sharp rise in freight and insurance bills. These high costs have resulted in exporters having ⁠a limited ability to pass through the exporting routes.

Middle East Conflict: Impact on India

The ECGC (Export Credit Guarantee Corporation of India) is the agency for implementing the package under the RELIEF scheme. This package will include logistical support, automatic extensions of export obligations, and potential financial measures to manage shipping delays.

Speaking about the current scenario, Rajesh Agarwal, Secretary in the Commerce Ministry, said, "We are announcing a new scheme under the Export Promotion mission, especially focused upon exporters exposed to these 17-18 geographies which have been impacted by the conflict to assuage some of the challenges that our exporters are facing.”

The Middle East conflict is hitting Indian exporters hard, and it will be interesting to see how the Indian government’s policy impacts the current market outlook.